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Motor Vehicle Account faces shortfall; administration proposes $166 million one‑time backfill from GGRF and Air Pollution Control funds
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Summary
Officials said the Motor Vehicle Account faces an operational shortfall as expenditures outpace revenues; the administration proposed a $166 million one‑time backfill from the Greenhouse Gas Reduction Fund and the Air Pollution Control Fund for 2025‑26.
Department of Motor Vehicles and Department of Finance officials told the Senate Budget Subcommittee No. 5 that the Motor Vehicle Account (MVA) will face operational shortfalls in 2025‑26 because expenditures are outpacing projected revenues.
Bowen Peterson outlined MVA current projections, saying 2025‑26 revenues are expected at roughly $5.0 billion, primarily from a $71 vehicle registration fee and a $32 California Highway Patrol (CHP) fee, while expenditures are projected near $5.2 billion with CHP and DMV expenditures of about $3.2 billion and $1.4 billion respectively. Since the prior May Revision, MVA revenues were reported approximately $103 million below prior expectations due to lower new‑car sales and fewer registration renewals.
The administration proposed a one‑time solution of $166 million in 2025‑26 drawn from the Air Pollution Control Fund and the Greenhouse Gas Reduction Fund (GGRF) to offset payments that would otherwise reduce the MVA condition. Matthew Macedo of the Department of Finance confirmed the administration’s position and said the proposal is intended to provide time for the Legislature to consider a permanent solution.
The Legislative Analyst’s Office said the administration’s proposal is not unreasonable as a short‑term response but flagged two caveats: cap‑and‑trade auction revenues (GGRF) have been below projections recently, creating uncertainty about availability of funds; and the proposal is one‑time only — an ongoing structural solution will be required, which could include fee adjustments or spending reductions with service impacts.
Committee members cautioned against passing costs to vehicle owners via fee increases. Senator Wahab said she opposed increased registration fees given household cost pressures and asked the department to identify program savings and “bloat” before asking motorists to pay more. Senators also asked for an accounting of all registration‑related fees and which funds they feed; Finance staff agreed to provide the committee with additional detail on the buckets and recipients of registration fees.
