Researchers analyze California transportation revenue scenarios

Report estimates the COVID-19 impact on state-generated transportation revenue under six potential economic recovery scenarios

January 19, 2021 / 2 minute read
COVID-19 transportation revenue scenarios

New research from the Mineta Transportation Institute (MTI) estimates the impact the COVID-19 pandemic would have on state-generated transportation revenue under six potential economic recovery scenarios in California.

The report, titled The Impact of the COVID-19 Recovery on California Transportation Revenue: A Scenario Analysis through 2040, projects future transportation revenue in California through 2040. 

The six scenarios vary by several variables, including the length of the economic downturn and differences in transportation trends such as vehicle miles traveled (VMT), light-duty fleet size, and the mix of internal-combustion engine vs. zero-emission vehicles. These projections only consider revenue collected by the state through California Senate Bill 1: The Road Repair Accountability Act (SB1).

The study’s revenue projections under these six scenarios found that:

  • The projections demonstrate that annual California transportation revenue by 2040 could range from as little as $6.5 billion to as much as $10.9 billion.
  • The projected cumulative revenue raised between 2020 and 2040 varies across the scenarios by more than $40 billion.
  • In 2020, taxes on fuels will generate roughly three-quarters of state generated transportation revenue but will likely generate a much smaller percentage of overall revenue by 2040 (in four of the six scenarios, they generate less than a quarter of revenues).

“The findings highlight the need for California’s policy leader to prepare a long-term strategy for raising adequate transportation revenues that take into account the wide variation that will arise,” Principal Investigator Dr. Asha W. Agrawal said in a statement.

The researchers suggest that in order to achieve its policy goals of reducing carbon emissions from the transportation sector, state policymakers may wish to change the structure of taxes to replace the revenue lost from fuel taxes. For instance, the team suggests supplementing the existing tax structure with a new road-user charge of one cent per mile. 

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SOURCE: Mineta Transportation Institute

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