In early 2007, the staff of the California Transportation Commission (CTC) made recommendations to the CTC members concerning how to distribute funds from the Corridor Mobility Improvement Account contained in Proposition 1B--The Highway Safety, Traffic Reduction, Air Quality, and Port Security Act of 2006. After the Governor and Legislature assessed the projects to be funded by the CTC, the Governor and leadership in the Legislature wrote to Marion Bergeson, the CTC Chair, to reprioritize projects to be funded stating that some of those chosen would provide little congestion relief. On February 28, the final selection project was approved taking into consideration those areas of concern to the Governor and the Legislature. In response to this situation, AB 1672 (Nunez) was passed by the Legislature and signed by the Governor to ensure legislative oversight on the CTC's projects. The new law requires CTC to consult with the chairs of the appropriate policy and budget committees 60 days prior to adopting changes to guidelines for the expenditure of Proposition 1B funds. It also authorizes the Senate Rules Committee and the Speaker of the Assembly to each appoint, to a four-year term, a voting member to the CTC and applies the same membership conditions to the two legislative appointees that existing law applies to the gubernatorial appointees. Specifically, appointees cannot "simultaneously hold an elective office, or serve on any local or regional public board or commission with business before the commission."

Other significant transportation legislation passed by the Legislature and signed by the Governor included: SB 7 (Oropeza) making it an infraction for a person to smoke a pipe, cigar, or cigarette in a vehicle, whether in motion or at rest, in which there is a minor; SB 23 (Cogdill) requiring the San Joaquin Valley Unified Air Pollution Control District to develop and implement a voluntary program to replace high polluting vehicles with donated low-emission motor vehicles; SB 33 (Simitian) prohibiting a driver under the age of 18 years from using a wireless telephone or any other mobile service device while operating a motor vehicle; SB 67 (Perata) reinstating the law that was sunsetted on December 31, 2006, which provided that when a person is arrested for reckless driving, reckless driving in a parking facility, exhibition of speed or a speed contest the officer may seize and impound the vehicle for 30 days; SB 79 (Senate Budget and Fiscal Review Committee), SB 88 (Senate Budget and Fiscal Review Committee), AB 193 (Assembly Budget Committee), AB 196 (Assembly Budget Committee), and AB 201 (Assembly Budget Committee) enacting the transportation trailer bills to the 2007 State Budget; SB 184 (Alquist) providing for reimbursement of regional or local agency transportation projects contained in the State Transportation Improvement Program and initiated in advance of an allocation by the CTC; SB 279 (Yee) allowing local law enforcement, with respect to highways under their respective jurisdiction, to cite and tow motor vehicles parked along a state highway for purpose of sale; SB 525 (Lowenthal) allowing the Department of Motor Vehicles to order restitution at the time it revokes or suspends a motor vehicle dealer's license; SB 715 (Lowenthal) prohibiting the Department of Transportation from regulating noncommercial copy contained on advertising displays that are subject to the Outdoor Advertising Act; SB 717 (Perata) continuously authorizing the transfers of sales tax revenue derived from the sale of motor vehicle fuels to the Transportation Investment Fund, beginning in fiscal year 2008-09; SB 729 (Padilla) creating a Consumer Motor Vehicle Recovery Corporation to compensate consumers when vehicle dealers fail to make certain required payments; SB 976 (Torlakson) repealing the San Francisco Bay Area Water Transit Authority and establishing a new replacement entity, the San Francisco Bay Area Water Emergency Transportation Authority, to consolidate and operate ferry services in the San Francisco Bay Area and to plan and respond to emergencies or disasters affecting the transportation system in the San Francisco Bay Area; SB 1028 (Padilla) requiring the Air Resources Board to adopt rules and regulations governing motor vehicle emissions that are necessary, cost-effective, and technologically feasible that together with other measures will achieve federal ambient air quality standards; AB 57 (Soto) deleting the sunset date of the Safe Routes to School program; AB 101 (Ma) allowing San Francisco to install automated forward facing parking control devices on city-owned public transit for the purpose of taking video images of parking violations occurring in transit-only traffic lanes; AB 112 (Wolk) modifying the conditions for designating road segments as "Safety Enhancement-Double Fine Zones" and requiring the Department of Transportation, in consultation with the Department of the California Highway Patrol, to certify that a road segment meets specified criteria; AB 118 (Nunez) enacting the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007, and establishing the Enhanced Fleet Modernization Program and the Air Quality Improvement Program and providing for fee increases to pay for the programs; AB 233 (Jones) enhancing the enforcement of diesel emission regulations; AB 236 (Lieu) revising current policies regarding the purchase of vehicles for state and local government fleets in order to increase fuel efficiency and the use of alternative fuels; AB 294 (Adams) requiring the Air Resources Board to study ambient air concentrations of manganese to determine where unhealthy concentrations may be in the state; AB 321 (Nava) allowing a local government to declare a speed limit of 15 miles per hour in school zones and expanding the distance that a 25 miles per hour school zone may be in force to 1,000 feet from the school; AB 462 (Villines) expanding the number of vehicles allowed to use vintage license plates; AB 470 (DeSaulnier) repealing the January 1, 2008 sunset date on provisions of law that regulate the use of electric personal assistive mobility devices, which are better known by their brand name Segways; AB 574 (Torrico) eliminating the four-year sunset date for each of four previously authorized high-occupancy toll lane projects; AB 645 (Feuer) providing that convictions of specified Vehicle Code offenses cannot be withdrawn after probation or dismissed because of attendance at traffic school; AB 695 (Karnette) requiring that in order to register a boat in California, the boat must be shown to comply with California's marine engine emissions standards; AB 758 (Plescia) requiring the Department of Motor Vehicles to develop a comprehensive plan for the licensing of traffic violator schools; AB 801 (Walters) prohibiting the sale of products that prevent the recognition of a license plate by an electronic monitoring device; AB 808 (Parra) requiring, starting July 1, 2008, that an applicant for an original or renewal driver's license sign a specified declaration related to driving under the influence; AB 829 (Duvall) allowing aftermarket and performance parts to be sold and installed on motorcycles prior to, or concurrent with, the motorcycle's transfer to the buyer where the parts have received an exemption through an Air Resources Board Executive Order; AB 1092 (Emmerson) prohibiting recreational vehicle manufacturers from failing to provide their franchisees with written dealer agreements; AB 1139 (Emmerson) allowing the Department of Motor Vehicles to place advertising on its various public displays; AB 1165 (Maze) making it unlawful for a person who is on probation for specified driving under the influence offenses to operate a motor vehicle with a blood alcohol concentration of 0.01% or greater, as measured by a preliminary alcohol screening; AB 1464 (Benoit) allowing a court to notify the Department of Motor Vehicles that a vehicle's owner has failed to respond to a citation issued for an owner-responsibility violation, and requiring the department to place a hold on the motor vehicle's registration upon receipt of that notice; AB 1488 (Mendoza) including diesel-powered vehicles manufactured after the 1997 model-year and diesel-powered vehicles with a gross vehicle weight rating of less than 8,501 pounds into the biennial smog check program, starting January 1, 2010; AB 1531 (DeSaulnier) raising the fine for illegally parking in a space reserved for disabled persons, requiring disabled parking spaces to be signed indicating the minimum fine for violations, and allowing temporary placards to be renewed no more than six times; AB 1581 (Fuller) recognizing a traffic-actuated signal as an official traffic control device and requiring upon its placement, or replacement of a loop detector of a traffic-actuated signal, to detect lawful bicycle or motorcycle traffic on the roadway; AB 1589 (Duvall) allowing the removal of vehicles that display license plates that have either been issued to other vehicles, forged, counterfeited, or are otherwise being used inappropriately; AB 1612 (Nava) modifying provisions of the Biennial Inspections of Terminals Program for motor carriers of hazardous materials, explicitly allowing the Department of Transportation, or a local authority, to issue special permits authorizing the transportation of over-wide wall units and trusses (responding to the April 29, 2007 MacArthur Maze in Alameda County in which a tanker truck filled with gasoline crashed and caught on fire); and AB 1702 (Blakeslee) providing the Department of Transportation permanent authority to consolidate the managerial candidate selection and hiring process testing in the five-year Managerial Selection Demonstration Project.

Vetoed significant transportation legislation included: SB 70 (Florez) authorizing the State of California, cities, counties, mass transit districts, and school districts to use a biodiesel fuel blend of greater than 20% biodiesel to operate their diesel-powered vehicles if certain conditions are met; SB 652 (Lowenthal) establishing an administrative process for the naming of highway segments or structures; SB 735 (Wiggins) requiring the Department of Transportation and its contractors to track information regarding the use of recycled and virgin materials used for subbase, base, and lean concrete base; SB 803 (Lowenthal) requiring regional transportation planning agencies, county transportation commissions, and congestion management agencies to adopt criteria giving priority to the selection of Transportation Enhancement Projects whose sponsors partner with or commit to use the services of a qualified community conservation corps or the California Conservation Corps; AB 878 (Davis) increasing, to $2, the maximum annual vehicle registration fee that may be assessed for vehicle theft deterrence programs; AB 881 (Mullin) requiring children up to eight years of age to ride in a child safety seat; AB 945 (Carter) requiring the California Transportation Commission, every five years, to prepare a transportation needs assessment; AB 966 (Krekorian) requiring the Department of Motor Vehicles to include, with every notice of renewal of a driver's license, a notice that a person who is 62 years of age or older may be issued an identification card free of charge; and AB 1091 (Bass) expanding the distance requirement between eligible projects and transit stations for the Transit-Oriented Development Implementation Program from one-quarter mile to one-half mile, and requiring the distance be readily available.