California Budget a Win for Transportation

Jan. 12, 2022 – Armed with a revenue surplus, California Gov. Gavin Newsom proposed a generous state budget for the 2022-23 fiscal year, which begins on July 1, according to the California Construction and Industrial Materials Association (CalCIMA). The budget proposes $20 billion in funding for infrastructure, including $15 billion for transportation. This is above the $40 billion-plus over five years coming to California from the recently enacted federal Infrastructure Investment and Jobs Act (IIJA). The budget includes $9 billion for high-speed rail and other transportation modes. There is also $6 billion over 5 years to convert vehicles to zero-emissions. Other infrastructure allocations include $9 billion for affordable housing and $2 billion in new grants and credits to spur housing construction. The budget also proposes to reinstate business tax credits suspended during the pandemic and create a new $100 million/three year credit for green infrastructure investments. Due to the infusion of federal transportation funds and concerns about inflation, the budget proposes suspending the anticipated July 1 inflation adjustment for the SB 1 gas tax. The impact would be about $500 million less transportation revenue for the fiscal year, although the state would make up for the anticipated loss to state and local governments. The Legislature has until June 15 to adopt.