The 2022-23 California Spending Plan

Transportation

Overview

The budget package provides a total of $33 billion for transportation-related programs in 2022-23, including for the California Department of Transportation (Caltrans), California State Transportation Agency (CalSTA), local streets and roads (shared revenues), California Highway Patrol (CHP), Department of Motor Vehicles (DMV), and High-Speed Rail Authority (HSRA). As shown in Figure 1, this total reflects a net decrease of $8 billion (20 percent) compared to 2021-22 estimated funding levels. As discussed below, about $5.4 billion of the funding displayed for 2021-22 was actually appropriated as part of this summer’s Transportation Infrastructure budget package. This is in addition to $4.2 billion in Proposition 1A funding for HSRA that was also appropriated as part of this year’s budget package for 2021-22. The relevant departments and agencies will therefore spend some prior-year funds during the current and coming years, alongside their 2022-23 appropriations.

Of the total spending, $21 billion (63 percent) is from special funds, such as various fuel taxes and vehicle-related fees. As shown in the figure and discussed below, transportation programs will receive a notable amount of federal funds—over $8 billion in both 2021-22 and 2022-23—largely from the Infrastructure Investment and Jobs Act (IIJA) passed in November 2021. The budget package also includes $2.1 billion from the General Fund, which, while significantly less than the $6.9 billion provided in 2021-22, still is notably more General Fund than state budgets typically have contributed for transportation programs in recent years.

Crosscutting Issues

Transportation Infrastructure Package. The budget agreement includes $9.5 billion from the General Fund over four years for CalSTA, Caltrans, and the California Transportation Commission (CTC) to implement a package of activities intended to support transportation infrastructure. As shown in Figure 2, $7.8 billion—$3.8 billion in 2021-22 and $2 billion in both 2023-24 and 2024-25—is provided to CalSTA to support transit and rail systems, including grade separation projects. The package also includes $1.7 billion in 2021-22 and $100 million in 2023-24 for several existing and new Caltrans programs. New activities include two local climate adaptation programs that will support planning and infrastructure projects, and the Highways to Boulevards Pilot Program, which will provide grants to local entities to support the conversion or transformation of underutilized highways. Finally, the budget provides about $1 million to CTC across 2022-23 and 2023-24 for administrative activities related to transit and rail projects and the local climate adaptation programs. Because the majority of the funding displayed in the figure is for capital outlay projects, much of it is excluded from the state appropriations limit. (For more on this, please see our State Appropriations Limit Spending Plan post.)

Supply Chain Resilience Package. As shown in Figure 3, the budget includes $1.4 billion from the General Fund over four years for a package of activities intended to support ports and goods movement infrastructure, workforce development, and operational efficiency at the state’s ports. Specifically, the package consists of (1) $1.2 billion for CalSTA to fund port, freight, and goods movement infrastructure; (2) $110 million for the California Workforce Development Board to establish a goods movement workforce training campus; (3) $40 million for DMV to increase its capacity to issue commercial driver’s licenses; and (4) $30 million for the Governor’s Office of Business and Economic Development to fund operational and process improvements at ports. The budget allocates $670 million in 2022-23 to initiate these activities.

Diesel Sales Tax Reduction. The budget includes a one-year reduction in the diesel sales tax from 13 percent to roughly 9 percent beginning October 1, 2022. This reduction is intended to provide fiscal relief from high fuel costs to drivers and businesses. The administration estimates that the resulting revenue losses to the state will total $327 million in 2022-23 and $112 million in 2023-24. To avoid programmatic impacts from this reduction, the budget package provides General Fund to backfill the lost diesel sales tax revenues that would have been used to support transit programs.

Caltrans

The budget provides $19.9 billion from various fund sources to support Caltrans in 2022-23, which is roughly equivalent to its revised 2021-22 funding level. While the budget included significant one-time General Fund augmentations for Caltrans in 2021-22 as part of the Transportation Infrastructure Package discussed above, what might have been a year-to-year funding decline due to those funds not being sustained in 2022-23 is largely offset by (1) gradual year-over-year funding increases from the federal IIJA (discussed more below), and (2) funding that was appropriated for capital projects in previous years being reflected in 2022-23 as those projects now get underway. The department’s budget is primarily supported by special funds (46 percent) and federal funds (43 percent), but also includes $738 million from the General Fund in 2022-23.

IIJA. Caltrans’ budget reflects additional federal funding the state is expected to receive from IIJA. From 2021-22 to 2025-26, the department estimates that IIJA will provide the state with an additional $9.5 billion in formula-based highway funding—an average annual increase of $2 billion compared to normal federal fund allotments. The state will use 60 percent of the funds for Caltrans activities—such as highway maintenance and rehabilitation—and 40 percent will be apportioned from the state to local agencies. (California is expected to receive an additional $2.3 billion in formula-based transit funding under IIJA over the next five years as well, however, this funding generally is provided directly to transit agencies and will not flow through the state budget.) The budget also includes $50 million ongoing from the State Highway Account (SHA) to support 295 positions beginning in 2022-23 for Caltrans’ non-project delivery programs, such as program development and statewide planning. The additional funding and positions will help implement IIJA.

Local Projects. The budget includes one-time General Fund appropriations totaling about $260 million in 2022-23 to Caltrans for over 50 specified local transportation projects. These projects include pedestrian and safety enhancements, local bridge improvements, and transit facility upgrades.

Fleet Replacement. The budget provides $176 million from SHA in both 2022-23 and 2023-24 for Caltrans to replace vehicles that it uses to maintain the state highway system. Caltrans will also use this funding to install the infrastructure needed to support the department’s zero-emission vehicle purchases. Budget bill language directs Caltrans to prioritize spending on zero-emission vehicles or, when that is not feasible, to prioritize vehicles with the lowest emissions.

Capital Outlay Support. The budget includes a net increase of $114.6 million and 734 full-time equivalent staff for the Capital Outlay Support Program. This brings budgeted totals for the program to $2.3 billion and 11,636 full-time equivalent staff. This program provides the staff support necessary to deliver transportation infrastructure projects, such as engineering and design, environmental analysis, right-of-way acquisition support, and construction administration and oversight. The increase is largely related to workload associated with the state’s Broadband Middle Mile Network Program. Caltrans’ responsibilities for this program include managing the construction of the middle-mile infrastructure along the state highway system.

Road Charge Pilot Program. The budget includes $3 million from SHA in both 2022-23 and 2023-24 for Caltrans to implement Chapter 308 of 2021 (SB 339, Wiener), which requires the state to conduct a road charge pilot program that tests revenue collection. The pilot program is expected to begin in 2024 and, in accordance with the legislation, will test two types of rates—a flat per-mile rate and a variable per-mile rate based on a vehicle’s fuel economy rating. A final report is due to the Legislature by July 1, 2026 that evaluates revenue collections and the potential of a road charge to support transportation funding.

Design-Build Procurement Authority. Budget trailer legislation authorizes Caltrans to utilize design-build procurement for six additional projects in both 2022-23 and 2023-24. (Previously, Caltrans was only authorized to use design-build for ten projects over a limited period.) Design-build is a project delivery method in which both the final design and the construction of a project are simultaneously awarded to a single entity. This approach differs from Caltrans’ typical delivery method (design-bid-build), in which the design is first completed by the department or a contractor before the construction contract is advertised. In both cases, Caltrans operates and maintains the infrastructure once the project is complete.

Department of Motor Vehicles

The budget provides about $1.6 billion for DMV, an increase of $48 million (or 3 percent) from the revised 2021-22 expenditure level. The year-to-year increase is primarily due to several limited-term expenditures in 2022-23. Nearly all of DMV’s ongoing funding is from the Motor Vehicle Account (MVA), which derives the majority of its revenue from vehicle registration fees, driver license fees, and other fees. In addition to the appropriations mentioned below, the Supply Chain Resilience Package described earlier in this post includes funding for DMV.

Facilities Projects. The enacted budget includes $14.1 million from the General Fund for various phases of seven DMV field offices. Four of these projects were previously approved by the Legislature, but require additional funds due to recent increases in construction costs. Historically, DMV capital outlay projects have been funded from the MVA. However, due to a long-term structural imbalance in the MVA and the available surplus in the General Fund, the Legislature approved General Fund for these projects as proposed by the Governor.

California Highway Patrol

The budget provides $3.2 billion to fund CHP, an increase of $248 million (8 percent) compared to 2021-22 revised spending estimates. The increase mainly is due to several anticipated one-time capital outlay expenditures in 2022-23. Nearly all of the funding for CHP is from the MVA.

Highway Violence Task Force. The budget includes a total of $10.6 million from the General Fund over three years—$4 million in 2022-23 and $3.3 million in 2023-24 and 2024-25—for CHP to support its Highway Violence Task Force. This includes funds for (1) overtime costs so that additional CHP officers can serve on road patrol duty; (2) seven Associate Governmental Program Analyst positions to provide analytical and investigatory support to the task force; and (3) training, information technology, and equipment to support criminal investigations.

Retail Theft Task Force. The budget includes $6 million from the General Fund annually through 2024-25 (increasing to $10.5 million in 2025-26 and $15 million in 2026-27 and ongoing) for CHP to (1) make permanent the three existing Organized Retail Crime Task Forces (ORCTFs) that have been operating in the greater Bay Area and portions of Southern California on a pilot basis, and (2) establish two new permanent ORCTFs in the Fresno and Sacramento areas. ORCTFs consist of CHP officers who collaborate with local law enforcement agencies and prosecutors in specified regions to support investigation and prosecution of organized retail crime. This expansion is a component of the Public Safety Package, which is discussed in further detail in the Judiciary and Criminal Justice Spending Plan post.

Sideshow Task Force. The budget includes $5.5 million on a one-time basis from the General Fund in 2022-23 for CHP to establish a task force focused on investigating sideshows. A sideshow is defined in Section 23109 of the Vehicle Code as an event in which two or more persons block or impede traffic on a highway for the purpose of performing motor vehicle stunts, motor vehicle speed contests, motor vehicle exhibitions of speed, or reckless driving for spectators.

Facilities Projects. The budget includes a total of $53 million from the General Fund to plan, design, and construct 14 new area offices and other facilities. Four of these projects were previously approved by the Legislature, but require additional funds due to recent increases in construction costs. Although CHP capital outlay projects are historically funded by the MVA, as with the DMV projects, the Legislature approved these projects to be funded with General Fund as proposed by the Governor.

High-Speed Rail Authority

The budget provides a total of $1.3 billion for HSRA in 2022-23, mostly from the Greenhouse Gas Reduction Fund (GGRF). This is a net reduction of $4.9 billion (nearly 80 percent) from the estimated 2021-22 level. This decrease is largely a result of $4.2 billion in one-time Proposition 1A funding provided in 2021-22.

Proposition 1A Appropriation and Budget Trailer Legislation. The budget package appropriates essentially all of the remaining unappropriated Proposition 1A bond funds—$4.2 billion—for the high-speed rail project in 2021-22. The package also includes associated budget trailer legislation. Some of the key provisions of the legislation include:

• Expressing legislative intent to (1) prioritize funding for planning and construction of the Merced-to-Bakersfield segment until the segment is completed, and (2) complete Phase 1 of the project, which extends from San Francisco to Anaheim.

• Prohibiting HSRA from entering into new commitments of GGRF outside of the Merced-to-Bakersfield segment, except as specified. This prohibition is in effect until the Merced-to-Bakersfield segment is fully funded or through June 30, 2030, whichever occurs sooner.

• Limiting the use of the $4.2 billion Proposition 1A appropriation to the Merced-to-Bakersfield segment. Additionally, the language conditions $2.2 billion of the $4.2 billion appropriation to be available only after submission of a specified report and notification to the Governor and Legislature.

• Establishing an independent HSRA Office of the Inspector General (OIG) with various authorities and responsibilities. (The budget also provides up to $2 million in 2022-23 from the Public Transportation Account to the OIG.)

• Requiring HSRA to notify the chairpersons of the relevant committees of both houses of the Legislature before submitting a federal grant application and before releasing a request for proposals for certain contracts, such as for acquisition of trainsets.