The first year of California’s 2025–2026 legislative session is in the bag. Are we passing the policies and funding the programs needed to align California’s transportation, housing, and land use — and drive down climate pollution? Not quite. ClimatePlan’s Jeanie Ward-Waller sums it up: “It was a mixed bag — we saw some wins, but also real losses. What matters now is that 2026 sets the stage for 2027, when new leadership will shape where California goes next.” Here’s how it went down: the good, the bad, the ugly, and the unknown.

The Good: Transit Funding

When the state reauthorized its Cap & Trade (now Cap & Invest) program, it also funded key public transit programs through the Greenhouse Gas Reduction Fund (GGRF). While most transit funding still comes from fuel taxes, vehicle fees, and local sales taxes, having a stable statewide source identified through 2045 is a big win.

Investing in public transit is broadly popular, which partly explains the win. The Bay Area systems (BART, Caltrain, Muni, AC Transit) also passed SB 63 to authorize a transit funding measure for the 2026 ballot to avoid a looming ‘fiscal cliff’ and service cuts. Still, the long-term picture is shaky. Systems statewide haven’t recovered financially from the pandemic, and California still needs to identify funding to cover both operations and capital projects.

GGRF transit Funding breakdown:  

• $400M/year for the Transit and Intercity Rail Capital Program (TIRCP): capital projects for major rail and bus systems to increase ridership and cut climate pollution. Recent examples: Caltrain electrification in the Bay Area, 6.7 new miles of LA Metro track in the East San Fernando Valley, and zero-emission buses in Merced County.
• $200M/year for the Low Carbon Transit Operations Program (LCTOP): local projects that expand or improve service, with a focus on disadvantaged communities. Examples: San Francisco’s Free Muni program.
• $125M in one-time funds was promised in the 2026-27 budget for free transit passes to give access to students, retirees, and lower-income workers.

Several ClimatePlan network members helped deliver these wins, including Transform (Bay Area) and MoveLA (Los Angeles).

Affordable Housing & Sustainable Communities

The Affordable housing and sustainable communities (AHSC) program develops affordable housing paired with transportation improvements. We love to see this program receive $800 million/year in GGRF money through 2045 since building housing is one step, but integrating that housing into the community and providing easy and affordable access for its residents to surrounding areas is how we’ll be able to increase housing, reduce driving, and meet our climate goals.  

ClimatePlan member Enterprise Community Partners was on the front lines to ensure this funding continued.

The Bad: Active Transportation 

California failed to increase baseline funding levels  to the Active Transportation Program this year, despite a pledge last year by budget leaders to increase support to the program. ATP continues to be funded at a measly 0.5% of our $20B transportation budget. With 60% of car trips under 6 miles, walking, biking, and scooting projects punch above their weight. They’re also popular: last year Caltrans could only approve 13 projects of the nearly 300 applications, leaving 264 unfunded. Restoring the $400M in past cuts to the program is a must for 2026. 

The Ugly: Federal Setbacks 

 The Federal government provides only ~20% of California’s transportation budget, but its actions in 2025 hit hard. Congress rescinded California’s Clean Air Act Waiver, ended EV tax credits, and pulled $4B from high-speed rail — calling it a “boondoggle.”

Electric vehicles are the future, but the Federal Government’s actions will slow California’s progress. Even before these rollbacks, electrification alone was not going to cut the pollution needed out of the transportation sector to meet California’s climate goals. Now more than ever, California must align transportation funding with the goal of driving less.

The Unknown: “Abundance”

In March, Ezra Klein and Derek Thompson’s book Abundance put California in the spotlight – more specifically its governance failures that were causing people to leave the state. It was quickly embraced by Governor Newsom and had a major policy impact particularly in housing, powering CEQA reform and SB 79’s passage.

But Abundance isn’t the only frame reshaping the conversation. Affordability has increasingly overtaken climate as the dominant lens in energy policy. Policymakers are under pressure to prioritize near-term cost savings, even when that means sidelining long-term climate goals.

While Abundance has energized housing, energy, and transportation debates, big questions remain. How do we balance equity and sustainability? How do we ensure community voices are heard, especially in communities that have historically been most burdened by industrial development and pollution, without requiring consensus on every project? How do we build more without destroying natural spaces, expanding housing in wildfire-prone areas, or worsening the climate crisis? 

Across the ClimatePlan network, groups are wrestling with what this new terrain means for equity and sustainability. Abundance doesn’t answer these questions — and neither does affordability. But California must.