California’s May Revise Reflects Continued Constraints for Clean Transportation Funding

By Darryl Little Jr.

On May 14, Governor Gavin Newsom released the May Revision of California’s proposed 2026–27 state budget, providing an updated outlook on the state’s fiscal condition and funding priorities for the coming year. As anticipated, the revised proposal reflects ongoing budget constraints, with limited new investments dedicated to clean transportation incentive programs despite California’s broader climate and transportation goals.

While the May Revise preserves a previously proposed light-duty commitment, it lacks significant funding across several key clean transportation sectors. Below, you’ll find an overview of the major developments and what to watch as budget negotiations continue.

Light-Duty Zero-Emission Vehicle Incentives

Governor Newsom’s revised budget maintains the previously proposed $200 million allocation to establish a new light-duty zero-emission vehicle incentive program. This funding level remains unchanged from the January proposal and represents the administration’s primary clean transportation investment included in the May Revise.

Equity-Focused Programs

Despite ongoing legislative discussions emphasizing equitable access to clean transportation, the May Revision does not include additional funding for equity-focused mobility programs such as Clean Mobility Options.

Medium- and Heavy-Duty Programs

The revised budget also provides no new dedicated funding for medium- and heavy-duty clean transportation programs.

While the recently announced Clean Fuel Reward Program — a Low Carbon Fuel Standard-funded point-of-sale rebate initiative for electric medium- and heavy-duty trucks — offers valuable support for fleet electrification, it is not positioned to replace the role of the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project. Instead, the program functions as a complementary tool within a broader incentive ecosystem.

Sustained investment in medium- and heavy-duty incentives remains essential to helping fleets manage upfront vehicle costs, supporting infrastructure deployment, and maintaining progress toward California’s freight modernization and emissions reduction goals.

California Energy Commission Clean Transportation Program

The California Energy Commission’s Clean Transportation Program sees no major changes in the May Revision. Although no significant new funding increases were proposed, the program is expected to continue operating under prior-year allocations and supporting ongoing infrastructure deployment efforts statewide.

Looking Ahead

The May Revision marks an important milestone in California’s budget process, but negotiations between Governor Newsom and the Legislature will continue over the coming weeks ahead of the state’s June budget deadline. During this period, policymakers will continue to evaluate funding priorities.

While the revised proposal maintains $200 million for a new light-duty zero-emission vehicle incentive program, significant funding gaps remain across medium- and heavy-duty deployment, infrastructure, and equitable mobility programs. As discussions continue, sustained engagement from industry leaders, fleets, technology providers, utilities, advocates, and other stakeholders will remain critical to ensuring California maintains momentum toward its clean transportation and climate goals. CALSTART will continue engaging with state leaders and coalition partners throughout the budget process and identifying opportunities for members to support ongoing advocacy efforts, including legislative engagement, coalition coordination, and program education.

Members interested in learning more or participating in ongoing budget and policy discussions are encouraged to contact Darryl Little Jr., CALSTART State Policy Director (dlittle@calstart.org).

CALSTART will continue monitoring negotiations closely and provide updates as the budget process moves forward.