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News|January 17, 2022

Governor Releases the FY 2022-23 State Budget Proposal

On January 10, 2022, Governor Newsom released the Administration’s Fiscal Year 2022-2023 State Budget Proposal. Below is a high-level summary and breakdown of the transportation component of the State Budget Proposal.

2022-23 STATE BUDGET PROPOSAL:

The Governor released the Administration’s overall state budget of $286.5 billion. The proposal identifies a budget surplus, which is now projected to be $45.7 billion over the remainder of the current year and throughout 2022-23.

Surplus

The budget proposal would spend the $45.7 billion surplus with $16.1 billion dedicated to Proposition 98, K-14 school appropriations, an addition of $9 billion to the state reserves, and an additional advance payment to state pensions. This would leave $20.6 billion in discretionary General Funds, largely for one-time allocations.

Transportation

Governor Newsom’s state budget proposal includes $15 billion for multimodal transportation programs, including the $4.3 billion that reverted to the General Fund in October 2021 after the Administration and Legislature failed to reach an agreement on the final aspects of the 2021-22 transportation funding package – most notably High-Speed Rail. Like his housing investments, the Governor’s 2022-23 state budget frames transportation investments in the climate change and equity context, noting his proposed investments will reduce GHG emissions, improve rail and transit across the state, enhance safety and access for bicyclists and pedestrians, and connect disadvantaged communities, just to name a few outcomes. While this is positive for transportation, the 2022-23 budget proposal also recommends suspending the fuel excise tax annual adjustment to account for inflation which, depending on the details, could be a loss for transportation. Details on these proposals are as follows:

Foregoing the Annual Gas Tax Inflationary Adjustment:

With the intention of providing relief to consumers from the high cost of gasoline, the Governor proposes to forgo the annual inflationary adjustment to the per-gallon fuel excise tax rate which takes place on July 1 annually. The estimated rate of inflation is 5.6 percent which would equate to a 3-cent increase. If paused, in 2022-23 this would equate to a decrease in fuel tax revenues by $523 million. The state budget proposal does indicate the Administration is exploring options for backfilling the lost revenue to cities and counties, including using funds from the State Highway Account.

State Transportation Infrastructure Package:

The Governor has reproposed his 2021-22 transportation funding package plus additional investments. The total $9.1 billion funding package includes:

  • $4.2 billion High-Speed Rail bond allocation to complete the electrified Central Valley segment, perform advance worked between Merced and Bakersfield, and complete advance planning and project designed for the entire project.
  • $2 billion for statewide priority transit and rail infrastructure projects to improve connectivity between state and regional/local services.
  • $1.25 billion for Southern California Transit and Rail Projects that will focus on mobility and GHG emissions reductions.
  • $500 million for grade separations for safety improvements throughout the state.
  • $500 million for the Active Transportation Program.
  • $400 million to establish a Climate Adaptation Program for state and local projects that support climate resiliency and reduce climate risks on the transportation system.
  • $150 million to establish a new Reconnecting Communities: Highways to Boulevard Pilot Program.
  • $100 million for bicycle and pedestrian safety projects, allocated through the Highway Safety Improvement Program.

Federal Infrastructure Investment and Jobs Act:

The 2022-23 state budget proposal includes an increase in to base Federal Highway Administration funding levels for California to reflect the recent passage of the federal surface transportation bill – the Infrastructure Investment and Jobs Act (IIJA). Specifically, the increase for 2021-22 is $1.8 billion and in 2022-23 it’s $1.9 billion. Base federal funding levels will also increase for transit projects – $238 million in 2021-22 and by $423 million in 2022-23. California is also anticipating approximately $14.2 million from the National Highway Safety Administration to support the Office of Traffic Safety and its efforts to eliminate serious injuries and fatalities on highways, streets, and roads. Further, California will be able to compete for federal grants – new grants and augmented existing programs – with over $100 million in available funding.

Supply Chain Resilience and Port Infrastructure Investments:

The 2022-23 state budget proposes $2.3 billion for supply chain investments to help mitigate and address global disruptions to the goods movement supply chain occurring in California. Specifically, the Governor proposes the following General Fund investments:

  • $1.2 billion for port-related high-priority projects that increase goods movement capacity on rail and roadways, including railyard expansions, new bridges, and zero-emission modernization projects.
  • $875 million for zero-emission port equipment, short-haul trucks, and related infrastructure.
  • $110 million for a workforce training campus, to support workforce resilience, and accelerate deployment of zero-emission equipment and technologies.
  • $40 million to enhance commercial diver license capacity.
  • $30 million for the Governor’s Office of Business and Economic Development for funding for operational improvements at the ports. Activities could include improving data interconnectivity between the ports to enable efficient cargo movement, reduce congestion, and create opportunities to increase cargo capacity through supply chain efficiency.

Zero-Emission Vehicle Acceleration:

The Governor proposes $6.1 billion towards zero-emission vehicle (ZEV) acceleration over the next five years. Of this, $3.5 billion in General Fund, $1.5 billion is derived from Prop 98, $676 million comes from cap-and-trade, and $383 million is from federal sources. Specific investments are as follows:

  • $256 million for low-income consumer purchases.
  • $900 million to expand convenient and affordable ZEV charging infrastructure access in low-income neighborhoods.
  • $935 million for heavy-duty ZEVs and supporting infrastructure to add 1,000 ZEV drayage trucks and 1,700 ZEV transit buses.
  • $1.5 billion in Prop 98 to support school transportation programs, including ZEV school buses.
  • $1.1 billion for ZEV trucks, buses, off-road equipment, and related fueling infrastructure.
  • $400 million for port electrification.
  • $419 million for sustainable community-based transportation equity programs that increase access to ZEV mobility options in low-income communities.
  • $200 million for emerging opportunities to invest in demonstration and pilot projects in high carbon-emitting sectors, such as maritime, aviation, and rail.

View the full State Budget Proposal.

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