California Mayors Revolt Over Newsom Rail Tax Plan
A coalition of ten California mayors is escalating opposition to Governor Gavin Newsom’s revived high-speed rail project, warning that a proposal to redirect local property and sales tax revenues to fund the troubled $126 billion infrastructure program amounts to a “legally dubious scheme” that could trigger lawsuits. The revolt, led by Fresno Mayor Jerry Dyer, highlights deepening tensions between state and local governments over who should bear the financial burden of the nation’s most ambitious — and most delayed — rail project.
The Dispute
At the center of the conflict is a tax increment financing (TIF) proposal contained in the California High-Speed Rail Authority’s (HSRA) 2026 Draft Business Plan. The plan would allow the state to capture a portion of future increases in property values and sales tax revenues generated within a half-mile radius of future high-speed rail stations. These funds would be reinvested into station-area infrastructure and development.
In an April 23 letter to HSRA CEO Ian Choudri, the mayors — representing Fresno, Anaheim, Lancaster, Riverside, Bakersfield, Gilroy, Merced, Burbank, Hanford, and Stockton — called the proposal “fiscally reckless, legally vulnerable, and fundamentally unfair.” According to Fox News, which obtained the letter, the mayors argued that “the state cannot solve a state funding problem by raiding local tax bases.”
Constitutional Concerns
The mayors’ opposition rests heavily on California’s Proposition 1A, a 2004 constitutional amendment that limits the state’s ability to redirect local government revenues. Local sales tax revenues are “expressly protected for local governmental purposes,” the letter states, and the Legislature is prohibited from reallocating those funds.
“It is not constitutionally allowable in California for the state of California to come in and take those sales tax dollars for any other purpose than what they’re intended for, and that’s to support local government,” Dyer told Fox News.
State Senator Tony Strickland (R-Huntington Beach) echoed those concerns during an April oversight hearing, telling rail officials he believes the proposal is unconstitutional, as reported by Newsweek.
The HSRA’s Position
The High-Speed Rail Authority has pushed back against the mayors’ characterization. A spokesperson told Fox News: “There is no proposal. Through the 2026 Draft Business Plan, the Authority is continuing conversations with local jurisdictions and stakeholders about potential tools that could support station-area infrastructure and long-term system delivery.”
CEO Ian Choudri has defended the approach as standard practice for infrastructure projects globally. “What we are proposing is to have some of it shared back so that we can build more,” he told Newsweek.
A Troubled History
The high-speed rail project was approved by California voters in 2008 via Proposition 1A with an initial $33 billion price tag and a promised completion by 2020. Nearly two decades later, no track has been laid for revenue service. The NY Post reports that $14 billion has been spent so far, mostly on land acquisitions and construction of various structures in the Central Valley.
The 2026 Draft Business Plan estimates the full Phase 1 buildout from San Francisco to Los Angeles and Anaheim could cost $231.3 billion, with an “optimized” approach at $126.2 billion. The Initial Operating Segment between Merced and Bakersfield is estimated at $34.76 billion, with revenue service projected to begin between 2031 and 2033.
President Donald Trump has repeatedly criticized the project, calling it “the worst cost overrun I’ve ever seen” and referring to it as “a little train going from San Francisco to Los Angeles.” The U.S. Department of Transportation canceled billions of dollars in federal grants for the project in summer 2025.
Local Impact
For cities like Anaheim, the stakes are particularly high. The Anaheim Regional Transportation Intermodal Center (ARTIC) is designated as a future high-speed rail station site, located across from the Honda Center and adjacent to the OC Vibe entertainment development. As Voice of OC reports, city officials fear that diverting tax growth from this area would undermine years of local planning and investment.
“We’ve put these developments in there to generate sales tax for our residents and if the state comes in here and starts to either take property and/or sales tax from us, then we have to make up that revenue somewhere else,” Anaheim Councilman Ryan Balius said during a council meeting.
Anaheim’s City Council voted unanimously on May 13 to oppose the TIF proposal. Councilwoman Natalie Meeks summed up the sentiment: “We have prepared and implemented and we are ready to accept high speed rail if it ever gets here, but you can’t take the benefits away from us.”
Analysis and Implications
The dispute raises fundamental questions about state-local fiscal relations in California. The Legislative Analyst’s Office has warned that the draft business plan “lacks transparency,” according to auditor Helen Kerstine. Critics have also noted that the TIF proposal is moving through the state budget process rather than standard legislation, potentially bypassing normal scrutiny.
Notably, Fresno Mayor Dyer has long supported high-speed rail as a potential economic boost for downtown Fresno. His opposition to the TIF proposal is not opposition to the rail project itself, but to what he sees as an unconstitutional funding mechanism. This suggests the mayors may be open to alternative approaches, such as voter-approved bonds.
What’s Next
With federal grants canceled and costs continuing to escalate, the HSRA is under enormous pressure to find new funding sources. The mayors’ opposition — and their threat of litigation — could force the Authority back to the drawing board, potentially further delaying a project already decades behind schedule. If the dispute reaches the courts, it could set a significant precedent for how California funds major infrastructure projects and the limits of state authority over local tax revenues.”