In a recent interview, Gabriel Petek of the California Legislative Analyst’s Office discussed the transportation funding challenges California will face as the state transitions to zero-emission vehicles. Petek noted that approximately 40% of the state’s greenhouse gas emissions come from the transportation sector. To help meet its climate goals, California will phase out new combustion engine vehicle sales by 2035.
However, Petek explained this transition will significantly reduce fuel tax revenue, which currently funds about 30% of highway maintenance and rehabilitation projects. With fuel tax revenue expected to decline by $4 billion annually once the phase-out is complete, alternative funding sources will need to be identified.
Petek outlined several options under consideration, including raising fuel taxes, using general state tax revenue, or implementing a new vehicle miles traveled tax. However, he stressed any new funding mechanism must consider principles of equity and minimizing administrative costs. Petek also emphasized the importance of maintaining California’s road infrastructure, warning of higher costs to consumers and businesses if roads are allowed to deteriorate.
While California is a leader in addressing climate change, transitioning the transportation sector away from fossil fuels presents complex funding challenges. As Petek’s interview illustrates, policymakers will need to carefully weigh options to ensure adequate and sustainable funding for critical transportation infrastructure as this transition accelerates in the coming years.
