Report shows stay-at-home order impacts to California gas tax revenue

May 4, 2020

Over an eight-week reduction in travel, the state suffered a nearly $370 million loss in gas tax revenue

A new report released by the Road Ecology Center at the University of California, Davis (UC Davis) estimates that the California gas tax revenue has taken a significant hit as the state sees a reduction in travel due to the coronavirus (COVID-19) pandemic.

Using traffic data from California and elsewhere in the U.S., the research team found that total vehicle miles traveled (VMT) at the county and state level had declined by 61% to 90% following various government stay-at-home orders.

The report says that California relies on a fuel tax supplement of 17.6 cents/gallon to supplement other sources of transportation funds. The reduction in travel has resulted in an estimated $46 million/week reduction in fuel tax funds for California transportation projects. For an eight-week reduction in travel, this would equate to approximately $370 million less revenue than would have been collected.

In the section of the report outlining reduction in fuel use and tax revenue, the report says that in the first week of March 2020, U.S. daily travel was equivalent to 4.6 billion gallons of fuel. Due to reduced daily travel following government guidance, the U.S. used only 1.3 billion gallons of fuel in the second week of April.

Since every state charges a fuel tax, the research team multiplied the state-specific tax rate by the estimated fuel use per state to calculate the total revenue per week for the first week of March and the second week of April. The revenue was reduced from $1.6 billion per week in March to $424 million per week in April, a difference of $1.18 billion.

The report says the fuel use and state tax revenue in California for the first week of March was 349 million gallons and $61 million, respectively. The fuel use and SB1 tax revenue for the second week of April was 85.8 million gallons and $15 million, respectively. The difference in weekly fuel use and revenue is 263 million gallons and $46 million. For an eight-week stay-at-home order, this would be equivalent to 2.1 billion gallons of fuel not being used and a tax revenue loss to the state government of $370 million.

The report also shows that a reduction in VMT has resulted in a proportional decrease in the greenhouse gases (GHG) that most vehicles release. Using average fuel mileage rates for U.S. vehicles, the research team calculated the GHG emissions equivalent to VMT before and after the government guidance for COVID-19 mitigation, including “stay-at-home” orders. Across the U.S., the total for the first week of March was 44 million metric tons CO2e and in the second week of April was 12 million metric tons CO2e, a 71% decline overall, with variation among the states.


SOURCE: Road Ecology Center at the University of California, Davis

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