The 2017-18 Budget

Overview of the Governor’s Transportation Budget

California’s transportation programs support the state’s highway system, local roads, transit systems, the state’s planned high-speed rail project, and the enforcement and administration of traffic laws. The state’s major transportation departments and programs include the California Department of Transportation (Caltrans), High-Speed Rail Authority (HSRA), California Highway Patrol (CHP), Department of Motor Vehicles (DMV), funding for local streets and roads, and State Transit Assistance (STA). The California State Transportation Agency has jurisdiction over most of the state’s transportation departments and programs.

Total Proposed Spending of Roughly $20 Billion in 2017‑18. The Governor’s budget for 2017‑18 proposes a total of $20.2 billion in expenditures from various fund sources—the General Fund, state special funds, bond funds, federal funds, and reimbursements—for the state’s various transportation departments and programs. This is an increase of $2.2 billion, or 12 percent, over estimated expenditures for the current year. This reflects increased spending resulting from a transportation infrastructure funding package proposed by the Governor, as well as higher transportation debt service costs.

Transportation Funding Package. Except for a few key differences, the funding package reflected in the Governor’s budget for 2017‑18 is generally similar to the package proposed by the Governor in the fall of 2015 as part of a special session on transportation funding. Revenue from the proposed funding package would phase in during 2017‑18 and 2018‑19 and provide a permanent ongoing increase thereafter. The budget estimates that the package will generate an average of $4.2 billion annually over the next ten years, primarily from a new $65 vehicle registration tax and increasing gasoline and diesel excise taxes and indexing the rates for inflation. The Governor proposes to spend this funding on a mix of transportation priorities, including highway rehabilitation, local roads, and transit, among others.

Spending by Major Transportation Programs. Figure 1 shows spending for the state’s major transportation programs and departments from selected sources, which include:

• Caltrans. The Governor’s budget proposes total expenditures of $10.9 billion in 2017‑18 for Caltrans—$1.3 billion, or 14 percent higher than estimated current-year expenditures. This increase reflects the availability of new transportation tax revenues from the Governor’s proposed transportation funding package.

• CHP and DMV. The budget proposes $2.5 billion for CHP in 2017‑18, which is about $100 million, or 4 percent, higher than estimated current-year expenditures. Over 90 percent of all CHP expenditures are supported from the Motor Vehicle Account (MVA), which generates its revenues primarily from vehicle registration and driver license fees. For DMV, the Governor’s budget proposes total expenditures of $1.1 billion, which is about the same as the current-year estimated level. About 95 percent of all DMV expenditures would come from the MVA.

• Transportation Debt Service. The budget assumes a total of almost $1.8 billion in debt service costs on transportation bonds, which is $313 million, or 22 percent, higher than the estimated current-year level. As shown in Figure 1, about $1.5 billion of this amount would come from transportation special funds, while $243 million would come from the General Fund.

• Shared Revenues—Local Streets and Roads. The budget assumes a total of $1.6 billion in transportation revenues shared with cities and counties to support local streets and roads—an increase of $317 million, or 24 percent, above the estimated current-year level.

• HSRA. The Governor’s budget proposes $1.1 billion for HSRA in 2017‑18, which is about $100 million, or 9 percent, less than estimated current-year expenditures. This decrease reflects the spending down of federal funds previously granted to the state for the high-speed rail project, which is partially offset by an increase in Proposition 1A bond spending.