Local streets and roads allocation estimates updated for fiscal years 2025-26 and 2026-27

By Brian Hendershot, Cal Cities Advocate managing editor

Cal Cities this week released new local streets and roads revenue estimates prepared by Cal Cities Fiscal Policy Advisor Michael Coleman. The allocations come from state taxes on gas and diesel fuels, and vehicle registrations through the state Highway Users Tax Account and state Road Maintenance and Repair Account.

The report is based on new statewide revenue estimates provided by the California Department of Finance with the release of Gov. Gavin Newsom’s May Revision. These allocations are formula-based and are not subject to budget negotiations. Cities and counties should use these estimates for budgeting.

The estimates are for the current fiscal year 2025-26 and budget fiscal year 2026-27. The estimates reflect a very small downward revision of the overall current fiscal year estimates by about 0.7%. For 2026-27, the California Department of Finance estimates that the statewide Road Maintenance and Rehabilitation Account allocations to cities and counties will increase by 6.9%. Highway Users Tax Account allocations are projected to grow by 2.4%.

Individual agency revenue growth will vary. The individual agency estimates take into account the various allocation rules contained in statute, along with agency population, vehicle registration, assessed valuation, and road mileage.

The county estimates were prepared in collaboration with the California State Association of Counties. The next update of these revenue estimates will be in January 2027.