California’s road to climate progress, Part 5

Introduction

California policymakers know that their state is falling short of its transportation-related climate ambitions. The state’s own data show that vehicle miles traveled (VMT) remain stubbornly high, while development continues to push into distant, wildfire-prone areas. State legislators keep tinkering with new laws aimed at limiting construction of VMT-inducing projects, but local officials are adamant that the state demands too much planning compliance while offering too little funding to accelerate infill development. Simply put, the status quo isn’t working.

Addressing the state’s policy failures is possible, but it will require state lawmakers to be clear-eyed about what constitutes a successful policy approach. The state must work doggedly to achieve its own goals, but it can’t deliver on those goals without the help of local partners. Local and regional governments, real estate developers, community leaders, bankers, and other private investors lead almost all the construction in California’s communities. State decisionmakers must leverage the state’s legal authority and deep pockets to influence what local partners deliver.

Fortunately, California’s policymakers and transportation officials already have the tools to exert downstream influence. By withdrawing state funding for local roadway widenings, the California Department of Transportation (Caltrans) will force local partners to confront the true cost of widening roads and developing greenfield areas. Conversely, the state can help municipalities attract far more development to infill locations by deploying its gas tax revenues more flexibly. Meanwhile, the state has the resources to augment local government capacity—whether through technical assistance, more intergovernmental staff, or streamlined compliance requirements.

Those same state actors can even more easily transform their own processes and policies. State transportation agencies have a strong desire to build, which can be harnessed to deliver projects that will encourage lower VMT. Leaders at those agencies can issue broad prohibitions on the use of state funds for roadway widenings. The processes that staff use to plan, select, and fund projects can be honed to ensure that the state doesn’t build counter to its own goals.

This piece offers specific strategies—bundled into five overall recommendations—to use these tools to change outcomes on the ground. For outgoing lawmakers eager to leave their mark on California’s transportation policy (and for those who will arrive in Sacramento after the 2026 elections), we hope these recommendations can help the state deliver on its bold vision:

• Recommendation 1: Caltrans should stop funding all roadway widenings on state-owned and locally owned roads.
• Recommendation 2: Create a new Infill Access Fund to underwrite flexible infrastructure projects.
• Recommendation 3: Strengthen transportation funding and planning practices to deliver more sustainable, resilient, and infill-related projects.
• Recommendation 4: Simplify climate planning requirements and performance measurement to reduce compliance burdens on regions and municipalities.
• Recommendation 5: Leverage the “build, baby, build” energy of transportation professionals to deliver projects that support California’s climate goals.

Recommendation 1: Caltrans should stop funding all roadway widenings on state-owned and locally owned roads

The country isn’t growing in the same way that it did in prior generations, and California is no exception. The state isn’t planning for new metro areas, interstate corridors already connect California in every direction, and existing roadways and right-of-way can accommodate all emerging transportation technologies. If a key goal of roadbuilding is to facilitate economic activity, what’s already built can deliver on that goal.¹

At the same time, the state’s road network creates sizable financial liabilities. Even if the state stops adding any new lane miles today, maintenance and repair costs will continue to rise, especially as weather conditions grow more extreme. The state must take these costs seriously.

We urge the state take a more conservative approach to capital investments in its network, and recommend the following:

• Caltrans and the California Transportation Commission (CTC) should no longer invest in projects that increase lane mileage on state-owned assets, with a narrow exception for priced freight-only lanes. Caltrans and CTC officials have enough academic research—not to mention in-state performance data—to know that new lane miles will not reduce congestion. Just as importantly, California’s state system is already extensive enough to facilitate trade among in-state and out-of-state regions. Simply put, expanding roadway capacity exacerbates certain problems and fails to solve others. If agency officials truly want to reduce congestion, the only options are demand-side interventions such as road user charges. If specific roadways with high-value freight traffic are especially congested, agency officials should create a narrow exemption to construct freight-only lanes.² Ideally, any freight-only lanes would be priced to cover the state’s construction and maintenance costs and promote free-flowing traffic.³
• Caltrans should no longer fund projects that would add lane miles on locally owned roads, and the CTC should not dedicate state or suballocated federal funds to such projects. Legislators, Caltrans officials, and CTC commissioners should ensure that local governments seeking to add lane miles to their own roadways pay for them solely with their own-source local revenue. Despite the significant amount of funding derived through local options sales tax (LOST) measures, both local and state officials said that most locally initiated roadway widenings would not be executed without state and federal funds delivered by the state.⁴
• The CTC should clarify and enforce the prohibition on adding lane miles for projects funded by the State Highway Operation and Protection Program (SHOPP). The biggest set of state-controlled transportation funds is the SHOPP. Legislative intent that the program only support maintenance, rehabilitation, and operation of the state highway network is clear: State code says projects are only eligible if they “do not add a new traffic lane to the system.” The CTC should vigorously enforce that law, including but not limited to prohibiting and preventing widening roadway shoulders to accommodate vehicle traffic. With its resilience-focused asset management approach and use of federal highway maintenance funds, the SHOPP should only fund maintenance or rehabilitation of state highways, multimodal interventions that improve the operational efficiency of state highways, and decommission of lanes where sensible.⁵⁶

Recommendation 2: Create a new Infill Access Fund to underwrite flexible infrastructure projects

The most durable way to reduce VMT, transportation-related emissions, and exposure to extreme weather is to accelerate development in infill locations. But property developers in those infill locations don’t need new highway lane miles; local roads and regional highways already serve those neighborhoods. Infill developers have different infrastructure needs, including improved utilities, redesigned roadways, and nearby public space.

The state has a generational opportunity to make infill development more attractive by using existing transportation programs and revenues. California has adopted transformative programs before, responding to consumer and developer demands in the 20th century by building publicly owned freeways and multilane arterials. Committing state funds to modernize infill infrastructure better responds to 21st century demands.

Even better, this new approach perfectly complements the VMT mitigation bank mechanism, operated through the Transit-Oriented Development Implementation Program. That program only receives funds if a transportation or real estate project will induce VMT, and has the primary effect of dissuading VMT-inducing development before it happens. In contrast, the approach we describe promotes more VMT-efficient development regardless of what happens somewhere else.

• The state must secure funding for any new infill-promoting programs. Repurposing funds that currently flow to state highway widenings or new routes will offer an immediate pot of funds. For example, a 2023 report from the National Resources Defense Council found that of $22.4 billion in state funds programmed from 2019 to 2027 in support of 4,824 projects, $2.2 billion was committed to 178 VMT-inducing projects. Roughly $1 billion of that came from the Trade Corridor Enhancement Program (TCEP). If the legislature repurposed the TCEP into a new Infill Access Fund, that fund would start receiving $400 million in annual funding based on FY 2026 accounting.⁷ This would be a funding floor, however, as Caltrans and the legislature could repurpose other funds currently used to widen roadways. We also believe a future road user charge (RUC) should channel funding to the Infill Access Fund.

If the state wants to use gas tax revenues for a range of infrastructure projects, Article XIX will need to be broadened to permit expenditure on a wider set of qualified projects, such as utility improvements. Presuming current transportation revenues can flow legally into a new program, we specifically recommend that the state leverage the revenue it would’ve otherwise used on VMT-inducing projects.

• The state should create a new formula-based Infill Access Fund to deliver flexible funding directly to municipalities.⁸ The fund, housed within Caltrans, would give municipalities funding to construct a range of physical infrastructure assets in qualified infill neighborhoods (see below).⁹ This new instrument is purposefully meant to accelerate the kinds of real estate development that recent reforms related to the California Environmental Quality Act (CEQA), such as SB 79, aim to expand.

The new fund would split state-budget-allotted annual funding across every Caltrans district, proportional to a mix of population and economic need, with greater relative funds given to districts either with lower gross domestic product per capita or faster population growth rates. The district office would then suballocate funds directly to municipalities and be responsible for ensuring funded projects are compliant with any programmatic guidelines. Unlike housing-specific requirements and competitive applications such as those used by the Infill Infrastructure Grant Program, this streamlined approach would ensure public funds flow to a variety of project types within qualified infill neighborhoods. The Regional Early Action Planning Grants (REAP) 2.0 program can act as a reference point for lawmakers.

• The state should create an official set of infill neighborhoods. Of course, these should include locations already generating shorter trips. But they should also include neighborhoods with the “urban bones”—such as a dense street grid, proximity to employment hubs and other activity centers, rates of land development at or near 100%, or adjacency to the core—where greater density of development would quickly lead to shorter trips. Because this investment is meant to accelerate development in corridors and block groups that can support it, the state should create statewide maps that rely on the aforementioned principles, instead of borrowing the transit-proximate definition used by AB 130 or parcel-specific elements such as within §53559 of the state’s Health and Safety Code.

The Governor’s Office of Land Use and Climate Innovation (LCI) could be responsible for creating the map and updating it every five years.¹⁰ Whichever office or agency maintains these infill locations, they should be done at the state level to standardize understanding of what qualifies as an infill area and establish comparable areas across the state.

• The state should create an official list of qualifying infrastructure assets and improvements and marry them to CEQA exemptions. The list can borrow language used by the Transit-Oriented Development Implementation Program or the Infill Infrastructure Grant Program. We recommend, however, that electric vehicle charging infrastructure (particularly in parking garages of multifamily buildings) also be included, since it could further incentivize people and businesses to relocate to infill locations. Critically, qualified infrastructure projects constructed within infill neighborhoods should benefit from the same CEQA streamlining AB 130 affords certain projects.

Overall, the new Infill Access Fund will offset municipal costs and ease the fiscal burden around servicing expanded housing, commercial, and industrial uses. Though some cities may currently be constrained by the limitations of development impact fees, this Infill Access Fund can bridge that gap while encouraging the kind of development that will let California simultaneously meet its emissions and housing goals. If municipalities feel the strain of infrastructure improvement costs even with the Infill Access Fund’s additional support, they can choose to make greater use of tax increment financing to further cheapen and accelerate development.

Recommendation 3: Strengthen transportation funding and planning practices to deliver more sustainable, resilient, and infill-related projects

Even if state leaders stop funding roadway widenings and create a new funding stream to spur infill development, most existing systems at Caltrans and the CTC will continue. Yet those specific policy mechanics also have procedural failures that need to be addressed. Project evaluations meant to ensure the state delivers VMT-reducing, sustainable projects are often intentionally riddled with loopholes. Some funding processes lack a climate-related evaluation altogether.

To strengthen the ability of Caltrans and the CTC to deliver the most sustainable projects, we recommend the following:

• Legislators and Caltrans should change the current evaluation process under the CSIS, making a project’s CAPTI alignment score the required metric, rather than “program fit.” Current policy holds that all projects that seek state funding to add lane miles must be evaluated by the Caltrans System Investment Strategy (CSIS) and align with the principles of the Climate Action Plan for Transportation Infrastructure (CAPTI). Legislators and Caltrans must prioritize alignment with CAPTI principles over alignment with funding programs.
• Caltrans should fully incorporate CSIS as a categorical evaluation at the project initiation stage of a project. This will strengthen the weak language that currently determines how projects are evaluated for CAPTI alignment before they’re added to Caltrans’ pipeline. Instead of prioritizing all-too-vague “proactive dialogue” while evaluating project initiation documents, this new evaluation would prioritize CAPTI alignment as its primary, dispositive criterion. This is especially common sense given that all projects will eventually undergo CSIS evaluation to receive state funding.
• The CTC should use the CSIS or a similar, CAPTI-based evaluation to choose which projects to fund. Whatever the tool, this new evaluation would significantly limit one pathway by which VMT-inducing projects receive funding. Critically, the CTC should publish the scores from this evaluation to make themselves accountable to officials in state government and the interested public.¹¹
• Legislators should reduce the approval threshold for government-initiated LOST measures to a simple majority if they will strictly fund infill development. Lowering the threshold would make it far more attractive for regions and their local partners to present constituents with funding measures that would only improve infill infrastructure.¹² Ideally, projects that would allow for this reduced threshold would match the kinds of infrastructure funded by the Infill Access Fund. 
• State lawmakers should require Caltrans to craft a fiscally constrained version of the California Transportation Plan (CTP). Such a change would address the long-standing concern that the CTP lacks concrete implementation steps and does not affect which projects the state and its metropolitan planning organizations pursue. Critically, it would force state agencies to use the CTP to explain how existing and predicted funding would support an 80% reduction in greenhouse gas emissions from 1990 levels by 2050—an explanation SB 391 already requires. When officials plan with dollars in mind, they’re forced to think more concretely about what a plan can deliver.

Recommendation 4: Simplify climate planning requirements and performance measurement to reduce compliance burdens on regions and municipalities

Transforming where the state invests in infrastructure—and moving dollars from capacity expansions to infill-supporting projects—should create powerful downstream benefits for localities. Combined with VMT mitigation fees, localities will have clear incentives to prioritize development in infill locations. In other words, the state will now be showing localities what to do—not just telling them.

In response, the state should begin to unwind many of the compliance-driven processes adopted in recent decades that delivered limited results. One value of climate planning exercises is to raise long-term awareness of relevant issues and drive consensus around goals and solutions—but they’re not meant to be enforceable. The Sustainable Communities Strategies (SCS) typify this: Regions develop the plans, but state law effectively admits it’d be impossible to make each municipality’s General Plan align with their regional SCS.

By contrast, the state should continue to view the locations of new housing units and commercial and industrial real estate as the main drivers of sustainable and resilient development, including travel patterns. We recommend the following:

• The state should develop a simple, standardized form that localities can submit to confirm how General Plans incorporate emissions data and climate risks. We recommend relevant state agencies (e.g., Caltrans, LCI, the California Air Resources Board) convene a short-term task force, composed of a representative group of municipal officials and state administrative experts, to decide which metrics should be reported. These metrics should be simple enough for any municipality to create with limited internal hours spent, and the standardization should streamline review by state officials. If data reporting via the Department of Housing and Community Development’s Annual Progress Report was simplified, this new data could be reported using the same system. We would recommend focusing on mappable data and summary statistics demonstrating where public construction and private development is planned to occur. State officials may want to overlay planned construction against state-published infill and VMT maps.
• LCI should annually update localities on all compliance changes related to the built environment and make staff available for technical assistance. One of the most common complaints we heard from local officials was the impossibility of tracking new laws with which they have to comply. Simply put, the state is moving faster than localities can keep up, especially smaller cities. In response, the governor should require LCI to update all relevant guidance annually. Then, to facilitate compliance, LCI should receive ample headcount to create minimum wait times for offering technical assistance to municipalities.
• State, regional, and local officials need to determine whether the SCS process is worth reforming. Throughout our research process, we consistently heard conflicting opinions about the utility of the SCS. Some support the process in spirit but lament that it hasn’t led to desired outcomes, while others fear losing any climate planning document no matter its impact (or lack thereof). Still others think that tweaks to the process could make the plans more impactful, especially considering the CEQA streamlining they allow for and their effect on Regional Transportation Plans. The variety of comments we heard echoes the range of reforms suggested in official public statements and other reports—as in a 2024 SPUR report, a 2022 California Strategic Growth Council report, and a 2018 report from the University of California, Berkeley’s Terner Center for Housing Innovation. At this point, California’s state and local officials need to determine whether this process can be reformed (what the Sustainable Communities Task Force is now doing), or be willing to scrap it entirely. Whatever the Task Force and leaders who implement their recommendations decide, we urge them to focus on the outcomes the SCS can deliver, not on using it to virtue signal.

Recommendation 5: Leverage the ‘build, baby, build’ energy of transportation professionals to deliver projects that support California’s climate goals

Caltrans was created to build roads. So over the last century, a culture reflecting that mandate has naturally surfaced. However, research now suggests that the culture and skills of Caltrans staff are misaligned with the contemporary goals of state leaders and the department itself.

But the fundamental drive of Caltrans staff to build is an opportunity, not a challenge. Many experts told us the agency’s engineering prowess is an asset—the problem-solving ability of engineers was heralded several times—that must be applied differently.¹³ If leadership, management, and staff at Caltrans can successfully reorient themselves—and thus the department as a whole—toward solutions that prioritize emissions reductions and resilience, every other reform we suggest will have a much easier path to its full potential.¹⁴ In the long term, Caltrans, the California State Transportation Agency (CalSTA), and the CTC must transform multimodal, climate-benefitting work from the subject of guidance and planning documents into the top-most priority of state transportation staff.

Beyond reforms such as prohibiting roadway widenings and modifying evaluation processes, we recommend the following:

• CalSTA, Caltrans, and the CTC should revisit the 2014 State Smart Transportation Initiative (SSTI) analysis and implement recommendations that were not executed. Simply titled “The California Department of Transportation: SSTI Assessment and Recommendations,” this 2014 analysis made 10 recommendations and included 46 specific action items. Experts said that Caltrans has made progress on some recommendations (such as prioritizing asset management in Caltrans operations), but less so on others. Recommendations such as better resourcing Caltrans rail and freight planning branches remain accurate and crucial.
• Each Caltrans district should submit a plan every four years—staggered with STIP updates—demonstrating how investments in their footprint will reduce emissions and increase asset resilience. The only requirements should be to submit a plan and convene meetings with regional leaders in their district, the goal of which would be to promote collaboration and knowledge-sharing among Caltrans staff and regional collaborators. If Caltrans leadership determines that the district plan is not being implemented in good faith, they should leave open the option of retracting the delegated project initiation approval authority from district directors.
• CalSTA should work with the University of California (UC) system and the Labor and Workforce Development Agency to develop an infill development curriculum. Lawmakers can’t expect all CalSTA and Caltrans staff to intuitively understand the benefits of a new approach to spatial development. Instead, leadership should show staff what infill development can achieve and deliberately impart the knowledge and skills required to build such communities. We recommend experts in continuing education assemble a flexible curriculum to do just that. That curriculum should include a mix of site visits; meetings with local officials in charge of budgets, economic development, housing, and public works; and classroom-style activities to teach more advanced techniques, such as those used in civil engineering. These lessons would serve the additional purpose of signaling the highest priorities of California transportation leadership to rank-and-file staff.
• CalSTA should work with LCI and experts in the UC system to enhance the knowledge of staff and external stakeholders through applied research. Two critical topics are of immediate need. The first relates to employment impacts: Using a representative sample of roadway, supportive infrastructure, and real estate construction projects, researchers should create estimates of the impact of different project types on short-term construction jobs, long-term operations jobs, and broader economic impacts. The second relates to infill’s broader economic benefits: Researchers should perform a meta-analysis of academic research on how infill development impacts priority metrics such as small business sales, roadway safety, and fiscal costs and benefits to localities. 

Conclusion

California didn’t build its reputation for climate action when lawmakers adopted emissions targets or made bold commitments. California is held in such high regard because its lawmakers passed more climate-related transportation and land use laws than any of its peers. It’s not hyperbole: California is experimenting more than anywhere else in the U.S.

The state’s lawmakers should maintain that kind of legislative courage and be willing to update their landmark transportation and land use laws. We consistently heard that the current regime isn’t delivering the climate-related outcomes that many of the laws’ supporters had originally hoped, whether through the eyes of state or local stakeholders. As state lawmakers consider the next batch of reforms, they should make better use of their funding and compliance authorities. Based on our research, we confidently believe reforms should focus on a singular goal: promoting infill development.

There will certainly be political opponents to such an approach, whether it’s someone who personally profits from greenfield development or an everyday resident who just wishes the 405 would magically have less traffic. But political opposition shouldn’t distract those who know the opportunity that a cleaner and more equitable California presents, nor does the political opposition in this case offer a reasonable or compelling alternative to that future.

We set out to understand why California’s transportation realities didn’t match the state’s climate ambitions, and found plenty of reasons today’s policies don’t deliver that vision. Lawmakers and agency officials must understand that they have no choice but to take generational action once again.