California Poised to Lose Up to $4 Billion in Gas Tax Revenue

States must find other ways to fund transportation projects as the transportation sector moves toward decarbonization.

1 minute read

January 3, 2024, 12:00 PM PST

By Diana Ionescu @aworkoffiction


E-Z Trip gas station in Bakersfield, California with orange awning over regular gas pumps and Tesla superchargers with white Teslas charging in foreground.

Gas station with Tesla charging station in Bakersfield, California. | sheilaf2002 / Adobe Stock

As electric vehicles grow in market share, states like California that depend on gas tax revenue for much of their transportation funding must find other ways to make up for the loss.

According to Manola Secaira of Cap Radio, “A report from the state’s Legislative Analyst’s Office projects a net transportation funding decline of about $4.4 billion — or 31% — within the next decade.” Currently, California gets about one-third of its transportation funding from gas taxes and vehicle fees.

Proposed replacements for the gas tax include mileage-based road user fees and new electric vehicle fees. The report recommends diversifying transportation funding sources and considering mileage fees (also known as vehicle miles traveled or VMT), which make all road users responsible for the damage incurred to roads by driving based on how much they travel. “Regardless of whether or not this approach is adopted, the report makes it clear that California officials must think of solutions sooner rather than later.”

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