The COVID-19 public health emergency has affected every aspect of life in California, reducing social and economic activity. Less activity translates to less travel, and less travel leads to less revenue generated from taxes on motor fuels. As California emerges from the COVID-19 crisis and returns to more normal levels of activity, the state must plan transportation system operations and maintenance in the context of deep uncertainty regarding future revenue.
To help decision makers navigate that uncertainty, we used spreadsheet models to estimate the impacts of different economic recovery scenarios from the COVID-19 pandemic on state-generated transportation revenue. Because it is not possible to anticipate future economic conditions, travel volumes, and vehicle markets with certainty, we created six potential economic recovery scenarios and projected future transportation revenue in California through 2040 under each.
Scenarios cannot foretell which conditions will predominate in future decades, but scenario analysis helps state officials assess the impact of different economic futures and policy choices, including policies to change the rates of adoption of alternative-fueled vehicles.
Key findings include:
- The projections from the six scenarios demonstrate that California transportation revenue by 2040 could range widely, from as little as $6.5 billion to as much as $10.9 billion, if the assumptions and conditions used to create particular scenarios are realized over time.
- The cumulative revenue raised between 2020 and 2040 varies by more than $40 billion across the scenarios, from $153 billion to $195 billion.
- In 2020, taxes on fuels will generate roughly three-quarters of state-generated transportation revenue. By 2040, however, taxes on fuels will generate a much smaller percentage of overall revenue. For example, in four of the six scenarios they generate less than a quarter of revenues.
Mineta Transportation Institute URL
Asha Weinstein Agrawal, Hannah King, Martin Wachs, and Jeremy Marks. "The Impact of the COVID-19 Recovery on California Transportation Revenue: A Scenario Analysis through 2040" Mineta Transportation Institute Publications (2020).