AB 267 revises how the state spends annual proceeds from the Greenhouse Gas Reduction Fund (GGRF). It keeps longstanding continuous appropriations for transit, affordable housing, and safe drinking water, and creates a temporary suspension of the dedicated GGRF appropriation to the High‑Speed Rail Authority that shifts those proceeds to the General Fund for water infrastructure and wildfire prevention.
The bill matters to agencies and projects that depend on predictable GGRF streams — transit and housing programs retain a protected share, while the High‑Speed Rail Authority faces a temporary loss of one dedicated revenue stream. Water districts, wildfire prevention programs, and Cal Fire are positioned to receive augmented resources, changing near‑term capital priorities tied to climate and resilience objectives.
At a Glance
What It Does
AB 267 preserves continuous appropriations from the GGRF for transit, affordable housing, safe drinking water, and a multi‑year allocation for forestry and fire prevention. It suspends the GGRF appropriation to the High‑Speed Rail Authority for two fiscal years and redirects those proceeds — via transfer to the General Fund — to augment funding for water infrastructure and wildfire prevention.
Who It Affects
Directly affected entities include the Transportation Agency, the Strategic Growth Council, the High‑Speed Rail Authority, the Department of Forestry and Fire Protection (Cal Fire), and agencies administering the Safe and Affordable Drinking Water Fund. Local governments, water agencies, and wildfire contractors will see changed funding flows.
Why It Matters
The bill shifts predictable, dedicated climate finance midstream, prioritizing water and wildfire resilience over a previously earmarked rail appropriation. That reallocation changes capital planning, project timelines, and the mix of near‑term greenhouse gas reduction and adaptation investments.
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What This Bill Actually Does
The bill operates inside California’s existing GGRF structure: the Legislature continuously appropriates annual proceeds of the fund for greenhouse gas reduction purposes. AB 267 leaves the statutory framework intact but modifies the destination of several streams within the fund.
It maintains the overall policy that GGRF proceeds must be used to reduce greenhouse gases, while specifying discrete flows to particular programs and, in two fiscal years, suspending one flow to allow reallocation to resilience priorities.
AB 267 keeps the dedicated, continuous set‑aside that funds transit, affordable housing, and sustainable communities programs, and it specifies that those funds remain available to the Transportation Agency and Strategic Growth Council for their respective capital and affordable housing programs. The bill also continues the mechanism that transfers a portion of the fund into the Safe and Affordable Drinking Water Fund, and it requires that transfers be used in ways that either reduce greenhouse gases or improve climate adaptation and resiliency for disadvantaged or low‑income communities.A central change in the bill is the treatment of the appropriation to the High‑Speed Rail Authority.
While the statute preserves a dedicated appropriation for rail capital and related costs, AB 267 temporarily suspends that appropriation for two fiscal years. During that suspension, the statute directs the State Board’s collections beginning January 1, 2026, to be transferred to the General Fund and made available — subject to appropriation — to support water infrastructure and wildfire prevention programs.
That creates a bridge that reroutes what would have been a long‑term rail funding stream into near‑term resilience spending.Finally, the bill creates a multi‑year continuous appropriation to Cal Fire for forest health and fuel reduction programs, allocating a fixed annual sum across specified program buckets and requiring implementation consistent with the California Forest Carbon Plan. It also clarifies how certain funds are excluded when calculating the percentages allocated to other programs, which affects the baseline used to determine each program’s share of annual GGRF proceeds.
The Five Things You Need to Know
The statute sets aside 35 percent of annual GGRF proceeds for transit, affordable housing, and sustainable communities programs; those proceeds are continuously appropriated to the Transportation Agency and Strategic Growth Council.
It designates a 25 percent continuous appropriation to the High‑Speed Rail Authority for capital, design, other capital costs, and loan repayment — but that 25 percent appropriation is suspended for the 2026–27 and 2027–28 fiscal years.
During the two‑year suspension, the law directs 25 percent of annual GGRF proceeds collected on or after January 1, 2026, to be transferred to the General Fund and made available, upon appropriation, for water infrastructure and wildfire prevention.
Beginning 2020–21 and until June 30, 2030, the statute transfers 5 percent of annual GGRF proceeds — up to $130 million per year — to the Safe and Affordable Drinking Water Fund for drinking water and related climate resilience work.
For each fiscal year from 2022–23 through 2028–29, the law continuously appropriates $200 million annually to Cal Fire: $165 million for forest health and wildfire emission‑reduction projects and $35 million for prescribed fire, fuel reduction, year‑round crews, and research and monitoring.
Section-by-Section Breakdown
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Transit, Low‑Carbon Operations, and Affordable Housing set‑aside
This provision creates a 35 percent continuous appropriation from GGRF proceeds for transit, low‑carbon transit operations, and the Affordable Housing and Sustainable Communities (AHSC) Program. It splits that 35 percent among the Transit and Intercity Rail Capital Program, the Low Carbon Transit Operations Program, and the Strategic Growth Council’s AHSC Program, and it directs no less than one‑quarter of that 35 percent (a floor described elsewhere in the statute) toward affordable housing within AHSC. Practically, this preserves a predictable revenue stream for capital and operating transit needs and for infill housing linked to sustainable communities planning.
High‑Speed Rail appropriation and temporary suspension
The statute earmarks 25 percent of annual GGRF proceeds to the High‑Speed Rail Authority for acquisition, construction, environmental review, design, and loan repayment tied to the initial operating segment and Phase I Blended System. AB 267 suspends that appropriation for two fiscal years (2026–27 and 2027–28) and redirects the equivalent proceeds into the General Fund for water infrastructure and wildfire prevention. The mechanics here convert a direct continuous appropriation into a one‑time transfer to the General Fund — the proceeds then become subject to usual appropriation processes rather than remaining continuously available to the Authority.
Transfer to Safe and Affordable Drinking Water Fund
This paragraph requires an annual transfer of 5 percent of GGRF proceeds — capped at $130 million per year — to the Safe and Affordable Drinking Water Fund from 2020–21 until mid‑2030. It also conditions eligible uses on either producing greenhouse gas reductions or improving climate adaptation and resiliency for disadvantaged or low‑income communities, and it allows agencies to comply with certain Government Code planning requirements by describing climate‑resiliency benefits in project proposals. The provision integrates water quality investments into the greenhouse‑gas reduction and resilience policy framework.
Annual appropriation for forestry and fire prevention (Cal Fire)
For fiscal years beginning 2022–23 through 2028–29, the bill continuously appropriates $200 million per year to Cal Fire, divided into $165 million for broad healthy forest and fire prevention programs that reduce wildfire‑related emissions and $35 million for prescribed fire and fuel‑reduction implementation, including crews and research. This creates a multi‑year, program‑specific funding envelope intended to accelerate fuel‑reduction activities and support operational capacity for prescribed burning.
Exclusion rule for calculation of program shares
This clause clarifies that when calculating the proportional amounts required under the earlier paragraphs, certain funds subject to Section 39719.1 and the fixed $200 million appropriation to Cal Fire are excluded from the base. That technical adjustment changes the denominator used to determine each program’s percent share of annual proceeds, which can materially affect the dollar amounts flowing to other programs as total GGRF revenues rise or fall.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Local water agencies and disadvantaged communities — receive increased funding availability for drinking water systems and resilience projects through the redirected GGRF transfer and the capped annual transfer to the Safe and Affordable Drinking Water Fund.
- Department of Forestry and Fire Protection (Cal Fire) and forestry practitioners — gain a multi‑year, predictable appropriation to scale healthy‑forest work, prescribed fire crews, and fuel‑reduction projects.
- Low‑income households and disadvantaged communities — benefit from statutory language requiring that certain water and transfer expenditures improve climate adaptation and resiliency for these populations.
- Affordable housing developers working with AHSC — retain continued access to GGRF‑backed AHSC funding because the statute preserves the transit/housing set‑aside.
Who Bears the Cost
- High‑Speed Rail Authority — loses a dedicated GGRF appropriation for two fiscal years, reducing predictable capital funding and likely delaying or reprioritizing rail project work.
- State budget negotiators and the General Fund — must absorb a redirected stream into the General Fund, which changes appropriation timing and could create competition with other priorities when the funds are allocated.
- Transit projects dependent on broader GGRF revenue growth — could face indirect effects if total GGRF receipts fall, because the statute excludes certain fixed appropriations from the base used to calculate other shares.
- State agencies and program administrators — take on additional administrative and compliance tasks to document greenhouse‑gas reduction or climate‑resiliency benefits for transferred funds and to coordinate implementation across multiple programs.
Key Issues
The Core Tension
The central dilemma is timing and predictability versus immediate need: whether to preserve a predictable, dedicated revenue stream for long‑term, capital‑intensive greenhouse‑gas reductions (high‑speed rail) or to repurpose those same proceeds to address urgent water and wildfire resilience needs that deliver faster, localized benefits and emissions avoidance.
AB 267 creates concrete trade‑offs between long‑lead capital investments and near‑term resilience spending. Suspending the rail appropriation converts a predictable, continuously available revenue stream into funds routed through the General Fund and subject to appropriation — that reduces direct access for the High‑Speed Rail Authority and introduces timing risk for projects that require multi‑year capital planning.
At the same time, routing money into water infrastructure and wildfire prevention addresses pressing resilience needs and offers measurable near‑term emissions reductions and avoided damages.
Operationally, the bill raises implementation questions: agencies must show how spending from transferred funds achieves greenhouse‑gas reductions or improves climate resilience for disadvantaged communities, which requires new compliance documentation and potentially new evaluation metrics. The exclusion of certain funds from the calculation base alters the arithmetic of percentage allocations, producing non‑intuitive results as GGRF revenues fluctuate.
Finally, sending previously dedicated proceeds to the General Fund creates appropriation risk — funds may be repurposed or delayed depending on budget negotiations, undermining the very predictability the original continuous appropriations sought to provide.
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