Transform primarily focuses on policies affecting the Bay Area or California as a whole. However, California and the Bay Area rely on federal funding for many transportation and housing projects, so we took a deep dive into the changes over the past few months and their impact on our region. Here’s our look at the first five months of the Trump administration.

Radical rescission on day one

On January 20, 2025, the new administration effectively paused funding for all Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA) projects. An estimated $20 billion worth of projects with grant agreements are threatened under the day-one “Woke Rescission” memo. 

The chaos only got worse when the current USDOT secretary issued various memos that extended the funding freeze to allow for project-by-project review, including those that had already been awarded federal money. Even though the administration stated that projects that were already underway would not be impacted, communities across the country have been having trouble accessing grant funds. 

To make things more confusing, the USDOT introduced a change in scoring criteria for competitive grants that included things like awarding extra points to areas with higher marriage and birth rates, areas with no vaccine or mask mandate, and so on. The memos coming from USDOT caused a lot of confusion because they were filled with criteria that were both vague and contradictory.

Then, in a leaked internal memo, the USDOT secretary stated that the agency will be targeting bike lanes, “green infrastructure,” electric vehicles, equity, and climate change, directing the agency to remove funding from these projects. These memos have impacted programs like Safe Streets and Roads for All, resulting in project cost increases, with some localities even having to issue stop-work orders on partially completed infrastructure projects.

At the end of April, the secretary issued a letter to all USDOT grant recipients, threatening to withhold federal transportation funding if the recipient advanced policies and procedures that promote diversity, equity, and inclusion, or if their jurisdiction impedes federal immigration enforcement, regardless of state and local statutes. What constitutes these violations is unclear; it’s also unclear whether these or any of the funding freezes instituted by the new regime are lawful. Many projects hang in limbo while court challenges are ongoing.

More funding cuts in the future

The executive branch wasn’t the only place cutting funding for transit, active transportation, and housing programs. At the end of April, the House Transportation and Infrastructure Committee announced it is looking to cut billions in funding through budget reconciliation. The budget reconciliation process allows Congress to pass funding to run the government without going through the typical appropriations process to fund the government. In the budget reconciliation process, the bill can only include provisions that have budget implications.

The planned cuts by the the House Transportation and Infrastructure Committee will essentially repeal unobligated funding (money that has not been put under a binding agreement to pay out money) for the Neighborhood Access and Equity Grant Program. This program, funded through the IIJA, provides grants to help reconnect neighborhoods divided by a history of racist freeway construction. It funds projects tailored to local needs that aim to repair harm done to humans and the environment by past destructive freeway building practices. One example could be Oakland’s Interstate 980, a highway on many lists as one that needs to be torn down as we move beyond highways to more connected and integrated communities. Neighborhood Access and Equity provided over $3.2 billion in funding for reconnecting communities projects at passage, but unfortunately, up to $3.1 billion in funds for that program have not yet been obligated, so 97% of the funds are now at risk of elimination.

That drastic cut is just a taste of what could be coming as the Office of Management and Budget released a “skinny budget” framework for the fiscal year 2026 budget. Overall, the skinny framework calls for cuts of about $163 billion, including some that would slash vital housing and community development programs.

The administration’s recommendations would entrench car culture and delegate transportation strategies to the states, which, for certain states, would most likely mean more highways. Additionally, not all programs in the IIJA have guaranteed funding from the Highway Trust Fund, meaning they rely on annual federal appropriations, so money must be set aside for them every year. These programs include passenger rail, transit, and Complete Streets, just to name a few.

The budget framework also goes after the CDC’s National Center for Chronic Disease Prevention and Health Promotion, which provides support to communities to advocate for and build civic spaces that are safe and welcoming to people using all transportation modes. The administration argues that the states and localities should be responsible for this instead, but many state and local governments lack the resources to do this themselves, so they rely on the federal government.

We should see a detailed FY26 budget proposal from the administration to Congress soon. That’s when we’ll learn which transportation and housing programs are recommended for cuts in the upcoming budget.

Federal courts provide a bulwark against unilateral executive branch decisions

As you’ve probably heard, courts have been stepping in to stop some — but not all — of the funding cuts, since Congress allocates funds and the executive branch, in theory, doesn’t have the right to reverse those decisions without congressional approval.

For example, in April, a federal judge ruled that the executive branch does not have unilateral decision-making power over programs funded by Congress and that the federal government overstepped its authority in freezing project funds viewed as out of step with the administration’s priorities. 

More recently, a Seattle judge issued a temporary restraining order, blocking the administration’s recently imposed federal funding conditions. This lawsuit was filed in the U.S. District Court in the Western District of Washington by two Washington counties, alongside the cities of San Francisco, Santa Clara, Columbus, Boston, and New York.

What does this mean for Bay Area climate and infrastructure programs?

There is a lot of uncertainty about the future. Some of the facts in this post have probably changed by the time you’re reading it, as court rulings come down and new executive orders drop. What we do know is that there’s likely to be less federal money for active transportation, transit, affordable housing, and climate change mitigation and adaptation. Those federal dollars flow through state agencies to finance local grants throughout California, including grants to community benefit organizations like Transform and many of our partners.

California’s budget moved into deficit territory because of federal policies, and more fiscal pain could be in our future. The administration has tried to claw back funds already deposited in grant recipients’ bank accounts.

But there is reason for hope. California has the fourth-largest economy in the world. And we have something more valuable than that: people power. The Bay Area is mobilized and engaged, and that is the biggest reason to hope for the future.Tight budget times mean difficult decisions, but there are innovative solutions that can preserve funding for critical projects. One policy directly affecting this year’s budget is the renewal of California’s Cap-and-Trade Program. Transform is calling on our legislators to close loopholes and make polluters pay to preserve funding for vital housing and transportation programs that move us toward our climate goals. Email your representatives now — it just takes a minute to send a message to your assemblymember and senator.