Steinberg's cap-and-trade plan would fund transit, affordable homes, bike/ped, and high-speed rail

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Throughout California, many regions have passed Sustainable Communities Strategies to promote transportation choices, reduce greenhouse gas emissions, and contribute to strong, sustainable economic development. But there is one massive asterisk: most of these plans still need billions of dollars in funding to be fully implemented.

This morning, TransForm joined California Senate President pro Tem Darrell Steinberg along with other partners and allies as he unveiled his promising long-term investment strategy for cap-and-trade auction proceeds that could begin addressing this need. SB 1156 proposes significant and sustained investments in many of the priorities TransForm and our partners in the Sustainable Communities for All Coalition have advocated for, including: expanded and efficient public transit, affordable homes near transit, and increasing biking and walking.

While there is work to be done in the weeks ahead, and some aspects of the proposal need improvement, Senator Steinberg has made a clear commitment to provide a much needed boost in funding to meet both California’s growing demand for real transportation and housing choices while meeting our greenhouse gas reduction targets.

Given that Senator Steinberg was the author and driving force behind the passage of SB 375, it is no surprise to see him once again taking a leadership role to dedicate a significant portion of cap-and-trade auction proceeds to achieve its objectives. With federal and state revenues declining, regions are increasingly being forced to turn to regional sales tax measures to make the transportation, housing, bicycle and pedestrian, and parks and open-space investments they need. But they can’t do it on their own. Cap-and-trade represents the only new source of funding for these priorities and is tailor-made to fund critical projects that reduce greenhouse gases and promote social equity. The proposal breaks down the investment areas for cap-and-trade in the following way:

  • 30% of cap-and-trade auction proceeds for investment in transit capital and operations, including funding for transit passes and transit connectivity projects. Funding would be awarded based on the emissions performance of projects. TransForm sees a competitive process at the regional level as the best way to select capital and operations projects that will achieve optimal combinations of emissions reductions and benefits such as access to jobs, improved public health, and lower transportation costs for families.
  • 40% to affordable housing and sustainable communities, with at least half of this 40% going to address demand for affordable transit-oriented homes. Since most Metropolitan Planning Organizations (MPOs) in the state don’t have housing programs, TransForm supports the Senator’s proposal to administer the funds at the state level and select projects on a competitive basis. TransForm and our housing allies describe how to get maximum benefit from these funds in this fact sheet.
  • 10% for complete streets. Funds from this section would be available for investing in complete streets. It is critical that these funds go through a competitive process to fund projects that maximize long-term emissions reductions via increased walking, bicycling, and transit ridership, rather than road rehabilitation alone. We will work with Senator Steinberg’s office so that funds from this category would achieve this objective.
  • 20% for High-Speed Rail. We recognize that a portion of cap-and-trade proceeds will be set aside for HSR. Our goal has always been to ensure that enough cap-and-trade proceeds support the achievement of SB 375 goals and that low-income and disadvantaged communities reap significant benefits. SB 1156 proposes funding levels that we find more reasonable than the Governor’s proposal of 33% of cap-and-trade proceeds for HSR.

The above percentages would apply to the pot of cap-and-trade funds after an annual appropriation to the following programs:

  • Up to $200 million for Natural Resources, Water, and Waste. This is a broad category that includes conservation, energy efficiency, and other issues such as clean vehicles. There is work to be done to ensure that this category provides enough support for natural resources, parks, and urban greening.
  • Up to $200 million for a climate dividend for transportation fuel users. The concept of a climate dividend would have a very minimal impact on motorists’ bottom lines and wouldn’t contribute to reducing emissions. This allocation of funding would be better utilized enhancing other pots that would reduce emissions and better impact Californians’ pocketbooks.
  • Up to $200 million for electric vehicles. This would provide incentives and rebates for the purchase of electric vehicles, including heavy-duty trucks and buses. This category could be strengthened by “stacking” rebates for electric vehicle purchases and credits removing gross polluting vehicles, allowing these incentives for transit passes or car-sharing vouchers.
  • $10 million for a green bank. This would assist financing of clean energy and other sustainable projects.

For all the work that remains to be done on the details of this proposal, one thing is clear: SB 1156 represents a potentially major annual increase in investment dedicated to funding transportation and housing choices that help meet our greenhouse gas reduction goals and help our communities prosper.

There is additional work to be done, but the overall landscape is clear: Senator pro Tem Steinberg is dedicated to advancing funding for real transportation and housing choices through cap-and-trade revenues.

California Is Ready for Change

Just last week Caltrans adopted the NACTO Urban Streets Design Guide. This will allow cities across the state to aggressively move forward with designing and building streets to accommodate biking and walking. It will allow them to innovate and build our communities to the human scale.

Cap-and-trade proceeds can and should play a critical role in making complete streets, world-class transit, and affordable, green, transit-oriented development a reality. With some hard work in the weeks ahead we can strengthen SB 1156 and ensure that it guides investment of cap-and-trade proceeds in the coming years.


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TransForum is the blog of TransForm, California's leading transportation advocate. For more about our work, including ways you can take action and contribute, visit