When Governor Newsom announced plans to eliminate key SB 125 promises and reauthorize the Cap-and-Trade program, transit funding certainty was thrown into disarray. Thanks to an intense campaign devised by Association advocates and carried out with unified support from members, key funds are once again safe from most cuts.
By Arianna Smith
Managing Editor
Transit California
After years of preparation and a legislative session full of intense lobbying activity, transit agencies finally have certainty about the continuity of funds from the SB 125 program and Cap-and-Trade.
As approved by the Legislature and the Governor earlier in September, the final funding agreement ensures that transit agencies can expect to receive funding from the Greenhouse Gas Reduction Fund (GGRF), key continuous appropriations to the Low Carbon Transit Operations Program (LCTOP) and the Transit Intercity Rail and Capital Program (TIRCP), all of which the Governor had previously proposed for renegotiations and funding eliminations. Transit agencies can also expect to receive previously-committed funds from TIRCP and Zero-Emission Transit Capital Program (ZETCP) that were threatened with proposed cuts.
“While this success largely represents the maintenance of the status quo on Cap-and-Invest Program investment in public transportation, this outcome was not pre-ordained,” said Michael Pimentel, Executive Director of the Association, in an update to members following the passage of the measures in the Legislature.
Here’s how Association advocates, key Association committees, and member agencies led the way to secure much-needed funding for the years to come.
What happened?
At the adjournment of the 2023-24 session, Association advocates were already preparing for Cap-and-Trade reauthorization discussions. The Association’s Cap-and-Trade subcommittee provided expertise and strategic guidance from the very start, even before Governor Newsom officially announced in May 2025 his intent to reauthorize the Cap-and-Trade program.
When Governor Newsom initially proposed to recast and reimagine the program as “Cap-and-Invest” in May 2025 with a reauthorization through 2045, Association member transit agencies had high hopes for a continuation of long-standing commitments, as well as new investments to public transit systems.
However, far from protecting or extending funding, the Governor and the Legislature remained silent on transit funding in the program, an impact that left unaddressed would have had devastating impacts to transit agency operations, maintenance, and infrastructure investments.
Transit agencies were further alarmed by the proposal to eliminate future continuous appropriations and previously-committed funds for the current fiscal year and the next two out-years. Specifically, the proposal eliminated future continuous appropriations to the Low Carbon Transit Operations Program (LCTOP) and the Transit Intercity Rail and Capital Program (TIRCP). The Governor also proposed to eliminate nearly $1 billion in already-committed transit funding to TIRCP for the current budget year and to the Zero-Emission Transit Capital Program (ZETCP) through 2028.
In short, the proposal represented a dramatic departure from the reliability of funding from the existing Cap-and-Trade program, as well as the previous commitments made in 2023 through SB 125. Already chronically underfunded transit agencies would have been at heightened risk for major cuts that would have seriously reduced their capacity to serve their riders and their communities.
Association leadership and membership descended on the Capitol with a consistent, simple drumbeat message of “no cuts”: in-person, following the Spring Legislative Conference; in the media, with timely and thoughtfully-placed op-eds from Association leadership; and on social media, with dozens of transit agency members amplifying how the proposed cuts would affect customers and communities.
The messaging worked: When the Legislature and the Governor struck the main budget agreement in mid-June, the Budget Act ultimately re-affirmed the appropriation of the remaining balance of the $5.1 billion in SB 125 program flexible transit capital and operations funding, as well as to one-time competitive TIRCP and to ZETCP.
However, the June budget agreement did not address questions about Cap-and-Trade reauthorization, which would govern long-term future continuous appropriations. Those decisions would not be finalized until the final week of the legislative session in September.
Association advocates, alongside transit agency members and stakeholder allies, weren’t going to wait: The team immediately launched an intense and strategic mobilization campaign to push back on harmful proposals to renegotiate GGRF funds or de-prioritize climate-safe infrastructure projects. The resulting Climate Safe Infrastructure Coalition (CSIC), which eventually included over forty stakeholder groups, hammered legislators and the Governor’s Administration with the message that any reauthorization needed to prioritize proven investments in infrastructure that would reduce greenhouse gas emissions.
CSIC members rallied at the Capitol, where Pimentel had a key speaking role before supporters and journalists. The coalition submitted a coalition letter to Governor Newsom, which called for a variety of continuous allocations to infrastructure projects and programs funded by or associated with TIRCP, High Speed Rail, the Low Carbon Transit Operations Program (LCTOP), and local infrastructure around Transit Oriented Development. The coalition also directly lobbied legislative leaders, launched a digital advocacy campaign, and placed op-eds in publications statewide, including one co-authored by Long Beach Transit President and CEO Kenneth McDonald.
Beyond group coalition work, the Association took action for its members with a direct, targeted, one-week advertising campaign that focused on reaching critical legislative districts and Capitol decisionmakers through video and digital ads on social media and digital Capitol publications. The messaging highlighted that public transit succeeds only with Cap-and-Trade funding, that climate safety depends on Cap-and-Trade investments in transit, and that local communities benefit from transit paid for by Cap-and-Trade. “Don’t derail California’s climate goals,” stated one ad. “Don’t cut funding that makes affordable fares and modern service possible,” urged another. Across all social media platforms and publications, the ads earned over a million impressions, over 300,000 video views, and over 2,000 link-clicks.
With guidance and lobbying materials from Association leadership, individual Association member agencies took up the call to action as well. Individuals who sit on key Association committees directly lobbied dozens of legislators and staff through an additional in-person lobby day and virtual meetings to advocate for the Association’s Cap-and-Trade priorities. Participating member agencies included the Los Angeles County Metropolitan Transportation Authority, Santa Clara Valley Transportation Authority, the Santa Barbara Metropolitan Transit District, San Francisco Bay Area Rapid Transit District, Orange County Transportation Authority, Caltrain, and San Francisco Municipal Transportation Agency. The message and materials reflected and reinforced the digital campaign.
Team and individual efforts paid off. Ultimately, most of the proposals to eliminate, cut, or renegotiate transit funding were scrapped and removed from the final Cap-and-Invest agreement.
By the time the Governor and the Legislature announced an agreement for Cap-and-Invest in mid-September 2025, the Association’s team had ensured that the legislation honored all existing one-time and ongoing commitments from the GGRF to transit programs through 2030 and maintains the current level of continuously appropriated funding to transit agencies through 2045. AB 1207 (Irwin) modified the Cap-and-Trade program itself, extending the program's market-based compliance mechanism through January 1, 2046, while the Cap-and-Trade Expenditure Plan was recast in SB 840 (Limon), resulting in the most substantial set of changes to expenditures since the Expenditure Plan was first adopted in 2014.
TIRCP and LCTOP will maintain their continuous appropriations, but with the current percentages converted to a dollar amount: $400 million annually for TIRCP and $200 million for LCTOP. The set numberreflects close to the high-water mark for funding . For more details about the funding agreement, see the Executive Director’s Funding Update email from Thursday, September 11).
Also of particular interest to transit agencies is a $1 billion fund that also includes $750 million of to-be-determined annual discretionary spending. Within that discretionary fund, $125 million has been set aside for transit passes in 2026-27; this funding was sought by then-Senator Monique Limón, who has since been elected to Senate President pro Tempore by her colleagues. The Association has already begun to engage with legislators and staff to help inform how the discretionary funds may get released, and for what purposes they can be used. At this time, there are no additional details on how the funds will be invested and how agencies can access it.
“Today, the Legislature delivered on a promise and sent a groundbreaking affordability, energy, and climate package to the Governor’s desk,” said then-Senate President pro Tempore Mike McGuire after the Legislature approved the agreement. “California is charting the future—cutting costs, building a stronger economy, protecting our climate progress, and proving our progress can’t be stopped.”
The Legislature passed the main budget bill and the trailer bills during the final week of the first year of the legislative session in mid-September, and on September 19, Governor Newsom signed into law the measures that included the revamped “Cap-and-Invest” program and its associated funding commitments and requirements.
Association leadership was asked to participate in the Governor’s signing ceremony in acknowledgment that transit agencies and allies were central to the evolution of the final Cap-and-Invest program.
“After months of hard work with the Legislature, we have agreed to historic reforms that will save money on your electric bills, stabilize gas supply, and slash toxic air pollution — all while fast-tracking California’s transition to a clean, green job-creating economy,” said Governor Newsom of the program.
“Public transportation delivers for the environment and economy by providing Californians with travel options that reduce emissions, relieve congestion, cut household expenses, and sustain middle class jobs,” said Pimentel in a statement following the signing ceremony. “By reauthorizing the Cap-and-Invest program and preserving the state's climate investments in building and operating our public transit systems, this bill package will ensure that communities across the state experience the benefits of California's nation-leading environmental policies. On behalf of the California Transit Association, I thank Governor Newsom, the Legislature, and their staffs for giving our Association a seat at the table, as we worked collectively to ensure these critical investments support California's public transit systems and our riders statewide."
What happens next?
Ultimately, future transit funding depends heavily on GGRF revenue proceeds because of the agreement’s changes in funding prioritization.
The legislation prioritizes at the first level over $2 billion annually, including $1 billion for high-speed rail, then $1 billion for Legislative discretionary priorities. Finally, the legislation moves to fund $2 billion-worth of TIRCP, LCTOP, Affordable Housing Sustainable Communities, and other programs. If Cap-and-Invest fails to raise enough money to fund all of these programs, the funds for the "Tier 3" programs will decrease proportionally. In other words, if Cap-and-Invest raises less than $4.2 billion, transit agencies can expect to receive less than $400 and $200 million for TIRCP and LCTOP.
Throughout the three months of intense negotiations, the Association made progress in protecting the levels of transit funding commitments. In the years ahead, the Association will focus on delivering future funding with certainty, and will encourage the Legislature to further insulate its investments in transit from possible market variability.
More information about the Cap-and-Invest agreement will be available at the Association’s 60th Annual Fall Conference and Expo, where California State Transportation Agency Secretary Toks Omishakin will speak about the development of the reauthorized program. We hope to see you there!