News & Press

Governor Newsom Issues May Budget Revise with Little Impact to Transportation Agencies

The COVID-19 pandemic response and stay-at-home orders have resulted in a significant decrease in state revenues and increases in unanticipated emergency spending. Combined, they created a devastating impact on the $222 billion spending plan the governor originally proposed in January. In today’s May Revise, the governor estimated the budget deficit to be $54 billion over the next two fiscal years. This reflects a 22.3% decline in revenue since the January budget proposal. 

While the governor outlined a number of mechanisms to balance the budget in his press conference today and the provided budget summary, including: delaying new programs, shifting resources, and program cuts, it appears that very little will change structurally for state transportation agencies. Thankfully, Caltrans will be instructed to 1) accelerate projects to achieve cost savings, 2) support the creation of new jobs in the transportation sector, and 3) improve roads as a means to restart California’s economy. 

Further, the governor’ budget maintains current planning and engineering staffing levels so as to continue developing and designing previously programmed projects. This is being done in anticipation of federal support for when stimulus funding becomes available. Unfortunately, transportation funding from fuel taxes is anticipated to drop by $1.8 billion dollars through the 2024-25 fiscal year. It is worth noting that the 2017 passage of SB 1, and efforts in 2018 to protect it from repeal, provides our industry funds that we would not otherwise have had which lessens the impact of this recession to our sector.

The impacts to ongoing transportation programs include:
- The State Highway Operations and Protection Program (SHOPP) will see a reduction of $556 million
- The State Transportation Improvement Program (STIP) will see a reduction of $91 million over the current and 2020-21 fiscal years
- Cities and counties will lose $282 million in local streets and roads revenues.

Many of these budget cuts, however, are triggered to be restored pending the receipt of funding and support from the federal government.

Now that the May revise has been published, the state legislature will begin budget committee meetings and negotiations to finalize a budget. The legislature must vote on a balanced budget by June 15; the Governor must enact the budget by July 1 per the state constitution.  
Action by the prior legislature and governor have prepared California’s for this recession. The legislature and governor enjoy additional support of “rainy day” funds totaling almost $17 billion. Expect difficult deliberations and additional budget solutions to be presented by the legislature in the coming weeks.