Description
California faces unprecedented uncertainty about how much revenue the state will raise from a package of taxes on motor fuels and annual registration fees on light-duty vehicles that was established in 2017 by Senate Bill 1 (SB 1). The SB 1 taxes are by far the largest source of revenue that the State of California generates to support maintenance, operations, and improvements for state highways, and the funds also contribute substantially to local transportation and public transit budgets. To help policymakers navigate the uncertainty about future SB 1 transportation revenue, this study used spreadsheet models to project revenue from the SB 1 taxes through 2040 under a set of eight scenarios that consider a wide range of possible futures. The scenarios consider changes to revenue that could arise from implementation of California’s zero-emission vehicle (ZEV) regulations, as well as potential changes in driving costs, population size, vehicle ownership rates, and trucking industry operations.
Key findings include:
• It is impossible to project future revenues with any confidence for more than a few years into the future. By 2040, annual revenue ranges from a low of $4.81 billion to a high of $12.15 billion.
• The state may lose substantial revenue if the SB 1 taxes and fees are not changed and/or replaced within the coming few years. In 2027, just three years out, projected annual revenue for some scenarios drops by more than a billion dollars below 2024 revenue.
• A fast ICE to ZEV transition would significantly reduce annual revenue—but so could changes in VMT.
• Fuel taxes currently provide most SB 1 revenue, but by 2040 California may rely on vehicle registration fees to provide most of the revenue.
The dataset for this report is available in SJSU ScholarWorks.
Publication Date
3-2024
Publication Type
Report
Topic
Planning and Policy, Transportation Finance
Digital Object Identifier
10.31979/mti.2024.2312
MTI Project
2312
Mineta Transportation Institute URL
https://transweb.sjsu.edu/research/2312-Transportation-Revenue-Fuel-Taxes-Electric-Vehicles
Keywords
Transportation revenue, Fuel taxes, Electric vehicles, Projections, Vehicle registration fees
Disciplines
Taxation | Transportation
Recommended Citation
Asha Weinstein Agrawal, Hannah King, and H. A. “Burt” Tasaico. "How Will California’s Electric Vehicle Policy Impact State-Generated Transportation Revenues? Projecting Scenarios through 2040" Mineta Transportation Institute Publications (2024). https://doi.org/10.31979/mti.2024.2312
Research Brief
