COVID-19 Decimated Many Local Transportation Budgets in California – But a Few Places Struck Gold

Everyone living through the COVID-19 pandemic knows it created unprecedented disruptions to economic and transportation patterns. Less obvious is how the pandemic decimated local government budgets that pay for fixing potholes, building new bike lanes, and keeping trains and buses running. New research from the Mineta Transportation Institute (MTI) reveals the impact on transportation budgets: Understanding COVID-19’s Impact on Local Transportation Revenue – A Mid-Crisis View from Experts.

“We learned that there was no simple ‘normal,’” said study author Dr. Asha Weinstein Agrawal. “For example, large cities with busy job centers and tourism saw huge losses in sales and hotel tax revenue. Conversely, some rural areas saw an increase in these revenues due to an influx of tourists and people relocating from metro areas.”

Other key findings include:

• Federal COVID-19 relief funds were critical to maintaining essential transportation services during the pandemic, especially public transit systems.
• The pandemic accelerated a simmering problem with how California distributes sales tax from online sales. The dramatic shift to online purchases created huge revenue windfalls for communities hosting warehouses and corporate headquarters, draining that revenue away from communities that historically relied on sales taxes from local retailers and services.
• The pandemic-induced crash in driving — and thus fuel tax collected — starkly highlighted the need for California to reduce its reliance on fuel tax revenue to fund transportation, given the state’s anticipated transition to electric vehicles.

ABOUT THE MINETA TRANSPORTATION INSTITUTE

At the Mineta Transportation Institute (MTI) at San Jose State University (SJSU), our mission is to increase mobility for all by improving the safety, efficiency, accessibility, and convenience of our nations’ transportation system. Through research, education, workforce development, and technology transfer, we help create a connected world. Founded in 1991, MTI is funded through the US Departments of Transportation and Homeland Security, the California Department of Transportation, and public and private grants, including those made available by the Road Repair and Accountability Act of 2017 (SB1). MTI is affiliated with SJSU’s Lucas College and Graduate School of Business.

ABOUT THE AUTHORS
Asha Weinstein Agrawal, PhD, is Director of the Mineta Transportation Institute’s National Transportation Finance Center; Serena Alexander, PhD, is Associate Professor of Urban & Regional Planning at SJSU. Ashley M. Hooper, PhD, is an Urban Community Resiliency Advisor with the University of California Division of Agriculture and Natural Resources.

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