New home construction. (Photo: Katy Grimes for California Globe)
VMT Housing Tax Buried in Budget Bill Could Add $324,000 Per Home or Apartment
Gavin Newsom’s ‘CEQA Reform’ will continue to add outrageous costs to building projects
By Katy Grimes, September 8, 2025 7:17 am
A new Vehicle-Miles Traveled (VMT) housing tax was quietly buried in the recent budget housing bill package in Assembly Bill 130, the bill Newsom signed in June claiming he was reforming CEQA, the Holy Grail of environmental policy, California Environmental Quality Act.
The Coalition for Affordable, Reliable, and Equitable (CARE) Housing warns that the tax will drive up housing costs, destroy jobs, and worsen the state’s affordability crisis. The tax could reach $324,000 per home or apartment – “a crushing burden that translates into the equivalent of a $2.00 penalty for every extra mile driven over government-set driving limits,” the coalition said.
Senator Tony Strickland (R-Huntington Beach) joined the coalition sounding the alarm on Assembly Bill 130, a budget bill that Sacramento Democrats passed in June and Governor Gavin Newsom signed into law.
While AB 130 removed some California Environmental Quality Act (CEQA) requirements, the bill includes a provision that incentivizes developers to build projects near public transportation resulting in “low vehicle miles traveled.” If a new development is deemed to have high vehicle miles traveled, developers may be required to contribute to a fund for developing low VMT projects.
The provision, Section 58 in AB 130, would allow local agencies to impose Vehicle Miles Traveled (VMT) fees that operate like hidden taxes on new housing across the state. The de facto taxes could potentially add $16,000 per unit and would likely be passed on to homebuyers and renters:
(b) (1) (A) If a lead agency determines that a project will have a significant transportation impact pursuant to the metrics adopted pursuant to paragraph (1) of subdivision (b) of Section 21099, the lead agency may mitigate the transportation impact to a less than significant level by helping to fund or otherwise facilitating vehicle miles traveled-efficient affordable housing or related infrastructure projects, provided the projects meet the requirements of mitigation measures contained within this division and Chapter 3 of Division 6 of Title 14 of the California Code of Regulations, including by contributing an amount, to be determined pursuant to the office’s guidance issued pursuant to subdivision (d), to the Transit-Oriented Development Implementation Fund for purposes of the Transit-Oriented Development Implementation Program.
(B) This section shall not preclude the lead agency’s use of other mitigation strategies, including, but not limited to, transportation demand management, transit improvements, active transportation infrastructure, road diets, or utilizing local or regional mitigation banks and exchanges.
(2) Moneys may be deposited into the Transit-Oriented Development Implementation Fund pursuant to paragraph (1) beginning on or before July 1, 2026, as determined by the department.
(3) Consistent with paragraph (1), a project applicant may use the Transit-Oriented Development Implementation Fund as one optional strategy to mitigate a significant transportation impact under this division. The ultimate use of this mitigation option is subject to the discretion of the lead agency that retains full authority to determine the sufficiency of any proposed mitigation consistent with this division.
“So much for Sacramento Democrats calling this the year of affordability as they snuck a Vehicle Miles Traveled (VMT) mandate into a budget bill, creating new hurdles for housing development by forcing developers to pay costly fees if projects are deemed to increase drive time,” Senator Strickland said. “Ultimately, this provision will hike up construction costs and make housing even more expensive.”
“At a time when Sacramento Democrats declare that California faces a severe housing shortage, this provision is counterproductive and will only worsen our housing and affordability crises.”
“Housing is not a one-size-fits-all, and yet this is another attack on the way of life for families who choose to live in rural communities or away from high-density housing,” Sen. Strickland added.
The Coalition breaks down the Impact of the new VMT housing tax:
- Raises new home prices on top of existing mandates that already add $197,000 to the price of a new home.
- Increases monthly rents by $1,350 — a 48% jump over the state median.
- Disproportionately harms low-income and minority households of color.
- Stalls housing production and eliminates construction and trade jobs.
In June when Gov. Newsom signed AB 130, Lance Christensen weighed in on Newsom’s dubious claims of CEQA reform:
“Translation: For the 7 years I’ve been governor, I did the bidding of environmentalists and unions and blocked the ability of people to build homes in California. Now I signed a bill that the news outlets are going to mimic my talking points of ‘major reforms’ that does nothing of the sort. Just like the expedited housing permits in burned out LA…”
While AB 130 exempts housing projects from environmental review, it also imposes minimum wage requirements and prevailing wage rates on developments that were never subject to these costly mandates—a costly mandate in a bill that purports to make it easier to build housing, Jon Fleischman reported.
But as the Associated Builders and Contractors clarifies, “the vast majority of construction workers in California choose to work free from union representation, with new data revealing that more than 87% of the state’s private construction workforce is nonunion.”
Promises of CEQA reforms from the Democrat ruling party have been made for decades, but usually only serve to exempt a pet project from environmental review, such as in 2012, I wrote about just one of those attempts – the proposed downtown Los Angeles football stadium – this was the second bill to authorize exemptions to selected projects with costs of $100 million or more. And another in 2013, a bill authored by then-Sen. Pres. Pro Tem Darrell Steinberg (D-Sacramento), granting the Sacramento Golden One arena development an exemption from CEQA, the state’s strict environmental laws.
As I said in July, Gavin Newsom would never really reform CEQA – he’s too much of a progressive, which explains the laundry list of caveats to build. But that’s the story they are selling to gullible media who don’t ask questions.
The coalition includes a long list of small and large business and industry advocates, home building organizations, taxpayer advocacy organizations, faith and family organizations and politicians.
A California native and Navy mom, Katy lives in Sacramento, CA.
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Gov. Newsom ; why don’t you admit that you want to rule the earth and have the power of life and death over everyone and everything .Now that you have made California impossible to live in you can make the United States impossible to live in as President ! Thanks for nothing !!
Complicating the VMT standard… is that it not uniform across California.
The state set the VMT requirement, it only provides a framework and guidance through the Governor’s Office of Planning and Research (OPR) Technical Advisory. However, individual “lead agencies” – cities and counties – are responsible for implementing the VMT standards within their jurisdictions.
Municipalities must develop their own “thresholds of significance” to determine when a project’s VMT is considered a significant environmental impact. OPR’s guidance suggests a threshold of 15% below the existing per capita VMT for a given area as a “reasonable” starting point, but this is a recommendation, not a strict rule. Cities and counties use different travel demand models or tools to calculate a project’s VMT impacts. To that end, some jurisdictions have developed criteria to “screen out” smaller projects or projects in “transit-rich” areas that are presumed to have a less-than-significant VMT impact, streamlining the CEQA process for those (preferred) projects. So more dense development is encouraged, while less dense residential projects – the California (and American) dream for a majority of citizens, gets punished with higher VMT mitigation fees -based on the VMT metrics of each separate municipality or county.
In El Dorado County, the County contracted out the majority of the VMT implementation to a traffic/engineering consultant – a consultant which happens to most of the traffic analysis for many of the county’s largest residential projects, meaning that every development project essentially meets the county’s VMT standard.
This could eliminate All rural construction of new homes. I live more than 50 miles from the nearest mass transit station. This could add millions to the cost of a single family rural home. There are many parts of the state that are much more remote. Building lots in rural areas could be made completely worthless.
Thus is a obvious 15 minute city power grab that will effectively eliminate All new housing not right next to a train station.
Who wants to live in Democrat run cities? Not me. They are the epitome of failure with high taxes, high crime, homeless addicts, congestion, and Democrat voters voting for all kinds of stupid things.
How can your have affordable housing when the GOVERMENT adds $197,000 to the cost of a home.
As you know, you can’t.
Always apply the “opposite” rule to everything these lying Dem politicians say and do.
E.g. “affordable housing” (a meaningless term anyway) is actually “UNaffordable housing.”
The “completely safe” Covid-19 “vaccine” is a poisonous brew of ingredients that can kill and disable.
“Statistics show crime is down” means crime is worse, more frequent, and more violent than ever.
The list is long.
Oh GREAT. Yet another disgusting, vile piece of “legislation,” buried deep in the dark. AGAIN. Just goes to show you that when our horrid tyrannical freak “leaders” have something they REALLY want to hide, they bury it in a budget bill. Then virtually NO ONE sees it until it’s too late. Bonus points for taking well-deserved criticism off of the governor’s back because “all he did” was sign the budget, he would say. Am I missing something in this tangled, shameful mess that is very near to completely suffocating the people of the state of California?
You said it ShowandTell,
“…very near to completely suffocating the people of the state of California?”
They are figuratively putting a pillow over each and every one of our faces, taking away our rights of pursuit and happiness, like a thief in the night.
In California because of the supermajority they tax us without our consent, make no mistake this is taxation without representation.
Also they are choosing losers and winners! Those who yearn for a quiet, rural lifestyle are punished!
This legislative body is out of their minds and out of control!
Yes, CG, it’s as if we’re each being suffocated by a pillow.
Doesn’t help, does it, that the powers are probably happy about that.
Our Republican leaders should be using AI to summarize and search these bills for this kind of thing hidden in bills.
It appears this would create yet another slush fund and my guess is that much of the money deposited in it will be diverted to other uses such as funding NGOs.
“While AB 130 exempts housing projects from environmental review”
Let me tell you how the Democrats work. When environmental regulations suit the Democrat’s agenda, then we have environmental regulations. When environmental regulations don’t suit the Democrat’s agenda, they are disposed of.
So climate change, that suits their agenda. Environmental regulations that get in the way of building “affordable housing”, which is code for apartments for people on welfare, that no longer suits their agenda.
When environmental regulations got in the way of building the train to nowhere, California went to court to block any challenges to the project.
We’re being forced to further nourish the metastatic cancer created to destroy us.
John Marshall said, The power to tax is the power to destroy.’
As Katy Grimes pointed out, Hair-gel Hitler Newsom would never really reform CEQA which has been profitably weaponized by the criminal Democrat thug mafia and their cronies to either limit or encourage development that they determine to be appropriate. It’s another example of how these thugs stifle freedom and enslave Californians.
I hear that giant Ssssst sound of the state government snorting up more tax payer money to fulfill promises never designed to be kept. Are they going retro active for “equity”.
If Trump can get us an honest election, we have a chance to end this madness of tax money being Hoovered up for projects that never materialize because they were designed to be a make-work no-show for their cronies.
Democrats in California running out of other People’s money, now need more taxes to compensate for lost in Revenue because of Citizens leaving California.
Illegals need Housing, Healthcare, Schooling, Food, and Transportation.
Shame on all of the Democrat representatives that approved this “budget” with New Taxation not introduced as a bill, but hidden within the budget (yes, the majority of Democrats voted For the budget and the majority of Republicans voted Against it)! California desperately needs affordable housing, and adding a new tax that can place $325,000 onto the cost of building each apartment unit or home is not a reasonable solution. How about cutting the $12 Billion being spent on illegals that aren’t supposed to be here?
Shame on all of the Democrat representatives that approved this “budget” with New Taxation not introduced as a bill, but hidden within the budget (yes, the majority of Democrats voted For the budget and the majority of Republicans voted Against it)! California desperately needs affordable housing, and adding a new tax that can place $325,000 onto the cost of building each apartment unit or home is not a reasonable solution. How about cutting the $12 Billion being spent on illegals that aren’t supposed to be here?