The new federal transportation act (SAFETEA-LU), enacted in August 2005, will provide $23.4 billion in federal funds to California through 2009 for highways, transit, and transportation safety. This represents a 40 percent increase in federal funding each year for transportation over the previous federal program. In addition to increasing federal funding to the state, SAFETEA-LU presents opportunities for financing transportation through nontraditional funding sources and expediting project delivery. There are a number of issues for the Legislature to consider when implementing the act in California. We discuss these issues and make recommendations where further legislative actions are warranted.