Final Budget Preserves Funding for Housing, Transit
California’s governor and legislature have now agreed on a final budget for the 2025-2026 fiscal year. The final budget includes the funding for affordable housing and public transit allocated in the legislature’s version. As we noted in our original statement, Transform appreciates the hard work of legislators to secure critical housing funding, protect previously committed transit funding, and provide a loan to Bay Area transit agencies that will prevent the fiscal cliff.
The budget puts $500 million toward Low-Income Housing Tax Credits (LIHTC) and $120 million to the Multifamily Housing Program. It doesn’t include the governor’s proposal to cut $1.1 billion from transit programs (thus saving that funding, which transit operators urgently need), and gives Bay Area transit agencies a $750 million loan to keep buses and trains running as they seek a long-term funding mechanism.
Unfortunately, the final budget fails to restore the $400 million cut from California’s Active Transportation Program in last year’s budget. Transform will continue to advocate for more funding for active transportation, which deserves a bigger share of our transportation budget.
But funding fights are not over. Legislators are continuing discussions on reauthorizing Cap-and-Invest (formerly Cap-and-Trade) until 2045. On the hook is over $4 billion a year for the next 30 years.
What’s next for Cap-and-Trade
While the final budget doesn’t reauthorize Cap-and-Invest, it does allocate $500 million to CalFIRE from the Greenhouse Gas Reduction Fund (GGRF) which is funded through Cap-and-Trade. This will limit the GGRF’s ability to support affordable housing, transit, and environmental justice priorities.
California’s carbon trading program provides funding for a number of programs that effectively reduce carbon emissions, such as Affordable Housing & Sustainable Communities (AHSC), the Low Carbon Transit Operations Program (LCTOP), and the Transit and Intercity Rail Capital Program (TIRCP).
Transform will be advocating to maintain funding for programs that fund proven strategies, such as those that build infill affordable housing near transit and improve transit operations. We believe our state can do more with this program by closing loopholes that amount to a $1 billion giveaway to big oil companies. You can help by emailing your senator and assemblymember to support a better Cap-and-Invest program.
