The 2025-26 California Spending Plan

Transportation

Overview

Budget Includes Roughly $31 Billion for Transportation. As shown in Figure 1, the budget package provides a total of $30.9 billion for transportation-related programs in 2025-26, including for the California Department of Transportation (Caltrans), California State Transportation Agency, local streets and roads (shared revenues), California Highway Patrol (CHP), Department of Motor Vehicles (DMV), and High-Speed Rail Authority (HSRA). This total reflects a net decrease of $4.5 billion (13 percent) compared to estimated 2024-25 expenditure levels. This year-to-year change is primarily due to large amounts of one-time funds from previous budget packages that were available for expenditure in the prior year, particularly from the General Fund. The 2025-26 total includes (1) several previously planned General Fund augmentations for transportation, including for the Port and Freight Infrastructure Program ($200 million), the Active Transportation Program ($100 million), grade separation projects ($75 million), and (2) support for transit and rail programs as described below.

In this post, we summarize some of the most notable components of transportation program budgets in the 2025-26 spending plan.

Reduces State Operations Funding for Transportation Departments. Under Control Sections 4.05 and 4.12, the 2024-25 budget directed the Department of Finance to identify efficiencies to reduce costs without adverse effects on state services. Specifically, Control Section 4.05 directed savings to be achieved through “operational efficiencies and other cost reduction measures including, but not limited to, reorganizations, eliminations of boards and commissions, rate changes, contract reductions, elimination of excess positions, and the cancellation or postponement of information technology projects.” The budget package reduces $117 million annually across transportation departments associated with Control Section 4.05 on an ongoing basis beginning in 2024-25, including $92 million from Caltrans, $12 million from DMV, and $11 million from CHP. Control Section 4.12 directed additional savings to be achieved by eliminating vacant positions and corresponding funding. The administration estimates savings from this section will total $51 million in transportation departments (nearly all from Caltrans) and proposes reducing authority for 828 transportation-related positions (including 621 at Caltrans and 200 at DMV). Most position and funding reductions pursuant to Control Section 4.12 are still pending additional legislative concurrence. All of the savings for transportation departments anticipated through Control Sections 4.05 and 4.12 would accrue to special funds, including the Motor Vehicle Account (MVA), State Highway Account, and Public Transportation Account. Please see the forthcoming “New and Ongoing Efforts to Achieve Efficiencies” section of our post, The 2025-26 California Spending Plan: Other Provisions, for more information on these reductions.

Addresses MVA Shortfall With Temporary Fund Shifts and Ongoing Expenditure Reductions. MVA is the primary funding source for CHP and DMV, and also provides some funding for the California Air Resources Board (CARB). Since 2021-22, annual expenditures from MVA have exceeded the account’s annual revenues, resulting in a structural imbalance and leaving it with insufficient funds to cover existing activities. To maintain a positive MVA balance in 2025-26, the budget package transfers funds into the account totaling $166 million on a one-time basis from two other state accounts: (1) $85 million from the Air Pollution Control Fund and (2) $81 million from the Greenhouse Gas Reduction Fund (GGRF). These transfers are intended to fully offset the estimated amount that MVA annually provides to support CARB’s Mobile Source Program. Given the temporary nature of these transfers, MVA is projected to have a recurring—and growing—shortfall in future years.

Additionally, the administration indicates that it is reducing MVA-supported programs through Control Sections 4.05 and 4.12 by a total of $36 million annually in 2025-26 and ongoing. Absent these reductions, the existing and projected MVA operating shortfall would be larger.

Support for Transit

Sustains Previous Augmentations for Transit and Rail in 2025-26. Recent budget packages planned for significant multiyear augmentations from the General Fund and various special funds to support transit and rail operations and infrastructure. (This funding was part of broader multiyear packages focused on improving transportation infrastructure and supply chains, as well as a few other one-time augmentations.) To address General Fund shortfalls, the 2023-24 and 2024-25 budgets made some modifications to transit and rail funding plans. While these changes did not include reductions, they provided budget relief through fund shifts, delays, and cash flow adjustments.

The budget sustains the amounts previously agreed to for transit and rail programs in 2025-26. As shown in Figure 2, this includes a total of $1.6 billion ($1.2 billion from the General Fund and $368 million from GGRF) to support formula and competitive funding provided through the Transit and Intercity Rail Capital Program (TIRCP).

Some Uncertainty Around Out-Year Funding. As highlighted in the figure, prior budget agreements also planned to provide a total of $668 million in 2026-27 and $1.1 billion in 2027-28 for competitive TIRCP and the Zero-Emission Transit Capital Program through a combination of General Fund ($418 million in 2026-27 and $611 million in 2027-28) and GGRF ($250 million in 2026-27 and $460 million in 2027-28). In contrast to recent budget agreements, however, the 2025-26 agreement does not include a specific multiyear discretionary GGRF expenditure plan. Instead, legislation enacted through the policy process—Chapter 121 of 2025 (SB 840, Limón)—reserves at least $1 billion from GGRF for the Legislature to appropriate for any purpose, with final amounts depending on the magnitude of cap-and-invest program auction revenues in a given year. Additionally, the General Fund is projected to face multibillion-dollar operating shortfalls in the coming years.

We note that the administration has already awarded all of the funding for competitive TIRCP to specific projects—including out-year amounts. Cash flow adjustments from prior budget packages reverted previously awarded funds, with the intent to reappropriate those dollars in future years for the same projects when awardees are expected to need construction funding.

Requires Administration to Examine Options to Provide Short-Term Financial Assistance to Specific Transit Agencies. Chapter 104 of 2025 (SB 105, Wiener) requires the Department of Finance (DOF)—in consultation with the California State Transportation Agency—to examine loans or other financing options that could be used to provide short-term financial assistance to certain transit agencies: San Francisco Bay Area Rapid Transit District, San Francisco Municipal Transportation Agency, Peninsula Corridor Joint Powers Board, and Alameda-Contra Costa Transit District. (Earlier budget language—Chapter 5 of 2025 [AB 102, Gabriel] had authorized DOF to provide a $750 million loan to these agencies contingent on subsequent legislation, which was never enacted.) Chapter 104 requires DOF to complete this examination by January 10, 2026, and to include any proposal it develops in the Governor’s January 2026-27 budget. The budget language also directs any loan or other financing options developed to (1) ensure full repayment with an agreed-upon interest rate, (2) follow a clearly defined repayment schedule, and (3) include a guaranteed mechanism to secure repayment from a reliable and predictable revenue source.

Modifies GGRF Amounts for Transit and Rail Programs and Expresses Intent to Fund Transit Passes in 2026-27. Senate Bill 840 adds new statutory language that modifies the annual continuous appropriations from GGRF for TIRCP and the Low Carbon Transit Operations Program (LCTOP). Starting in 2026-27, the legislation establishes fixed annual amounts of $400 million for TIRCP and $200 million for LCTOP. (To the extent that GGRF revenues are insufficient to fully cover the statutory amounts designated for continuous appropriations, funding for TIRCP, LCTOP, and other specified programs will be reduced proportionally.) These changes will replace existing statutory provisions that provide 10 percent and 5 percent of annual GGRF revenues to TIRCP and LCTOP, respectively. Senate Bill 840 also includes legislative intent language to use $125 million from GGRF in 2026-27 for the state to provide transit passes.

Caltrans

The budget provides $16.1 billion to support Caltrans in 2025-26. This reflects a $719 million (5 percent) increase when compared to the estimated 2024-25 expenditure level. This increase largely reflects an anticipated growth in the number of capital projects scheduled for 2025-26.

Clean California Community Cleanup and Employment Pathways Grant Program. The budget provides $25 million on a one-time basis from the General Fund to establish the Clean California Community Cleanup and Employment Pathways Grant Program. The program will offer competitive grants to local governments and federally recognized tribal governments for litter abatement efforts, with a particular focus on projects that create employment pathways. This new program falls under Clean California, a statewide program administered by Caltrans that supports state and local litter abatement and beautification efforts. Before this augmentation, Clean California had received a total of $1.2 billion from the General Fund through previous budget packages

Funding and Budget Trailer Legislation Related to the 2028 Olympic and Paralympic Games in Los Angeles. Budget trailer legislation—Chapter 16 of 2025 (SB 128, Committee on Budget and Fiscal Review)—authorizes Caltrans and local agencies to create a “Games Route Network.” This will be a temporary network of designated highway lanes that provide exclusive or priority access to vehicles serving the 2028 Olympic and Paralympic Games in Los Angeles. The budget also provides Caltrans with $17.6 million on a one-time basis from the State Highway Account for the Games Route Network and other related highway improvements. Additionally, SB 128 appropriates $1,000 from the State Highway Account for Caltrans to fund capital projects that support the Games Route Network. The legislation authorizes DOF to augment this amount by up to $20 million. All augmentations shall be authorized no sooner than 30 days after written notification to the Joint Legislative Budget Committee.

Budget Does Not Include Previously Planned GGRF for Highways to Boulevards Pilot Program. Prior budgets provided $150 million from the General Fund to establish the Highways to Boulevards Pilot Program, which funds projects that plan for and implement the conversion of underutilized highways into multimodal corridors. To address General Fund shortfalls, the 2024-25 budget both reduced and adjusted the timing of awarded funding, instead planning to provide $25 million in 2025-26 and $50 million in 2026-27, all from GGRF. However, the 2025-26 budget does not include funding for this program. Additionally, as discussed above related to competitive TIRCP and the Zero-Emission Transit Capital Program, out-year funding for previous GGRF commitments is somewhat uncertain. (We note that the administration has already awarded the full $75 million for the Highways to Boulevards Pilot Program to specific projects.)

California Highway Patrol

The budget provides $3.33 billion for CHP in 2025-26, which represents a slight increase ($20 million, or less than 1 percent) relative to 2024-25. Augmentations within CHP’s 2025-26 budget include:

• Capitol Security. The budget provides $8 million on a one-time basis from MVA to cover overtime costs associated with providing protection and security at the State Capitol Complex.

• Child Sexual Abuse Investigations. The budget includes $5 million in ongoing General Fund and 12 new positions to expand the existing Computer Crimes Investigation Unit and augment work combatting child sexual abuse material and human trafficking throughout the state.

• Highway Violence Task Force. The budget provides $4.9 million from MVA on a one-time basis to provide an additional year of support for a targeted effort to address violence on the state’s highways. The activities of this task force were initially funded for a three-year term beginning in 2022-23.

• Capital Outlay Infrastructure Replacement Projects. As summarized in the Statewide Infrastructure section of our post, The 2025-26 California Spending Plan: Other Provisions, the budget package includes a total of $10.1 million for various phases of eight CHP capital outlay projects—replacing seven offices and one radio communications tower. Of this total, $7.8 million is from the General Fund and $2.3 million is supported by the Public Buildings Construction Fund (lease revenue bonds that will eventually need to be paid back with interest).

Department of Motor Vehicles

The budget provides $1.46 billion for DMV in 2025-26, which is slightly less ($26 million) than the estimated 2024-25 expenditure level.

Digital eXperience Platform (DXP) Project. New spending includes $53.1 million from MVA on a one-time basis and 90 temporary positions to complete the vehicle registration phase of the DXP information technology (IT) project. This large project also received one-time funding allocations in 2024-25 and prior years, and will need subsequent appropriations to complete forthcoming phases. Additionally, because the costs of DMV’s IT modernization efforts have exceeded initial projections, budget trailer legislation extended the sunset date for a Business Partner Automation system improvement fee from December 31, 2023 to December 31, 2028. This authorizes the state to resume charging a $1 per-transaction fee on business partners who process vehicle registrations through DMV, with the revenue directed to help support the costs of the DXP project. The fee was first authorized in 2018 and DMV estimates it currently raises about $6.8 million annually.

Other Augmentations. The budget also includes (1) $10 million from MVA on a one-time basis to design and develop a State-to-State Verification System pursuant to federal requirements, with a provision that the system shall not be activated to transmit or share data unless specifically authorized by statute prior to July 1, 2026; (2) $4.9 million in 2025-26 (and $3.5 million in 2026-27 and ongoing) from the Truck Emission Check Fund and 19.4 permanent positions to support post-implementation IT enhancements and ongoing workload activities associated with Chapter 298 of 2019 (SB 210, Leyva); and (3) $2 million in ongoing General Fund to continue implementation of the Motor Voter Program.

High-Speed Rail Authority

The budget provides a total of $798 million for HSRA in 2025-26, mostly from GGRF. While this is a net reduction from the estimated 2025-26 expenditure level, actual expenditures in 2025-26 could be notably higher or lower than budgeted. This is because the project has access to resources—such as GGRF funds that remain unspent from prior years—that far exceed the budgeted amount.

Extension and Modification of Funding From GGRF. Under SB 840, starting in 2026-27, HSRA will receive $1 billion annually from GGRF rather than the 25 percent of revenues it receives under current law.