It’s Time to Clean the California Transportation Budget

California's leaders must prioritize safe, equitable, zero-emissions mobility choices in this year's state budget. Here's how.


Costanza Hevia for NRDC

California finds itself at a difficult crossroads this budget season, with one path regressing toward the polluting status quo and the other driving progress toward aligning the State’s transportation spending with its climate priorities.

Unfortunately, the state is facing a $25 billion deficit this year, but the Governor’s recently released budget proposal would steer the state in the wrong direction on transportation funding, imposing significant cuts to clean transportation investments critical to putting the State on a path to achieving its ambitious climate goals by 2030. The Legislature now has the responsibility to carefully consider how it will make clean transportation investments that deliver public health, climate, and jobs benefits to communities throughout the state.

Transportation remains the largest source of climate pollution in California, and pollution from the sector has stubbornly resisted the State’s efforts to reverse course toward a clean transportation future. This is true in spite of the State’s national leadership in setting zero-emission vehicle (ZEV) standards, selling electric vehicles, and the passage of multiple statewide policy reforms designed to align land use and transportation decisions with the State’s pollution-reduction goals. As much leadership as the State has showed, pollution data clearly indicate that continued, deeper, and more comprehensive action is required. The budget process presents a critical opportunity for State leaders to put their money where their mouths are.

A critical investment gap remains in the State’s transition to zero-emissions vehicles

California failed to pass Proposition 30 in 2022, which would have invested $100 billion over the next twenty years to fight and prevent catastrophic wildfires, expand electric vehicle charging infrastructure, and help all Californians access electric vehicles. This setback to the State’s zero-emission vehicle (ZEV) goals—to the tune of $3 billion annually—puts added pressure on the budget process.

Over the past two years, the California Legislature approved more than $10 billion in investments for zero-emission vehicles and infrastructure—described by the Governor’s office as “ZEV investments with a focus on communities that are the most affected”—which this year’s proposed budget would cut by at least $1.1 billion. This budget line item should be going up, not down, especially for programs that prioritize investment in most-impacted communities who stand to benefit most from State rebates and subsidies. While most of these guaranteed cuts will be realized in the 2023-2024 budget year, there is no guarantee that ZEV investments in future budget years will be fully preserved, and that the $10 billion ZEV package will not be further reduced.

These cuts highlight the need for a permanent funding stream for clean transportation to shield these critical programs from destabilizing boom and bust funding cycles. The Governor and members of the legislature have expressed interest in reauthorizing AB 118 revenues streams which would provide more long term stability, but additional guardrails are needed to ensure the benefits of those programs are directed to low-income and disadvantaged communities.

Rather than cutting successful, proven programs, the state should, at minimum, maintain funding for public transit, as well as identify opportunities for new investments, such as community carsharing programs, on-demand microtransit, school transportation, e-bike incentives, and other community- and climate-friendly projects.

California’s transportation policy progress is overshadowed by continued investments in more driving, worse traffic

California’s transportation investments should be guided by the State’s commitments to cleaning our air, advancing equity, creating high-road jobs, and improving safety for all travelers—whether in cars or on foot or bike. Instead, the State has continued to allocate too much of its transportation budget to widening existing roads or dividing communities and ecosystems by building new highways. The California Air Resources Board’s 2022 plan for reaching our State’s climate goals identified reducing per-capita driving 25 percent by 2030 as “indispensable,” but status quo transportation investments are increasing driving and traffic, moving the state in the wrong direction.

Years of research has shown that so-called “highway capacity” projects not only fail to reduce traffic congestion—as Caltrans has acknowledged—but create fewer jobs than other transportation investments (national research suggests that transit projects generate 70 percent more jobs per dollar spent than highway capacity projects, on average). Highway investments have also displaced thousands of people, especially low-income communities of color; and they encourage sprawl that aggravates traffic and undermines the State’s ecosystem preservation goals.

California’s transportation agencies have taken promising steps in the right direction, but these must be complemented by leadership from the State’s elected leaders to align budget priorities with administrative policy. Caltrans and its partner agencies are in the early stages of implementing the Climate Action Plan for Transportation Infrastructure (CAPTI), but administrative action alone is insufficient to the scale of this challenge. And while the State has made some progress on CAPTI implementation, we won’t know how successful those efforts have been until updated funding guidelines go into effect in the coming year and beyond—which makes the budget process a critical barometer for how committed our leaders are to clean, community-centered transportation investments.

California must prioritize federal infrastructure dollars to invest in climate progress

More than $7 billion in federal ‘formula’ funding anticipated to arrive in the State in the coming budget year provides a historic boost to California’s transportation budget (and more than $40 billion through 2026, courtesy of the bipartisan infrastructure law—not including billions more from competitive grant programs. The Federal Highways Administration has issued clear guidance encouraging states to invest in community-centered projects that reduce pollution, improve safety, repair past harms via federal Justice 40 goals, and prioritize maintenance over expansion.

California leaders can answer this call for climate leadership, or continue with business as usual. Governor Newsom’s office recently issued a press release announcing $2.5 billion in much-needed state funding awards to support public transit infrastructure projects in California. Yet in the Governor’s draft budget released only two weeks prior, his administration proposed cutting the same program’s budget in half in the coming fiscal year. Now is the time to scale up investments in community-centered clean transportation infrastructure—not to walk back the State’s commitments to climate leadership.

There’s a clear mechanism for doing so, in which the State is already well-versed—flexing more highway funding to public transit projects. California is already a leading state in this practice but must do more to prioritize public transit and grow its national leadership in this important practice. State leaders should work with metropolitan planning organizations to put our State on a path toward responding to the National Campaign for Transit Justice’s call for 50 percent of federal transportation spending to support public transit, starting with flexing 20 percent of eligible funds.


Constanza Hevia for NRDC

Even if the State commits to continued public transit infrastructure investments, the benefits of those investments are threatened by a looming fiscal cliff in transit operations funding—funding used to pay bus and train operator salaries, for example. All of the public transit infrastructure in the world is useless if California’s transit agencies cannot afford to pay drivers to provide the service they’ve promised to transit riders across the state—service that is necessary for the State to reach its climate goals.

A clear path forward to clean transportation investments

Fortunately—even in a down budget year—California does not have to slow its clean transportation progress. Indeed, the Governor has proposed to increase the overall State transportation budget in the coming fiscal year, including a more than $5 billion increase for Caltrans and an infusion of $466 million in new general fund dollars for transportation.

The state’s elected leaders must work with relevant transportation agencies and budget stakeholders to reprioritize the final budget to align with the State’s clean transportation priorities. Accomplishing this will require action on multiple fronts, all rooted in shifting the State’s transportation budget away from traffic inducing projects and the State Highway Account, and toward community-centered clean transportation investments. Shifting funds from the State Highway Account was noted as an opportunity to increase funding for clean transportation priorities just this past week in a report on “Proposed Budget Solutions in Transportation Programs”  from the State’s Legislative Analyst’s Office—which also notes that this is possible without reducing year-over-year funding for critical maintenance and repair throughout the state highway system.

With the Governor’s proposed budget now in the hands of the State Legislature for consideration, the budget leaders in the Senate and Assembly should prioritize:

  • Committing the State to spend federal formula highway funds on transit, bike, walk, and EV charging infrastructure, reallocating funds from the State Highway Account and highway capacity projects and flexing 20 percent of eligible federal highway funding to support transit projects. These shifts are critical to preserve year-over-year funding levels for the Active Transportation Program, Transit and Intercity Rail Capital Program, and key ZEV programs. The State should then go further to increase funding to programs that support community-centered clean transportation investments. This will enable the State to improve mobility choices in communities of all shapes and sizes—installing EV charging throughout the state, expanding vanpool service, investing in small town main streets, and making transformative public transit investments in California’s major metropolitan areas.
  • Taking concrete steps to prioritize community-centered transportation investments in most-impacted communities, especially low-income communities of color and other hard-to-reach communities. Critically, the State must distinguish between merely investing in projects in these communities, and designing projects with these most-impacted communities to align with those communities’ priorities and needs.
  • Identifying long-term funding solutions to stably resource proven, community-centered ZEV programs and increase State funding support for public transit operations. Directing agency staff to find flexible State funding sources to increase operations funding support to public transit agencies across the state. This is necessary to address the looming fiscal cliff for public transit agencies, with a complementary opportunity to equitably invest in a new generation of public transit users by funding a statewide program to subsidize student transit passes.

This budget cycle presents an opportunity for State leaders to send a clear signal that clean transportation is a priority for California. This overdue shift from highway boondoggles to clean mobility choices will make California’s transportation system cleaner, safer, and more equitable, creating more good jobs in the process. A status quo approach is certain to increase pollution, while changing course would give California a fighting chance to finally start delivering on its promise to reduce climate pollution in the transportation sector.

State leaders must choose to lead in this year’s budget process to give California a chance to deliver on the promise of clean transportation. The alternative of continuing with the status quo would qualify as a classic definition of insanity—doing the same thing over and over again, and expecting different results. 

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