Governor Newsom Releases FY 2023-24 May Revise, Includes Acknowledgement of Transit Operations Funding Crisis
This morning, Governor Newsom released his Fiscal Year 2023-24 May Revise to the proposed budget based on the latest revised economic forecasts available to the Governor and his Department of Finance.
In January, Governor Newsom's fiscally conservative proposed budget identified a $30 billion deficit, which he presented could be reduced to $22.5 billion deficit if certain budget actions were taken, including acting on the several reductions proposed in the January Budget. These reductions included, among other things, $2 billion from the Transit and Intercity Rail Capital Program (TIRCP), postponing the grade separation program, and zeroing out the amount of General Fund money and replacing it with other fund sources (Cap and Trade, State Highway Account) for zero-emission vehicle and other programs (ATP, Climate Adaptation).
The Governor's revised budget projects an increased deficit of $31.5 billion. Though Governor Newsom does not commit to any additional investments in transportation programs, the May Revise also does not project any additional reductions in transportation investments proposed in the January Budget. Rather, it maintains the reductions and investments proposed in the Governor's proposed January Budget - a total of $2.7 billion in reductions and $12.8 billion in transportation investments. This includes the proposed $2 billion reduction to the TIRCP.
Importantly, in regard to transit operations funding, the May Revise states, "while the state's transit agencies have benefitted from large infusions of capital dollars, both state and federal, post-pandemic ridership trends have resulted in significant operating challenges for many of the state's transit agencies, particularly as federal relief dollars begin to run out. The Administration welcomes discussion with the Legislature on potential near- and long-term solutions to support the viability of transit across the state." That said, the May Revise does not outline any projected investments to address the transit operations funding problem.
The May Revise includes an update to the State Transit Assistance (STA) program projections. STA will see revenues of about $1.09 billion in FY 2023-24, a $30 million increase over the January Budget estimate and a $50 million decrease over the final FY 2022-23 projection of $1.14 billion. We would like to note that these STA estimates are historic, considering the STA received $830 million in FY 2021-22 and has never crossed the $1 billion threshold.
A detailed breakdown of the revenue totals can be found in the table below. 
Last month, the Association submitted to Governor Newsom and Legislative leaders our transit operations budget request letter. In it, we request $5.15 billion from FY 2023-24 to 2027-28 to sustain transit operations as many agencies statewide face a fiscal cliff. For additional details on the contents of our budget request, you can access the Association's letter here. We are appreciative of the Governor and his Administration for calling attention to the transit operations funding crisis and we look forward to continuing conversations with them and the Legislature to negotiate operations funding to support public transit.
For questions about this Funding Update, please contact Executive Director Michael Pimentel (michael@caltransit.org).