California is exploring a major shift in how it funds road maintenance by potentially replacing its current gas tax with a mileage-based road charge program, as more drivers switch to zero-emission vehicles.
The state currently maintains the nation's highest gas tax at 59 cents per gallon, generating substantial revenue for road repairs. However, with electric vehicles making up roughly 25% of new car sales in California, officials project a concerning decline in gas tax revenue.
According to state analysts, gas tax collections could plummet by $5 billion - a 64% decrease - by 2035 if California meets its climate goals. This projected shortfall has prompted transportation officials to seek alternative funding methods.
In August 2023, Caltrans launched a pilot program to test a new road charge system that would charge drivers based on miles driven rather than fuel purchased. The pilot concluded in January 2024, with results expected later this year.
Under the current system, drivers of gas-powered vehicles pay approximately $300 annually in state gas taxes. However, zero-emission vehicle owners contribute nothing through fuel purchases, despite using the same roads.
This revenue challenge isn't unique to California. Pennsylvania reported a $250 million drop in gas tax revenue in 2023 compared to 2019 levels. Nationwide, motor fuel taxes as a percentage of state transportation revenue have declined from 41% in 2016 to 36% in 2024.
The proposed road charge program would create a more equitable system where all drivers contribute to road maintenance based on their actual road usage, regardless of vehicle type. This shift becomes increasingly relevant as California moves toward requiring all new passenger vehicle sales to be zero-emission by 2035.
Transportation officials must also contend with rising inflation, which has increased the cost of road maintenance materials, making sustainable funding solutions even more pressing for California's infrastructure needs.