Governor Newsom and Legislative Leaders Agree on Historic Transportation Investments
By Jacob Herson
Managing Editor
Transit California
On June 30, Governor Gavin Newsom signed a raft of legislation, comprising the 2022-2023 State Budget. The final $300 billion spending plan reflects a $97 billion budget surplus and followed months of legislative budget hearings, direct engagement from stakeholders statewide, including the California Transit Association and our members, and negotiations between Governor Newsom, Senate President pro Tempore Toni G. Atkins and Assembly Speaker Anthony Rendon. Among the most exciting elements of the state budget, which tackles inflation, homelessness, healthcare, and climate change, is a historic transportation package. The transportation funding package represents one of the largest one-time investments in clean transportation in the state’s history and was years in the making. Core tenets of the package were first introduced by Governor Newsom in 2021 for inclusion in the 2021-2022 State Budget, and subsequently became the subject of intense negotiations between Governor Newsom and legislative leaders last year. Those negotiations ultimately ended without an agreement, depriving transportation projects of an infusion of new funding intended to leverage increased federal funding from the Bipartisan Infrastructure Investment and Jobs Act; however, those conversations seeded the resolve, legislative interest, and public and stakeholder pressure necessary to secure this year’s success.
At the center of the transportation funding package is nearly $8 billion for public transportation and rail projects statewide, which will flow through familiar programs, including the California State Transportation Agency’s Transit and Intercity Rail Capital Program. To understand why these investments were prioritized in the budget and what they will mean for our state, Transit California met with key state leaders.
Below, we highlight their observations.
State Leader Perspectives
“Public transportation in California is essential to a sustainable, safer, more connected and more equitable transportation future,” said California State Transportation Secretary Toks Omishakin. “Under Governor Gavin Newsom’s leadership, the state is investing a historic level of transportation funding to further the state’s ambitious climate goals, create jobs, expand access to transportation, make key safety improvements and reconnect communities. Alongside massive investments in infrastructure zero-emission vehicles, the Governor and Legislature included $7.65 billion in the budget to improve and expand public transportation throughout California while positioning the state to strongly compete for significant new federal funding. This state funding more than doubles the $6.6 billion spent since 2015 on transformative transit and intercity rail capital projects that cut pollution from the transportation sector with faster, more frequent, more affordable and more reliable transit service that increases ridership and reduces our dependence on driving.”
Assembly Speaker Rendon commented: “I think there are two key factors when making state transportation investments. We want to provide quality employment for Californians, and we want to minimize adverse environmental impacts from moving people. Transit tends to answer both those demands. For example, the LOSSAN line will link two population centers in environmentally friendly ways. We allocated an amount specifically for transit project funding in Northern and Southern California that approaches the level of our allocation for high-speed rail.
“We appropriated the remaining Prop 1A funds for high-speed rail. Ultimately, we hope this is something that provides a rapid conduit between work centers and housing in an environmentally responsible way. We made sure to strengthen the project with oversight to make the dollars go farther. And when we talk about adverse environmental impacts, we are increasingly talking about climate change adaptation. We put in $300 million for rail lines that have to be adapted to account for sea level rise.”
Senate Budget Subcommittee 5 Chair Maria Elena Durazo commented: “I am proud of this historic $14.8 billion investment into California’s transportation infrastructure, which will improve the state’s roads and highways, fund public transportation to meet the mobility needs of communities who need it most, electric vehicle adoption, and help meet our state’s long-term climate, equity, and air quality goals. This budget will not only extend the state’s transit networks, it will also improve transit opportunities for everyone while strengthening our commitment to quality apprenticeship and training programs, uplifting communities, supporting local economies, and creating high-quality jobs across the state.”
Assembly Budget Chair Phil Ting commented: “California prioritized transportation in the latest state budget with historic funding. We aim to have a more connected and equitable transportation system. And with the climate crisis worsening, we are doing more to get residents out of their gas-powered vehicles. $7.6 billion is slated for public transit and inner-city rail projects over three years, and another $1 billion will expand safe walking and biking options. These investments will be great for our health and environment. I’m also excited about the good paying jobs these projects will bring.”
Transit Budget Breakdown
As previously shared by the Association’s advocacy team, investments in the funding package that benefit public transit or clean transportation projects include the following:
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$3.65 billion (AB 180, Item 0521-131-0001) starting in FY 2021-22 for transit capital projects to be administered through the Transit and Intercity Rail Capital Program.
a. Of this total, $300 million is dedicated to project development activities related to rail realignment capital projects for high-priority intercity rail projects located primarily in the coastal zone, identified in the State Rail Plan as being at risk of sea-level rise, and designated as a Strategic Rail Corridor Network by the United States Department of Defense and Federal Railroad Administration.
b. Of this total, $1.8315 billion is dedicated to high-priority transit projects in Southern California, geographically inclusive of the counties of Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura.
No less than $900 million of the $1.8315 billion shall be administered as a General Fund set-aside for an "Existing TIRCP Projects Leveraging Federal & Local Funds Reserve" and shall be available for multi- year grants to support the delivery of capital projects that have previously received grants from the Transit and Intercity Rail Capital Program and that can demonstrate that a supplemental state grant would leverage or maintain an identified source of significant local or federal investment, including through the federal Capital Investment Grant Program, Expedited Project Delivery Program, or other such federal funding source.
c. Of this total, $1.4985 billion is dedicated to other geographical areas not listed above for high-priority transit and rail infrastructure projects.
No less than $900 million of the $1.4985 billion shall be administered as a General Fund set-aside for an "Existing TIRCP Projects Leveraging Federal & Local Funds Reserve" and shall be available for multi- year grants to support the delivery of capital projects that have previously received grants from the Transit and Intercity Rail Capital Program and that can demonstrate that a supplemental state grant would leverage or maintain an identified source of significant local or federal investment, including through the federal Capital Investment Grant Program, Expedited Project Delivery Program, or other such federal funding source.
d. Of the total allocated under 1b and 1c, up to $150 million shall be administered as a General Fund set-aside for a "Major Projects Project Development Reserve" and shall be available for multi-year grants to support the delivery of capital projects and programs of projects that have entered or have applied to enter federal project development processes for at least a portion of the project or program of projects, and that expect to receive federal funding in the future once complete with project development.
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$4 billion (SB 198 Section 15) in FYs 2023-24 and 2024-25 for transit capital projects statewide, allocated via population-based formula.
a. Of this total $2 billion shall be available for each fiscal year, for the 2023-24 and 2024-25 fiscal years for transit and intercity rail capital projects. Each recipient of funding described in subdivision (a) of Section 99313 of the Public Utilities Code will receive a minimum allocation of three hundred thousand dollars ($300,000) from Transit and Intercity Rail Capital Program funds described in this section, with the balance of the Transit and Intercity Rail Capital Program funds described in this section allocated on a population-based formula to each recipient of funding described in subdivision (a) of Section 99313 of the Public Utilities Code. It is the intent of the Legislature that these funds will be used consistent with the uses identified Item 0521-131-0001 of Section 2.00 of the Budget Act of 2021.
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$1.049 billion (AB 180, Items 2660-101-0001 and 2660-102-0001) starting in FY 2021-22 for the Active Transportation Program.
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$198 million (AB 180, Item 2660-102-0001) starting in FY 2021-22 for local climate adaptation projects. The criteria for the program is contained in Section 3 of SB 198.
a. Of this total, $148 million shall be allocated through the Local Transportation Infrastructure Climate Adaptation Project program. These funds shall be administered by the California Transportation Commission for purposes of development and implementing projects adapting local transportation infrastructure to climate change.
b. Of this total, $50 million shall be allocated through the Transportation Infrastructure Climate Adaptation Strategy Grant program. These funds shall be available for competitive grants awarded and administered by the California Department of Transportation to local agencies to identify transportation-related climate vulnerabilities through the development of climate adaptation plans and to identify ways to incorporate transportation climate adaptation needs into existing transportation plans.
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$350 million (AB 180, Items 0521-131-0001 and 2660-102-0001) starting in FY 2021-22 for grade separation projects.
As the Association has flagged throughout the budget process, the allocation of these dollars would only proceed if the Legislature and the Administration reached an agreement on funding for the California high-speed rail project. Importantly, the transportation funding package includes the appropriation of $4.2 billion (AB 180, Item 2665-301-6043) for the project from Proposition 1A and also includes a number of oversight provisions, including the creation of an Inspector General, for the project (contained in the transportation trailer bill - SB 198).
Separate from these investments, the budget agreement provides $3.53 billion in FY 2022-23 for zero-emission vehicle deployment and charging/refueling infrastructure.
Of this total, $100 million is earmarked for zero-emission transit buses and supporting infrastructure (SB 178 (Skinner), Item 3900-101-0001; SB 154 (Skinner), Item 3360-101- 0001); $600 million may be available to transit agencies through the California Air Resources Board's Clean Trucks, Buses, and Off-Road Equipment Program, which funds HVIP, advanced technology demonstrations, and pilot commercial deployment projects (SB 178, Item 3900-101-3228). Additionally, of this total $1.12 billion will be subject to future legislative negotiations, with the potential to support zero-emission transit projects. The remaining balance of funds support the transition to zero-emission technologies for school buses, drayage trucks, and low-income Californians (SB 178, Section 232; AB 180, Section 47).
Additionally, AB 194 (Committee on Budget), the Revenue and Taxation trailer bill, institutes a partial sales and use tax exemption for diesel fuel from October 1, 2022 to October 1, 2023, impacting only revenues collected by the State and deposited into the General Fund. The partial sales and use tax exemption would not impact revenues that support transportation programs.
“This agreement is truly historic, as it commits approximately $8 billion to public transit and rail projects statewide and hundreds of millions of dollars to support the transition to zero-emission technologies for our industry,” said Michael Pimentel, Executive Director of the California Transit Association. “This strong show of support for public transportation by state leaders owes much to the work of our member agencies who submitted letters, met with legislators, and presented before budget committees to emphasize the importance of directing a portion of the state's budget surplus to reinventing our transportation network.
“On behalf of the California Transit Association, I thank Governor Newsom and the legislative and budgetary leaders in both houses for finding common ground to move the budget agreement forward and for prioritizing new investments for public transit in the agreement.”