Traffic congestion is a growing problem in California, and its effects are being felt throughout the state in reduced amenity, productivity, and profitability. Two reasons for congestion increases are the shortage of public funds for transportation and the lack of coordination of land use planning and development decisions with available and planned transportation capacity. This paper examines current and anticipated trends and practices in transportation and land development and discusses some strategies that the state could consider to improve decisions and outcomes. Financing problems plague both highway and transit programs at a time when overall demand for transportation is rapidly growing and patterns of demand are shifting. Development trends are likely to increase the pressures on the transportation systems, both in established and new-growth areas. Yet little coordination between transportation and land use plans, programs, and investments is apparent. This lack of coordination results from the institutional division of responsibilities for transportation and land use and weaknesses in state law concerning consistency in planning and implementation, as well as lack of funds to deliver needed transportation facilities and services and local governments' strong desires for development. While a number of local governments are utilizing development exactions and impact fees to finance transportation improvements and are implementing transportation systems management and TSM-oriented site design requirements, these strategies are rarely sufficient to resolve traffic problems over the longer run. Some local governments are considering policies that tie permitted land development to existing and planned transportation capacity. yet for many, this poses a dilemma: without the funds to improve transportation, greater coordination often would mean downzoning or other limitations on much-desired development. What is needed are a set of strategies that can enhance local governments' willingness to match development with needed transportation improvements, while allowing for reasonable and necessary growth. Such strategies might entail new requirements for transportation plans and investment programs at the local level, tied to reasonable standards for transportation levels of service; coordination of these local plans and programs with regional and state transportation plans and programs; strengthened requirements for consistency between land use and circulation elements of General Plans, and between General Plans and sub-division, zoning, and transportation investment programs; and additional financing for transportation, as an incentive to comply with the other strategies. While such an approach could be met with local government concerns about home rule and taxpayer resistance to increased fuel taxes, the prospects for substantially better transportation and the benefits it would bring the state could be sufficient to overcome such barriers.