New gas tax allocation estimates available

By Brian Hendershot, Cal Cities Advocate managing editor

Cal Cities released new local streets and roads revenue estimates, prepared by Cal Cities Fiscal Policy Advisor Michael Coleman. The allocations come from state tax revenues collected at gas pumps and other sources. Cities and counties should use these estimates for budgeting.

The report is based on statewide tax revenue estimates released by the California Department of Finance with Gov. Gavin Newsom’s January budget proposal. The county estimates were prepared in collaboration with the California State Association of Counties.

Fuel consumption has largely recovered from the COVID-19 pandemic to its slightly declining trajectory. Recently, fuel prices have increased steeply, but the price of fuel no longer has a direct effect on local streets and roads revenues.

The estimates reflect a downward revision of the current fiscal year estimated allocations by about 1.6%. For fiscal year 2025-26, the Department of Finance estimates statewide Road Maintenance and Rehabilitation Account allocations to cities and counties will increase by 3.9%. Highway Users Tax Account allocations will remain flat from the prior year.

Individual agency revenue growth will vary. The report includes specific city and county estimates, which are suitable for budgeting and long-range planning. The next update of these estimates will be in May 2025.

The revenue estimates, together with a detailed explanation of local streets and roads revenues and allocations are available online.