SB 125, signed in 2023 as Chapter 54 of that year’s statutes, is California’s $5.1 billion response to the operating deficits and ridership losses public transit agencies faced coming out of the pandemic.1California State Transportation Agency. SB 125 Transit Program The law routes one-time money through two programs run by the California State Transportation Agency, and its defining feature is flexibility: regional agencies can spend the dollars on either capital projects or day-to-day operations, which lets them keep buses and trains running while working toward longer-term financial stability.
How the $5.1 Billion Is Split
SB 125 divides its funding between two programs with different purposes and timelines.
Transit and Intercity Rail Capital Program
The larger pot is $4 billion from the General Fund and the Greenhouse Gas Reduction Fund, flowing through the Transit and Intercity Rail Capital Program (TIRCP). CalSTA distributes the money to regional transportation planning agencies using a population-based formula, after a $300,000 base allocation to each recipient.2California State Transportation Agency. SB 125 Final Guidelines The funds roll out over two fiscal years, 2023–24 and 2024–25. Despite the program’s name, SB 125 explicitly allows these dollars to pay for operations as well as capital work, a departure from how TIRCP funds have historically been restricted.1California State Transportation Agency. SB 125 Transit Program
Zero-Emission Transit Capital Program
The remaining $1.1 billion funds a new Zero-Emission Transit Capital Program (ZETCP), distributed to the same regional agencies using a combined formula based on population and existing transit revenues.1California State Transportation Agency. SB 125 Transit Program It pays for zero-emission transit equipment and the operations tied to that equipment. The four-year distribution schedule has a gap worth planning around: $190 million in 2023–24, $220 million in 2024–25, nothing in 2025–26, then $230 million in 2026–27 and $460 million in 2027–28. Agencies timing fleet electrification purchases need to work around that pause.
Who Gets the Money
Regional transportation planning agencies are the legal recipients for both programs. They receive state allocations and distribute the money to local transit operators in their jurisdictions. Every county or multi-county region in California has a designated planning agency filling this role, from large metropolitan planning organizations to smaller rural county transportation commissions.1California State Transportation Agency. SB 125 Transit Program
Transit providers themselves, including city bus systems, regional rail authorities, and ferry operators, receive money as sub-recipients through their regional agency. To qualify, an operator must currently provide public transit service and be eligible under existing state programs such as the State Transit Assistance fund. Both small rural operators and large metropolitan transit districts can receive SB 125 dollars, as long as they operate in a participating region and meet the reporting requirements.
Capital or Operations: What the Money Can Pay For
The flexibility is the heart of the law. Older TIRCP money funded capital projects such as new rail cars, station construction, and fleet purchases. Agencies coming out of the pandemic faced a different problem, with vehicles sitting in yards because there was no money to pay the drivers and mechanics to run them. SB 125 lets regional agencies direct their TIRCP allocations to either capital improvements or daily operations such as driver salaries, fuel, and maintenance.1California State Transportation Agency. SB 125 Transit Program The Zero-Emission program works the same way, covering both the equipment and the operations needed to run it.
When agencies do spend the money on capital, eligible uses include procuring zero-emission buses and rail vehicles, upgrading stations and facilities, maintaining track and infrastructure, and modernizing fare collection.3California State Transportation Agency. Transit and Intercity Rail Capital Program The ZETCP narrows capital spending to zero-emission equipment specifically.
The flexibility comes with a condition. Agencies that shift money toward operations must still show, through their required financial plans, how they intend to reach long-term solvency without depending on continued emergency state funding.
What Agencies Must Do to Keep the Money
CalSTA runs an accountability program that steps up as agencies move from their first year of funding into later years.1California State Transportation Agency. SB 125 Transit Program
Short-Term Financial Plan
Each regional planning agency must compile transit operator data and submit a regional short-term financial plan covering the period through fiscal year 2026–27. The plan includes ridership data, current service levels, and financial projections. Agencies that did not include this plan in their initial allocation package can submit it on a rolling basis, but it must be in before any additional funding is released.4California State Transportation Agency. SB 125 Cycle 2 Guidelines
Long-Term Financial Plan
Separately, each agency must submit and get CalSTA approval of a one-time long-term financial plan by June 30, 2026. The plan has to explain how the region will sustain transit operations without relying on additional discretionary or non-formula state funding. It must include a five-year operating funding forecast, lay out all proposed revenue sources (including any new local measures being pursued), and describe ridership retention and recovery strategies.4California State Transportation Agency. SB 125 Cycle 2 Guidelines An approved plan is a prerequisite for receiving TIRCP funding in 2026–27 and beyond.
Year-Two Requirements
To receive the second year of TIRCP or ZETCP funding, an agency must submit an updated fund request form, an annual reporting template, and the short-term financial plan if it hasn’t already.1California State Transportation Agency. SB 125 Transit Program Agencies with incomplete filings get a remedy window to fix them rather than losing the money outright. The structure works as a gateway: an agency that never submits qualifying materials simply cannot draw down its allocation.4California State Transportation Agency. SB 125 Cycle 2 Guidelines
Key Deadlines
- December 31, 2023: Initial allocation package and compiled transit operator data due for first-year funding.
- December 31, 2024: Materials due for timely distribution of second-year TIRCP funds.
- June 30, 2026: Approved long-term financial plan required to stay eligible for TIRCP funding in 2026–27 and later.4California State Transportation Agency. SB 125 Cycle 2 Guidelines
- June 30, 2028: All first-year TIRCP and ZETCP funds must be fully encumbered or expended.2California State Transportation Agency. SB 125 Final Guidelines
The Transit Transformation Task Force
SB 125 also created the Transit Transformation Task Force, a 25-member body led by CalSTA and charged with developing policy recommendations to grow ridership, improve the rider experience, and address long-term operational funding needs.1California State Transportation Agency. SB 125 Transit Program Members come from state and local agencies, academic institutions, and nongovernmental organizations. The task force issued a final report to the Legislature with recommendations covering farebox recovery penalties under the Transportation Development Act, local ballot authority for transit agencies, value-capture strategies, and the use of managed-lane toll revenue to support transit service.5California State Transportation Agency. SB125 Transit Transformation Task Force Final Report What the Legislature does with those recommendations will shape whether California’s transit systems need another round of emergency funding once the SB 125 dollars are gone.