A Sacramento judge gave his OK Friday to what's being called a landmark agreement between state officials and environmentalists to allow carpool lanes on Highway 50 in Rancho Cordova.

The lawsuit settlement, brokered this week by Senate President Pro Tem Darrell Steinberg, clears a major sticking point in state budget negotiations, legislative leaders said.

Gov. Arnold Schwarzenegger has insisted the Highway 50 project and nine others statewide be fast-tracked as part of an economic stimulus package attached to a state budget agreement.

Legislative Democrats balked on Highway 50 in particular, saying the state should not pre-empt an ongoing environmental lawsuit.

With Superior Court Judge Timothy Frawley's signature in hand, state Transportation Department officials say they plan to start work late this summer on seven miles of carpool lanes between Sunrise Boulevard and Watt Avenue.

"The earlier the better," Caltrans head Will Kempton said. "It's a shot in the arm to the local economy."

Caltrans planners say the freeway widening will smooth traffic on what has been a troublesome corridor, where congestion occurs in both directions, morning and evening, as some commuters head to downtown Sacramento, others to Rancho Cordova's office parks.

In exchange, Caltrans has agreed to finance $7 million in improvements to the Sacramento Regional Transit light-rail line that parallels the freeway.

Caltrans also agreed to pay to make a pedestrian and bike crossing from an old railroad bridge over Highway 50 near Mather Field Road and a light-rail station.

"The agreement provides twice the number of jobs and economic stimulus as the initial highway-only project while also providing enormous environmental and community benefits by creating more transit on the Highway 50 corridor," Steinberg said.

The Sacramento Democrat said the deal removes a months-old stumbling block in the budget negotiations, but added, "we (still) have a lot of work to do."

Regional Transit executive Mike Wiley said the funding will allow his agency to introduce a limited-stop express train to and from downtown Sacramento, and to run trains to the Hazel Avenue light-rail station every 15 minutes instead of the current 30-minute arrivals.

RT also will receive funds that will make it easier to eventually bring trains into downtown Folsom every 15 minutes.

The original lawsuit calling for more environmental review was brought by the Environmental Council of Sacramento and the Neighbors Advocating Sustainable Transportation community group.

Environmentalists said the deal gives Highway 50 corridor travelers more choice and shows the state can respect environmental law and still create jobs.

"We are happy that improvements for the benefit of vehicle traffic in the Highway 50 corridor are now tied to improvements to transit service in the same area," ECOS spokesman Eric Davis said.

"We also hope that resolution of our lawsuit will help prevent the undermining of (state environmental review law) during the difficult budget negotiations that are under way."

State officials said similar talks are ongoing regarding another major transportation project subject to an environmental lawsuit – a fourth bore for the Caldecott Tunnel in the East Bay.

Caltrans Director Kempton said the $165 million Highway 50 project will be funded half by state bonds and half by Sacramento County sales taxes.

He pointed out that the state does not yet have the bond money and it needs a balanced budget soon before it can go to the financial markets to get that money.

Call The Bee's Tony Bizjak, (916) 321-1059.