California Climate Solutions achieving environmental goals + creating business opportunities

Moving Dollars

Aligning Transportation Spending With California's Environmental Goals

California spends roughly $28 billion a year on transportation infrastructure projects, with almost half of that amount derived from local funding sources. A majority of these dollars goes to automobile infrastructure, particularly new road and highway expansion projects. This approach undermines California’s environmental and energy priorities, which include increasing public access to transportation options beyond the private, single-occupancy automobile – such as walking, biking, and taking transit. Realigning transportation investments will be critical for California to meet its ambitious environmental goals.

Majority of California’s transportation funding goes to automobile infrastructure. Overall, California’s state, regional, and local governments combined spend roughly $28 billion a year on transportation infrastructure projects, with almost half of that amount derived from local funding sources.

Non automobile-focused infrastructure can have great impact on reducing state greenhouse gas emissions. Reductions in driving facilitated by public transit save 37 million metric tons of carbon dioxide annually across the nation, equivalent to the emissions from generating electricity for 4.9 million households.

California has attempted to to encourage more investment in transportation options and development projects in order to decrease the amount of driving per capita in the state. State leaders passed SB 375 (Steinberg, 2008), which encourages a regional approach to transportation and land use planning to minimize greenhouse gas emissions.

Policy Needs

Policy Solutions

Aligning Policies with Environmental Goals at Multiple Levels of Government.

Ease Outdated Restrictions on Transit Decisionmaking and Implement Reforms Within Agencies to Consider Environmental Goals.

State Leaders

Place a ballot measure allowing a 55 percent voter-approval threshold for local transportation funding measures that reduce vehicle miles traveled.

California’s voter-approved Proposition 13 (1978) and Proposition 218 (1996) constitutional initiatives require a two-thirds voter approval threshold for local ballot measures that raise revenue for “special purposes” such as transportation. This high threshold makes it difficult to secure voter approval for local funding measures, such as sales tax increases or bond initiatives, for badly needed transit measures.

State Leaders

Authorize the California Air Resources Board to set vehicle miles traveled (VMT) regional reduction targets for congestion management agencies (CMAs) to replace auto-delay analyses.

A VMT reduction target from the state would give CMAs a different metric to evaluate new road and highway projects and should replace the statutory requirement that CMAs alleviate auto delay. The VMT metric would allow CMAs to focus instead on overall access to destinations through reduced driving per capita.

State Legislature

Allow pricing on “mixed flow” highway lanes.

Allowing pricing for “mixed flow” highway lanes would allow regional entities to better manage diverse mobility options with existing road capacity, reduce vehicle miles traveled overall, provide travelers with improved access to destinations, and generate revenue that can be reinvested into alternative transportation options within that corridor.

State and Local Leaders

Reduce parking requirements in transit-intensive areas.

Excessive parking requirements for real estate projects in transit-intensive areas is often counter-productive because it encourages driving, as opposed to using existing transit or other travel modes. Reducing local parking requirements can increase transit utilization and promote other forms of mobility.

State Leaders

Further enhance the California Environmental Quality Act (CEQA) to streamline review of transportation impacts based on a reduction in vehicle miles traveled and adopted SB 375 plans.

Currently, CEQA provides an additional layer of analysis on transportation projects, which can delay, increase costs of, and sometimes stop transportation infrastructure that supports California’s environmental and energy goals (such as transit or bicycle networks).

State Leaders

Reform the Caltrans highway design manual to promote “smart roadway” design.

The manual establishes uniform policies and procedures for designing state highways as a guidance document (not a legal standard) and is used by many local jurisdictions for roads. The manual currently does not recommend design practices to account for environmental impacts related to increased driving miles and greenhouse gas emissions.

Federal Leaders

Reform the “Buy America” requirements to allow local procurement from firms that use some foreign parts and services, but only when a majority of the funds for a project are local.

Federal rules currently require “Buy America” provisions for any project that receives federal dollars. However, in some instances, local transportation agencies may prefer to procure parts and services from local firms that do not fully comply with this provision. Allowing more local firms to participate could help maximize decreasing federal dollars and also become an economic stimulus for the affected local area.

State Leaders

Develop a comprehensive legislative package to promote ride-booking services as a complement to transit networks.

Encouraging ride-booking companies (e.g. Uber, Lyft, Sidecar) to make transit stations more accessible to commuters in exchange for more regulatory certainty, could greatly improve transit ridership. As another option, cities may want to explore encouraging traditional taxi companies to provide this service. Local jurisdictions could initiate public demand-response, small-bus local circulators as feeders to rail or major bus stations.

Federal Leaders

Delegate National Environmental Policy Act (NEPA) authority to qualifying local transit agencies to save planning time for new projects.

NEPA review requires lead agencies to analyze a new project’s range of potential environmental impacts before issuing a permit. However, the state level CEQA statute performs a similar function. Having a federal agency perform this review in addition to state-level environmental review, undertaken by the local lead agency, can add unnecessary time, costs, and uncertainty to the process.

Federal and State Leaders

Subsidize interest payments on “America Fast Forward” bonds.


Federal leaders could modify the Internal Revenue Code to make America Fast Forward Bonds eligible  for annual federal tax credits that would reduce the interest expense of the long-term borrowing. California could dedicate cap-and-trade funds to help pay the interest on this borrowing.

Coordinating Decision-Making at Multiple Levels of Government.

Develop a State-Wide Vision for Transportation Spending and Set Common Environmental Performance Measures Across All Levels of Government.

State Leaders

Develop and implement a common state vision of sustainable transportation across the various implementing agencies.

The California Air Resources Board could lead this effort, potentially in partnership with Caltrans, which could develop it around greenhouse gas reductions. The agencies could also partner with the Strategic Growth Council, which helps develop modeling tools that could be aligned with this effort.

State Leaders

Authorize and develop performance measures for state and regional transportation projects that align with state environmental goals.

The state should consider legislation (or using existing regulatory authority under the State Transportation Improvement Program) to authorize the adoption of common measures to determine which state transportation projects receive funding.

Aligning Funding and Financing for Transportation Projects at Multiple Levels of Government.

Reform Transportation Spending to Encourage Environmentally Friendly Policies Aligned with State Goals.

State Leaders

Reform State Transportation Improvement Program (STIP) funds to align with SB 375 and AB 32 goals.

STIP funds are not required to be spent in furtherance of state environmental goals. To reform the process, legislation may be needed to clarify that the California Transportation Commission can reject projects that do not meet these performance standards and to ensure that more STIP funds are spent on maintenance of existing infrastructure.

State Leaders

Improve the transparency of spending decision-making of State Highway Operations and Protection Program (SHOPP) funds and ensure that the outcomes align with SB 375 and AB 32 and “complete streets” goals.

State leaders allocating SHOPP funds should develop criteria and transparent processes to ensure that these funds (as well as any additional future funds) are spent only on projects that reinforce SB 375 and AB 32 goals and that maintenance projects also contain a smart mobility and complete streets performance requirements to make the roadway safer for all users, including bikers, pedestrians, and transit riders.

State and Local Leaders

Ensure improved sustainability in local sales tax measures project criteria.

As local entities develop these measures for the ballot, they should ensure that projects meet certain environmental goals such as a reduction in vehicle miles traveled or improved maintenance of infrastructure in existing housing and jobs centers. In return, the state could provide more financing and funding or other incentives, such as streamlined environmental review.

State Leaders

Ensure that more transportation dollars at all levels are directed to the repair and maintenance of existing infrastructure (“fix it first”).

Transportation dollars should be spent first to repair the infrastructure the state already built before considering new projects, including by adding smart mobility and complete streets performance requirements.

Federal and State Leaders

Develop mileage-based user fees with possible incentives for zero emission vehicles.

The state gas tax that helps fund transportation projects has not been raised to keep pace with inflation or adjust for the increasing fuel efficiency of modern vehicles. As a result, revenues cannot keep pace with needs. Federal and state leaders should adopt a mileage-based user fee to apportion tax revenue based on the actual usage of the roads, as opposed to usage of fuels.

State and Regional Leaders

Allow more high-occupancy toll (HOT) lanes and dedicate new revenue for transit and other non-automobile transportation improvements in the corridor.

More HOT lanes could help manage traffic, reduce congestion and driving, and generate revenue to improve mobility and reduce emissions in the affected corridor. Decision-makers should dedicate revenue from the HOT lanes to transit, bike lanes, and pedestrian infrastructure in these corridors.

State Leaders

Place a state ballot measure to remove Article XIX requirements restricting the use of state gas tax funds on transit operations or transit rolling stock.

The California Constitution, Article 19, Section 2(b) currently allows for state gas tax spending only on “research, planning, construction, and improvement” of public transit but not for “the maintenance and operating costs” related to public transit. Removing this restriction would alleviate the fiscal strain on transit operations and improve transit service and infrastructure across the state.

State Leaders

Increase vehicle registration fees to pay for pedestrian, bicycle, and transit infrastructure and operations.

This additional revenue for non-automobile infrastructure could encourage more transportation by these modes and therefore lessen the need for expensive new automobile infrastructure, while furthering state energy and environmental goals.

State and Regional Leaders

Explore privatization of some highway assets and operations.

Some automobile infrastructure could be operated profitably by private entities, such as toll road operators. Devolving responsibility for improving and maintaining this infrastructure could free revenue for state and local leaders to allocate to non-automobile-based infrastructure.

"It's all about letting local governments make appropriate decisions that aggregate to something beneficial. How do we incentivize and fund individual decisions that are in the right direction so that in the aggregate we get to what we want? It can't be entirely top down."

Steve Brown, Fehr & Peers