New gas tax allocation estimates suggest stable, but modest growth

Jan 24, 2024
By Brian Lee-Mounger Hendershot, Cal Cities Advocate managing editor   

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

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. 

The twice-a-year report shows stable, but modest growth despite a slight decline in fuel consumption. Fuel consumption dropped sharply during the COVID-19 pandemic, but has since recovered to its prior, slightly declining trajectory. Fuel prices did increase recently. However, the price of fuel no longer has a direct effect on local streets and roads revenues. All rates are per gallon, regardless of price. 

The estimate contains individual city and county calculations for the current fiscal year 2023-24 and budget year 2024-25. Overall allocations from the Highway Users Tax Account and the Road Maintenance and Rehabilitation Account are projected to climb 7.4% in the current fiscal year above the prior year. The report forecasts a growth of 4.1% over the current year for the 2024-25 budget year. 

Individual agency amounts and growth rates 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 2024.  

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