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As more drivers in California switch to zero-emissions vehicles, the state’s high gas tax, currently at 59 cents per gallon, may soon be a thing of the past. Lawmakers are exploring a new system called the California Road Charge, which would replace the traditional gas tax with a mileage-based user fee.
The gas tax has long been a critical revenue source for road repairs and infrastructure funding in California. However, with the rise of electric vehicles (EVs), the revenue generated by the tax is declining. In fact, lawmakers predict that gas tax collections could fall by 64% by 2035, potentially losing $5 billion in funding, as more EVs hit the road and the state aims to meet its ambitious climate goals.
In August 2024, California launched a pilot program to test the road charge system, which concluded in January 2025. Results are expected later this year. The road charge would assess drivers a fee based on the number of miles driven, rather than how much fuel is purchased. This shift aims to ensure consistent funding for road maintenance despite declining gas tax revenues.
As of now, gas taxes account for a significant portion of transportation funding, but the National Association of State Budget Officers reports that the percentage of transportation revenue raised by gas taxes has dropped, from 41% in 2016 to about 36% in 2024. California’s decision to move toward a mileage-based system is partly influenced by a nationwide trend, as states like Oregon are also considering similar initiatives.
The decline in gas tax revenues is already evident in states like Pennsylvania, where gas tax revenues fell by $250 million in 2024 compared to 2019. Adding inflation and rising transportation material costs to the mix only amplifies the challenges in maintaining and upgrading infrastructure.
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