California Budget Process Demystified

The process of allocating spending for the next fiscal year in California is complex, opaque, often controversial — and critically important. CalBike has scored significant wins for better biking through the budget process, like securing $10 million for the statewide e-bike incentive pilot in 2021 and getting a one-time funding bump for the Active Transportation Program to $1 billion in 2022, more funding than the state has ever invested in biking and walking infrastructure.

We’re making some big budget asks in 2023:

To meet these ambitious goals will take action — emails and calls from supporters like you. But we realize that although the funding is exciting, the budget process is confusing and, frankly, wonky. Here are some FAQs to help explain California’s budget process and, we hope, get you excited about weighing in on your spending priorities.

California Budget FAQs

What is the California state budget?

Like every other US state, California must pass a budget each year. Unlike the federal government, states must balance their budgets, so California lawmakers set spending levels based on revenue projections.

California operates on a fiscal year that begins on July 1, so the deadline to pass a budget bill that both houses of the legislature and the governor agree on is June 30.

Why is the 2023 budget extra challenging in California?

California went from a budget surplus in 2022 to a projected deficit in 2023. To add to the challenge of figuring out where to cut, this year’s punishing winter storms led the Franchise Tax Board to follow the lead of the IRS and push the income tax filing deadline back for residents of all but seven California counties. Most of California’s taxpayers don’t have to pay or file until October 16, so lawmakers won’t know exactly how much they have to work with when they pass the final budget in June.

Can the budget change after the June deadline?

Yes. Line items can be added or deleted after the deadline. We may see more changes than usual in 2023 because of the late income tax filing deadline, as noted above. Additionally, budget “trailer bills” can greatly modify where spending goes.

What is the California budget process?

There are several major milestones for the California budget.

What is the May Revise?

The May Revise is the term for the governor’s updated version of the budget from January, issued in mid-May, after taking into account a better estimate of expected revenues alongside the administration’s policy priorities.

When does the budget have to be finally approved?

California’s budget approval deadline is June 15.

How big is California’s state budget?

The budget varies from year to year. For the 2023-2024 fiscal year, the governor’s budget was $297 billion in January.

How much does California spend on transportation?

Transportation expenditures are approximately $20 billion, or about 7% of the budget in the governor’s proposed version. But this is just 25% of all transportation funding in California.

That figure doesn’t tell the whole story, however, because California gets federal funding to supplement the $20 billion from its own coffers. Federal spending comprises another 25% of all California transportation funding. The federal Infrastructure Investment and Jobs Act will bump up transportation funding and alone will send at least an additional $41.9 billion to California over the next five years, most of which will be allocated to transportation projects.

Moreover, half of all transportation spending in California comes from the local level. These funds, often provided by voter-approved local sales tax measures, are overseen by city and regional officials.

What does the transportation budget pay for?

California’s transportation budget funds road repairs; building new roads and freeways; the CHP, DMV, Caltrans staffing, and other administrative costs; public transportation; and the Active Transportation Program (biking and walking infrastructure). Some funds from cap-and-trade go to climate-friendly transportation options such as high-speed rail and to sustainable housing.

Does California get federal transportation funding?

Yes. California receives approximately $20 billion every year, representing 25% of all California transportation funding.

What percentage of the California transportation budget goes to active transportation?

In recent years, the Active Transportation Program (ATP) has gotten around $222 million in annual funding. That’s about 1% of the state’s transportation funding.

In the current fiscal year, the ATP got a one-time bump up to about $1 billion from the General Fund, but the governor took back half of that money ($500 million) in his January budget. In an April statement of their budget priorities, Senate Democrats proposed returning the $500 million to the ATP.

What level of funding is CalBike requesting for active transportation?

CalBike is asking lawmakers to spend $10 billion, or 50% of the state’s transportation dollars, on active transportation in the 2023-2024 budget. In the face of a climate crisis that grows more extreme and expensive yearly, funding active transportation is the fiscally responsible choice. Shifting transportation spending priorities is essential if California is serious about addressing the climate crisis and creating livable neighborhoods where residents can thrive.

What difference would $10 billion for bikes make?

$10 billion would fully fund the Active Transportation Program (which leaves more excellent projects unfunded every cycle because of a chronically insufficient budget), Complete Streets, connected bike networks, and more. It could enable Caltrans to deliver on its promise to add Complete Streets features to state highways that serve as city streets. That level of funding could support an ongoing e-bike incentive program, help communities build safer biking and walking infrastructure, and shore up public transit budgets, ensuring those vital systems remain viable.

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California Needs $10 Billion for Bikes

Correction: An earlier version of this post included the wrong deadline to finalize the budget. The governor and the legislature must agree on a budget by June 30.