Fuels Tax Increase Supports County Road Maintenance

On July 1, the voter-approved annual inflation adjustment to California’s fuel excise tax is scheduled to take effect, increasing the tax by 2.2 cents per gallon. The July 1 adjustment is a critical road funding mechanism that is part of SB 1 (2017), which CSAC supported and diligently worked to pass due to the role this funding plays in maintaining the county transportation system. The funding generated through SB 1 remains one of California’s most reliable tools for providing resources to counties through the Local Streets and Roads (LSR) program. The LSR program provides funding directly to counties for fixing roads, repairing bridges, and creating jobs to keep people moving on the county and state road network. Current geopolitical conflicts have driven increases to fuel prices which have led to calls for the state to suspend and even repeal all fuels-based transportation taxes. Fuel taxes currently fund about 80% of highway and road repairs in the state and proposals to interrupt gas tax revenues would have immediate negative impacts to county roads and bridges, including: 

• The potential for the delaying or cancelation of hundreds of current county road maintenance projects, deepening the existing backlog of county road and bridge maintenance projects.  
• Increased costs to future county road maintenance projects as the existing infrastructure has not been adequately maintained. Delaying projects will cost more in the future and cause more disruption than continuing the routine maintenance of the existing county transportation system fuels-based taxes support. 
• Increases in deferred maintenance problems for county road systems, including  more potholes, degrading bridge conditions, and jeopardizing the jobs that county road maintenance projects support.    

The state continues to experience challenges with declining revenues from the fuels-based taxes that support the state and county transportation system, including: 

• The loss of $31.1 billion in transportation funding over the next 10 years due to the declining fuel tax revenues.  
• The California Transportation Commission is projecting that revenues for transportation improvements will be $215.7 billion short of the state’s transportation funding needs over the next 10 years. 
• Counties will be the first to experience the impact of the decline in transportation revenues as these are provided directly to counties by statutory formulas, not discretionary grants. 

The decline in transportation revenues is driven by a variety of factors with the rapid adoption of zero-emission and fuel-efficient vehicles benefits translating to fewer drivers paying their fair share at the pump to maintain the states roads, bridges and highways.   

Transportation California, a key partner that CSAC works with to advocate in support of county transportation, has developed the fact sheet available here to provide critical information on the state’s transportation fuels-based taxes.