A state Senate subcommittee May 22 disapproved major portions of the governor's 2007-08 budget for administering California's new climate change law, AB 32. The panel cut proposed funds and activities on grounds that they were duplicative, conflicted with statutory requirements, or were poorly thought out. The Senate Budget and Fiscal Review subcommittee slashed $1.3 million out of the governor's request for the California Public Utilities Commission. The money would have funded new positions and consulting contracts related to developing climate change policies for the energy industry. The panel cut the proposed use of $65 million in bond proceeds from the governor's request for the Department of Water Resources to perform studies related to global warming. Instead, it ordered the department to study how to eliminate coal from its power purchases and improve efficiency in water use. The subcommittee blue penciled $466,000 in funds requested for the California Energy Commission to develop a low-carbon fuel standard on the grounds that the job belongs to the California Air Resources Board. The vote came after Energy Commission executive director B.B. Blevins advised the panel that the Energy Commission could make a unique contribution in developing the standard because of its expertise on California's transportation fuel distribution system. In a continued squabble with the governor over funding for the California Air Resources Board, the panel insisted that the air board develop "sustainable" funding for its AB 32 work (Circuit, May 18, 2007). Panel chair Alan Lowenthal (D-Long Beach) said the board should use its authority under AB 32 to levy fees on regulated businesses to fund its global warming work. The panel also voted to prohibit use of funds "for rulemaking development or adoption of market-based compliance mechanisms," such as a greenhouse gas cap-and-trade program. The prohibition would apply until the air board completes a "scoping plan" administering AB 32. Lowenthal called work on market mechanisms "premature." However, air board executive officer Catherine Witherspoon said the agency had to fully study market-based approaches to determine whether a cap-and-trade program should even be included in the scoping plan for carrying out the new law. The panel also cut $700,000 in proposed contract money for the California Environmental Protection Agency related to AB 32, as well as small amounts of funds proposed for climate change work at several other state agencies. Lowenthal acknowledged that the subcommittee actions on the AB 32 budget are subject to further discussions as a final budget is developed.