Cal Cities releases local streets and roads revenue estimates following the Governor’s revised May budget proposal

May 19, 2021

To reflect the updates to the new state revenue estimates, the League of California Cities generated new local streets and roads (LSR) revenue allocation estimates for the current fiscal year and upcoming 2021-22 budget year.

The latest figures include Highway Users Tax Account (HUTA), as well as Road Maintenance and Rehabilitation Account (RMRA) distributions, and are based on updated estimates of state collections of fuel taxes and vehicle registration fees released by the California Department of Finance (DOF) in coordination with Gov. Gavin Newsom's revised May budget proposal.  
Unsurprisingly, fuel consumption is down due to COVID-19. However, the decline was somewhat offset by annual tax rate adjustments. The new estimates suggest that the LSR allocations to cities and counties for both fiscal years will be about $210 million lower than previously calculated in January. The 2020-21 LSR allocations to cities and counties — including HUTA and RMRA — will likely be 1.1 percent below the 2019-20 allocations. Although lower than January projections, the 2021-22 estimated LSR allocations are projected to increase 11.9 percent when compared to the previous fiscal year.
Assuming a gradual recovery from COVID-19, cities can expect a stable, but modest year-over-year growth in local streets and roads revenues in the future. Although fuel consumption may remain flat overall, the annual cost of living adjustments will help to maintain revenues. 

For a full explanation of the city and county allocation formulas, visit the California Local Government Finance Almanac website.