Over the past five years, Governor Gavin Newsom repeatedly proposed reductions to active transportation and transit funding. Legislators sometimes blocked those cuts, but over time programs such as the state’s Active Transportation Program (bicycle and pedestrian safety projects), Transit and Intercity Rail Capital Program (transit capital funding), and the state’s subsidies for transit operations have all been significantly shrunk from where they were in 2022.

But this year may see the biggest cuts. Changes to how the California Air Resources Board (CARB) collects funds through the state’s cap-and-trade (called Cap-and-Invest by Newsom) program created earlier this year will force larger cuts than any of those proposed in recent years.

In June, the CARB, whose board is almost exclusively appointed by the governor, looked to “strike a balance” between trying to combat global warming and the needs of polluters. With gas prices at record highs, due in large part to President Trump’s war in the Middle East, regulators bowed to political pressure to try and reduce the cost to drivers.

Cap-and-trade programs are supposed to allow polluters to purchase at auction the right to pollute a certain amount, with the money collected going to programs that reduce pollution. The new cap-and-trade rules for California’s program reduced the amount of revenue collected by billions of dollars anually, leading to reductions for transit operations and affordable housing construction throughout the state.

The coming cuts couldn’t come at a worse time. What little federal support for transit that was created during the pandemic expired last year, leaving agencies scrambling. Some parts of the state have funding measures on this year’s ballot to help continue operations, but the mess Newsom is making on his way out the door may cause agencies to make cuts even if these taxes pass.

2018-2019: A Positive Start Before the Pandemic

As Lt. governor running for governor in 2018, Newsom pledged to make California a leader in the fight against Climate Change. He got off to a good start.

His October 2019 executive order called for transportation investments to be aligned with California’s climate goals, reduce vehicle miles traveled and support walking, biking, and transit. Former Streetsblog California Editor Melanie Curry described it as a “potentially significant shift in state transportation policy.”

But while the order looked good on paper, Newsom balked at signing legislation that would have required it. He vetoed Senate Bill 127, a Complete Streets bill that would have required Caltrans to incorporate bicycle and pedestrian improvements into transportation projects. His veto message argued that the legislation was too prescriptive and potentially costly.

He also vetoed a bill altering the distribution of $200 million annually in Local Partnership Program funds that would have benefited bicycle and pedestrian projects.

In 2020, the focus was not on transportation reform as California, like the rest of the world, grappled with the pandemic and responding to social justice movements that included Black Lives Matter.

2021-2022: Growth When the Budget Was Strongest

Faced with a surprising budget surplus as the country began emerging from the pandemic, Newsom looked to burnish his credentials as a leader on Climate Change. In a reverse of what we’d see in his second term, the legislature held back Newsom’s ambitions.

Newsom proposed a one-time $500 million increase for the Active Transportation Program in the first draft of his budget. While those funds were much appreciated, the annual requests to this program, from municipalities, transit agencies, and counties, was often between $2.5 billion and $3 billion annually.

Newsom’s proposal also included substantial transportation investments elsewhere, including $2 billion for highways, $1 billion for rail and transit, $4.2 billion for high-speed rail and billions more for zero-emission vehicle subsidies and charging stations.

By September of 2021, the legislature and governor had reached an impasse over the release of voter-approved high-speed rail funds and the governor’s entire transportation package was thrown out. The $500 million for ATP and $2.5 billion for the Transit and Intercity Capital Rail Program were sent back to the General Fund.

2022 proved to be the crest of the wave for Newsom’s transit commitments. He initially proposed another $500 million ATP increase. In May the governor’s revision increased the proposal to $1 billion for ATP, $150 million for a new “Highways to Boulevards” program, and $100 million for bike and pedestrian safety.

Most interestingly, Newsom’s budget included $750 million for a free transit pilot program. While the idea of reducing the cost for riders is appreciated, advocates were more interested in establishing an ongoing fund to support transit operations than a one-time injection. This concern proved prescient.

However, it’s worth noting that Newsom called out free transit as a remedy for high gas prices.

“This package is also focused on protecting people from volatile gas prices, and advancing clean transportation – providing three months of free public transportation, fast-tracking electric vehicle incentives and charging stations, and new funding for local biking and walking projects,” Newsom said in a statement announcing the package.

2023-2024: When the Going Gets Tough…

California entered 2023 facing an estimated $22.5 billion budget shortfall after several years of extraordinary revenues. While cuts to the ATP program and transit wouldn’t fix that gap, Newsom looked to those budgets as a way to reduce it.

Newsom’s first budget proposed reducing the previous year’s one-time ATP by clawing back $500 million from the $1 billion ATP augmentation from 2022. The change disrupted a year’s planning that assumed the $1 billion allocation.

Streetsblog also reported that his proposal reduced future funding for the Transit and Intercity Rail Capital Program (TIRCP) by $2 billion.

One of the things that made the proposed cuts so frustrating for advocates is that Newsom clearly understood what impact those cuts would make, and the importance of the Transit and Intercity Rail program. At the same time he was trying to cut the program, he was celebrating new grants.

The legislature’s counterproposal restored the transit funding and included language to give transit agencies greater flexibility to use state capital funding for operations, which were facing an immediate crisis as federal pandemic aid began to expire. The legislature also rejected Newsom’s proposed ATP clawback preserving the $1.1 billion budget from the year before.

In 2024, the legislature wasn’t as successful stopping Newsom’s proposed cuts.

Newsom’s budget proposal increased his proposed ATP from the previous year to $600 million, leaving just $400 million.

That would have effectively ended the program for the next several years. Streetsblog calculated that the entire four-year ATP fund estimate was only about $568 million, meaning Newsom’s proposed cut was larger than the entire amount available for the upcoming cycle.

At an Assembly budget hearing, a Department of Finance representative explained that the state had previously used the State Highway Account to backfill ATP. The administration no longer wanted to do that because doing so could affect Caltrans’ highway work. Or as Curry put it in her headline: “Active Transportation Program Cut Because Administration Wants to Prioritize Highways.”

A compromise between legislative leaders and Newson was reached, but it still left ATP severely diminished. $168.7 million was left for the current ATP cycle, $400 million less than what was originally budgeted. These cuts were called “temporary” by the administration at the time.

And again, even as Newsom was slashing programs that reduced car-dependency, he was praising the programs and using them as an example of California investing in the future. In December of 2024, after spending most of the year decimating the program, Newsom was all smiles when announcing the ATP grants.

“California is making it easier and safer for everyone to bike and walk in their communities. We’re building healthier, more connected neighborhoods and cutting pollution at the same time,” he said in the grant announcement.

In brighter news, the legislature did reject a proposed $148 million cut to TIRCP.

2025-2026: From Bad to Worse

By 2025, the “temporary cuts” to the Active Transportation Program were beginning to look like a new baseline (2022/23: $600 million-ish level → 2024: $168.7 million → 2025: $200 million → 2026: $200 million), as there was no proposed increase from the previous year. Funding looked even more bleak for transit.

With expiring federal supports and ridership rising but not at pre-pandemic levels, agencies around the state warned they were heading for a “fiscal cliff” that would see major cuts to what service they could provide.

Newsom’s May budget revision proposed zero emergency funding for transit operations and cut $1.1 billion that transit agencies had expected from previous budget commitments. It also rejected more than $750 million in emergency assistance for Bay Area transit agencies.

The legislature again intervened. Led by Senators Scott Wiener (D-SF) and Jesse Arreguín (D-Berkeley), they pushed back hard as Newsom’s budget would have decimated transit in their districts.

The final budget restored the $1.1 billion for transit operations and promised a $750 million loan, not grant, to the destitute Bay Area agencies. 

Newsom ultimately approved the agreement…but then didn’t release funding for the loan. In February of this year, eight months after the budget deal, the state eventually released a $590 million loan to help agencies maintain service while ballot measures were drafted and (hopefully) approved this November to permanently fill the hole.

You might note that $590 million is less than $750 million. The reason for the reduced funding was never made clear.

The final budget left ATP with a $200 million allocation, matching 2024’s allocation, rather than restoring the $600 million level that had existed in 2022 and 2023. The previous year’s $400 million reduction is now the new normal.

Disaster 2026

Newsom’s proposed 2026 budget maintained a stagnant ATP (new normal of $200 million, less than 10% of what is requested) and failed to provide a long-term solution to transit’s operating problems. 

Then things got worse.

A June 2026 coalition letter to Newsom and legislative leaders warned that proposed changes to the Greenhouse Gas Reduction Fund, funded by cap-and-trade, could effectively defund the Transit and Intercity Rail Capital Program and Low Carbon Transit Operations Program through 2030. The letter noted that the programs were supposed to receive approximately $400 million and $200 million annually, respectively.

CARB went ahead with the changes anyway. While Newsom did not publicly take a stance on the CARB changes, as the person who appointed the board and the head of state he has been the target of advocates’ pleas for reversal and ire that the rule change ever happened.

In late June, Newsom issued an executive order aimed at speeding up transit project delivery in an attempt to change the conversation and mollify critics. The order was significant for policy and administration, but it did not include new funding for transit agencies. Advocates welcomed the reforms while warning that faster project delivery couldn’t substitute for reliable funding.

The last chance to either find new funding for transit or reverse CARB’s regulations ends in a couple of hours when the legislative session ends at midnight. There’s always a chance a future governor and future legislatures will work together to fix the mess Newsom left, but one of his last moves in office will be to defund transit.