The Impact of COVID-19 on California Transportation Revenue

The Impact of COVID-19 on California Transportation Revenue

Abstract: 

The COVID-19 public health emergency has affected every aspect of life in California, and the severe reductions in social and economic activity have dramatically reduced travel. Transportation revenue has plummeted because user fees produce a large share of resources needed to operate California’s transportation system. As we emerge from the crisis and return to normal levels of activity, the state must plan transportation system operations and maintenance in the context of deep uncertainty regarding available resources.

This research used simple spreadsheet models to estimate the impact that different scenarios for economic recovery from the COVID-19 pandemic would have on state-generated transportation revenues. Because it is not possible to state with certainty future economic conditions, travel volumes, and vehicle markets, we created five potential economic recovery scenarios and projected future transportation revenue in California through 2030 under each. The differences among the scenarios illuminate a range of possible futures for which the state can prepare.

Key findings include that (1) the total revenue raised varies considerably among the scenarios; (2) fuel taxes generate the lion’s share of revenues in all scenarios; and (3) should the number of zero emission vehicles (ZEVs) dramatically increase, then the registration fees levied on them can replace and potentially even exceed the state revenue that will be lost because of declining gasoline sales tax revenue.

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Authors: 

ASHA WEINSTEIN AGRAWAL, PH.D.

Dr. Agrawal is the Director of the MTI National Transportation Finance Center and also Professor of Urban and Regional Planning at San José State University. Her research and teaching interests in transportation policy and planning include transportation finance, bicycle and pedestrian planning, and travel survey methods. 

HANNAH KING

Hannah King is currently a PhD student in transportation planning & policy at UCLA. Her research focuses on transportation finance, transportation equity, and travel behavior. Prior to coming to UCLA, she earned a Master’s in Urban and Regional Planning and a Master’s in Geographic Information Systems from Florida State University. 

MARTIN WACHS, PH.D.

Dr. Wachs is Distinguished Professor Emeritus of Civil & Environmental Engineering and of City and Regional Planning at the University of California, Berkeley, where he directed the Institute of Transportation Studies. Wachs currently serves as a member of both the California High Speed Rail Peer Review Group and the Technical Advisory Committee for the California Road Charge Pilot Program.

Published: 

May 2020

Keywords: 

State taxes
Highway user taxation
Fuel taxes
Registration fees
COVID-19