The California Legislature is back in full swing, with the bill introduction deadline fast approaching in February. Governor Newsom released his final budget recommendation as governor, serving both as a starting point for this year’s budget negotiations, and as a reminder that California will start 2027 with a new governor.
Like any year, 2026 presents its own legislative and budget opportunities — and challenges — for advancing climate-aligned housing and transportation policy. With the gubernatorial transition,we’ll also be laying the groundwork for success in the next administration by elevating housing and transportation investments that allow Californians to live affordably and move freely to everyday destinations of high priority.
The Detail We’re Watching Closely in Governor Newsom’s Budget: 
Of particular note: the governor’s budget includes a proposal that would change how funding flows through the AHSC program, which integrates housing, transportation and green space into multi-benefit projects and has delivered affordable, well-located homes in disadvantaged communities. Under this proposal, transportation and housing investments would be separated into distinct programs and administered by two different agencies.
This is a new approach, and ClimatePlan is taking a closer look at what it could mean in practice — particularly for projects that depend on coordinated housing and transportation investments to deliver meaningful improvements and climate benefits for Californians.
Aligning housing and transportation investments helps Californians live and get where they need to go affordably. This alignment supports strong, resilient communities and reduces the air pollution that sickens and kills thousands of Californians every year. We’ll continue to assess this proposal and put forward our own ideas for how it should work as the budget moves through the Legislature.
But the governor’s budget proposal was also notable for what wasn’t there – namely any budget items related to the recommendations of the Transit Transformation Task Force that could provide stable operating funding for transit, increases to the very popular Active Transportation Program, or replacement funding for e-bike incentives that disappeared abruptly at the end of 2025.
One welcome development is the inclusion of the Free Transit Pass program, which helps make transit more affordable for students, older adults, and low-income Californians.
As revenues from California’s gas tax decline, we need to modernize how – and what we fund – in our transportation budget. ClimatePlan looks forward to improving the budget as it moves through the legislature. Read our full statement on the Governor’s budget.
These early budget signals — what’s proposed, what’s missing, and what’s still coming into focus — underscore why 2026 is a critical year.
How we’ll be focusing our work in 2026 (and beyond):
To meet the opportunities and challenges of 2026, ClimatePlan will be focusing its work on three strategic initiatives that together answer fundamental questions: how we fund our transportation priorities, how transportation investment decisions get made, and how housing and transportation investments are aligned with California’s climate goals in practice. Here’s a little bit more about these initiatives.
Connected communities:
Building housing near transit, jobs and other daily destinations helps people get around easily and affordably, supports climate-resilient communities, and protects wild lands and important open spaces. Sound familiar? This was the vision that ClimatePlan was formed to deliver, and we still believe in it.
More than 15 years after the passage of SB 375, several efforts are taking shape to reform some of California’s most foundational housing and transportation laws. We expect these proposals to be a major focus of our work in early 2026, as we work to both improve the implementation and defend the most critical elements of these laws.
Beyond Highways:
Every year, California spends hundreds of millions on widening highways – projects which take a long time to build and lock in additional driving, sprawl development and air pollution. What’s more, widening highways doesn’t improve congestion. Many of these projects move forward because of inertia — not because they deliver meaningful benefits. ClimatePlan is working to shift the projects that Caltrans develops and the CTC approves by cutting down spending on highway widening and redirecting it to better transportation options.
In 2026, we’ll continue to advocate directly with the CTC for better decision-making, raise awareness about the negative impacts of highway widening, and support community groups so they can meaningfully engage in decisions about projects that shape their communities.
Everyday Mobility:
Everyday mobility is about providing options for Californians to get around - by bike, train, bus or on foot easily, safely and affordably – without being forced to drive where they need to go. Today these systems rely on patchwork and unreliable funding. And, with the gas tax declining, there’s a need to ensure that there are replacement ways to fund our transportation system that are more equitable, and that those funds treat public transit and Active Transportation as core transportation programs, not nice-to-have. In 2026, ClimatePlan will focus on setting the table for long-term, stable funding for public transit, while advancing concrete budget and policy asks to expand active transportation and give communities better options to walk and bike safely.
If you’d like to learn more about our work in 2026 — including changes to our workgroups — join us on Thursday, January 29 at 11:00 a.m. for a conversation about what’s ahead and how we’re preparing for a big year.