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A Case Study in Funding: Future California Transportation agencies rely on stable, predictable, and adequate revenue streams to plan and deliver excellent transportation systems.
e
COVID-19 pandemic has created an unprecedented level of disruption to typical revenue collections, creating uncertainty among policymakers about whether they can maintain even basic services and maintenance levels, let alone make long-planned improvements.
e pandemic has hit transportation revenues f rom all directions. Shelter-in-place orders led to VMT drops of 50% or more in many
regions, with concomitant losses in fuel tax and toll revenues. Public transit ridership—and fare revenues—has fallen even more, hit by the double-whammy of plummeting trips rates and riders who have avoided public transit out of concern for their safety. While annual vehicle registration fee revenues have not yet dropped substantially, if the economic crisis persists, households may shed vehicles or forgo upgrading vehicles, both outcomes that will reduce revenues collected. And those are just the impacts to direct user fees. Most public agencies also allocate to transportation some revenue raised f rom general-purposes taxes such as property, sales, income, and business taxes, all sources that will be very hard hit for as long as the economy stagnates.
To shed light on the possible future of a critical component of the transportation revenue picture in California, we conducted a rapid-
response research project in April that explored the potential impact of COVID-19 on state-generated revenues. Study results are available in a report,
e Impact of COVID-19 on California Transportation Revenue, published by the Mineta Transportation Institute.
We created five potential economic recovery scenarios and projected future transportation revenue in California through 2030 under each of these, as well as a “baseline” scenario of projected revenues had COVID-19 not occurred.
e di
fferences
among the scenarios
illuminate a range of possible futures the state may wish to consider. For example, possible recovery scenarios that provide future incentives to purchase zero emission vehicles (ZEVs) should be informed in part by assessment of their revenue implications.
State-generated transportation revenues in California
e study looked just at dedicated
transportation revenue collected by the state, a package of taxes and fees
that recently were adjusted by Senate Bill 1 in 2017.
ese are gasoline and
diesel fuel taxes, an annual fee on vehicles with the rate based on vehicle value (the Transportation Improvement Fee, or TIF), and an annual fee for zero-emission vehicles (the Road Improvement Fee, or RIF) recently established in recognition of
the fact that they pay no fuel taxes. e table to the right shows the rate
for each tax and fee.
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