NEXT 10 – Beyond the Gas Tax: Funding California Transportation in the 21st Century

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Into the 21st century, California needs a new kind of funding to renew rough roadways. SB 1 is an initial step in bridging the critical revenue gap.

NEXT 10 is the organized focus on innovation that interconnects the economy, the environment, and quality of life issues for all Californians

NEXT 10‘s research, which includes a comparative analysis from, reveals that California’s roads and highways are some of the worst in the nation. Comparisons show that 68% of California’s roadways are described as in poor or mediocre condition compared to the 24.4% national average. In respect to design, at an age of over 40 years most of our roads have exceeded their useful life.

Gov. Brown faces rough road in quest to repair California’s freeways
Caltrans Maintenance Supervisor Howard Mead stands near the Los Angeles junction of the I-5 Southbound and the Eastbound 60, where there are numerous potholes and examples of theroadway cracking….  (Mark Boster/Los Angeles Times/TNS)

In California, motor vehicle fuel taxes are the primary funding source for roadway repairs and renewal. With heightened fuel efficiency and the growing use of hybrid or electric vehicles, state fuel tax revenue is declining. SB1, which authorizes the establishment of redevelopment agencies in communities to address the effects of blight, is expected to contribute $52 billion to the $137 billion transportation infrastructure backlog. But obviously more revenue is needed.

In response to the funding challenge of revitalizing California’s road infrastructure, NEXT 10 outlines Alternative Approaches to Vehicle Fuel Tax Based Revenue, including the pros and cons:

  • Flat rate fees – simplest and easiest to implement but ignores road usage and externalities like congestion cost
  • Fuel taxes indexed to inflationSB1 made this improvement by indexing new state taxes and fees to inflation, but the federal gas excise tax has remained unchanged since 1993
  • Fund toll roads through private-public-partnerships – has the potential to be efficient but comes with risk; private company interests may not align with public priorities and revenues may decline in times of recession
  • Mileage based user tax – could help account for usage in a more comprehensive and equitable way, but comes with implementation hurdles and privacy concerns
“Revenue from fuel taxes is shrinking, and the gap between what we need and what we have to spend will keep growing, despite the passage of SB 1. This bill is a great start, but the state needs to adapt its approach in order to fund our roads down the line.
-F. Noel Perry, Next 10 Founder


Information herein presented was derived from the NEXT 10 Publications website and NEXT 10 distributed emails. Visit their site for further insight into the conditions of California’s roadways.

For more information on SB1, please refer to the Legislative Digest on Senate Bill No. 1.

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