The state spending plan to be passed this week is expected to require the California Public Utilities Commission for the first time to start with a blank slate when preparing its annual budget. The move is aimed at enabling increased legislative oversight of the constitutionally-independent agency. Lawmakers during a June 10 budget conference committee agreed to order the CPUC to do labor intensive \u201czero-based budgeting,\u201d where division staff numbers, duties, and program spending are detailed. The provision has received \u201can enormity of support\u201d from legislators and the governor, according to an Assembly Budget Committee staffer. It is expected to be included in a trailer budget bill. The CPUC would have to take the zero-based approach beginning with its 2015-16 financial plan. Also expected to be included in the final state budget blueprint up for a June 14 vote is diversion of the California Air Resources Board\u2019s first year of carbon auction revenue to the state\u2019s general fund. In spite of considerable opposition from clean air and conservation groups, lawmakers point to the Air Board\u2019s incomplete investment plan under AB 32, the state\u2019s climate protection law, which allows for the greenhouse gas auctions. That overdue plan is to spell out how the quarterly auction funds are to be spent to ensure AB 32\u2019s carbon reduction goals are met. The pending zero based budget for the CPUC is more onerous. Assuming it is part of the final budget deal, it means the commission must develop a spending blueprint without funding presumptions\u2014at least in theory. \u201cThey start with nothing, then add in their core mission, the resources and staff,\u201d explained the budget committee staffer. \u201cIt is a real opportunity to rebuild and refocus the commission in a way that is very public.\u201d \u201cIt\u2019s an effort to get the CPUC to justify expenses from the ground up,\u201d added Joe Como, Division of Ratepayer Advocates acting director. \tTensions between lawmakers and regulators have grown over the months. They\u2019ve been exacerbated by state reports on commission inadequacies. Those include a Department of Finance audit revealed serious budget problems at the commission. Subsequently, a secret report was leaked that revealed regulators\u2019 safety deficiencies. For years, the Legislature has worked to exercise more control over the constitutionally-independent CPUC, which is funded with special funds. Power over its purse strings is the avenue to get more control over the agency. \tEarlier this year, an Assembly Budget Subcommittee recommended that the CPUC be mandated to carry out zero-based budgeting (Current, May 10, 2013). The Legislative Analyst Office was supportive but did not formally recommend that budgeting strategy for the commission. Fairly significant resources are needed to carry out zero-based budgets, which are uncommon among state agencies but not in industry. Some divisions of the California Department of Transportation are required to carry out zero-based budgeting. The Air Board\u2019s AB 32 program also initially was subject to zero-based budgeting. Many expect it to take the CPUC 18 months to overhaul its budget process. To date the process has involved taking the previous year\u2019s budget and making additions and\/or subtractions to staff and programs. \tThere was no agreement as to how much work zero-based budgeting entails. It would be carried out with the Department of Finance. \u201cIt is the strongest oversight over an agency,\u201d said the budget committee staff member. \u201cThey have to justify everything.\u201d Como expected it to be a good amount of work, but \u201cnot unreasonable\u201d to carry out the possible new mandate. That is because more than half the budget is staff and benefits. \u201cMost of the work will be tweaking the other half,\u201d he said, which includes complying with legislation and constitutional mandates. Because of ongoing legislative concerns over the commission\u2019s budget two more audits were recently approved, one by the Bureau of State Audits and another one by the Department of Finance, both of which are to be released next spring.