California February 21, 2020 State Transportation Revenue - - PowerPoint PPT Presentation

Attachment A Tab 12 February 21, 2020

California State Transportation Revenue Projections

Overview w of f California a Transportation n Revenues s

Overall, California transportation funding consists of state, federal, and local funds. This graphic shows the major components of state funds.

STATE E TRANSPORTATION N RELATED D REVENUES S

FY 17/18 - FY 24/25 revenues

Fuel Consumption No Longer Increases in Proportion to Vehicle Miles Traveled

Growth (1994 Base Year) 30% 25% 20% 15% 10% 5% 0% Vehicle Miles Traveled Consumption 1994 1998 2002 2006 2010 2014 2018 Notes: Vehicle miles traveled data from US Federal Highway Administration Gasoline consumption data from California Department of Tax and Fee Administration

3

Key y Datasets s for r Projections s

Transportation revenue projections rely on assumptions about many factors for which there is considerable uncertainly, including:

Population size # of vehicles # of vehicle miles traveled (VMT) Gasoline and diesel fuel prices Adoption rates for ZEVs Inflation rates

UC C Davis s Projections s - Gas s Tax x + + RIF IF (Z (ZEV) ) Fee e Only y

Projections are a function of:

• Fleet size
• Fuel economy (and

improvements for new vehicles)

• Number of ZEVs
• VMT

Revenue decreases over time as fuel economy of new vehicles improves ZEV fee recovers part of the decrease in revenue but most of the deficit is from fuel economy improvements

1 2 3 4 2020 2022 2024 2026 2028 2030

Year Annual revenue (billions of $) Revenue Source

Gasoline Tax Gasoline Tax + ZEV Fee

Mineta a Transportation Institute e Projections s – State e Fuel l Related d Revenues s Only y

Includes the following projected revenues: ✓Gasoline Excise Tax ✓Incremental Gas Tax ✓Diesel Excise Tax ✓Diesel Sales Tax

Mineta a Transportation Institute e Projections s – State e Fuel l Related d Revenues s + + TIF F and d RIF F

Looks at the impact of ZEV adoption on revenue Includes the following projected revenues:

✓Transportation Improvement Fee (based on value of car) ✓Road Improvement Fee (ZEV) ✓Gasoline Excise Tax ✓Incremental Gas Tax ✓Diesel Excise Tax ✓Diesel Sales Tax

National l Fuel l Tax x Revenue e Projections s

Red Line: Total fuel tax revenues if 2017 CAFE mpg levels remained constant. Green Line: Impact of 2025 mpg requirements over next two decades. Yellow Line: Adds to the previous line the impact of an electric vehicle penetration estimate from Bloomberg New Energy Finance. Key differences from CA:

• This graph assumes an average

State and federal tax of $.47 per gallon, but CA has a higher state excise tax beginning around 2021 for gas and 2031 for diesel.

• California has RIF and TIF revenues.

From Bob Poole report, “How a State Could Transition from Per-Gallon Taxes to Per-Mile Charging,” originally from Ed Regan, “The Motor Fuel Tax: A Critical System at Risk.” CDM

• Smith. 2017

CALIFORNIA A FUEL L USE E AND D VEHICLE E MILES S TRAVELLED D

Fuel is shown in million of gallons, VMT is shown in millions of miles.

400,000 500,000

Mineta VMT projections Caltrans VMT

300,000 200,000 100,000

CDTFA gas & diesel consumption Mineta gas & diesel consumption projections

• 600,000

Data Sources:

• Department of Tax and Fee Administration: http://www.cdtfa.ca.gov/taxes-and-fees/spftrpts.htm
• Mineta Transportation Institute: https://transweb.sjsu.edu/research/1850-California-Fuel-Tax-Futures
• Caltrans: https://dot.ca.gov/programs/research-innovation-system-information/highway-performance-monitoring-system

Conclusion n

In general, SB 1 slowed the process of revenue decline, allowing California more time to research and implement a road charge.

• Reasons to pursue

road charge are: To keep in line with national changes

• To encourage equity

for taxpayers

• To prepare for the

future

• To align with

environmental policy

A road charge is the most viable long-term solution.

Questions?