Although California’s ambitious agenda to reduce fossil fuel use by transitioning the state from gas and diesel vehicles to electric ones promises important climate benefits, it also sets up a potential transportation revenue crisis. That’s the topline conclusion of a new study by the Mineta Transportation Institute at San Jose State University, which forecasts the state losing $1 billion or more in tax revenues by 2027 due to diminished collection of motor fuel taxes and vehicle registration fees.
“That doesn’t leave California legislators much time to establish a replacement for lost revenue,” said the study’s principal investigator, Dr. Asha Weinstein Agrawal. “And the revenue lost matters to people’s everyday lives because we are losing money that would otherwise be available for critical maintenance of local streets and state highways, plus support for public transit services.”
Researchers considered eight scenarios that assume different rates of electric vehicle adoption, changes in how many miles Californians drive and changes in the number of personal vehicles registered. The authors also found that the projected annual revenue raised under the eight study scenarios diverges widely over time. By 2040, annual revenue collected could be $8.5 billion less than in 2024, a loss of 64%.
