The joint informational hearing of the Assembly Transportation Committee and Senate members examined how California’s reliance on fuel excise taxes and vehicle fees is producing a shrinking revenue base for road and transit work as vehicle fuel efficiency rises and zero‑emission vehicles spread.

Chair Wilson, chair of the Assembly Transportation Committee, opened the hearing by framing the problem: “State and local transportation funding currently relies heavily on revenues from fuel taxes and other fees on gas powered vehicles,” she said, adding that as efficiency improves and zero‑emission vehicles enter the fleet, “these revenues are declining.”

Why it matters: transportation funding underpins road repairs, bridge work, transit operations and climate‑related projects statewide. Panelists and agency officials warned that, absent new revenue measures, California risks fewer projects, slower maintenance and growing backlogs that could reverse recent progress achieved since the passage of Senate Bill 1 (SB1).

The Legislative Analyst’s Office provided a state funding overview. Frank Jimenez of the LAO summarized revenue sources and amounts, and said the state’s package of fuel taxes and vehicle fees was expected to generate about $14.4 billion in 2024–25. “The gas excise tax makes up roughly $7,900,000,000,” he said, and identified the transportation improvement fee and the road improvement fee as other major items in the state’s revenue portfolio.

Researchers presented scenario forecasts for future revenue. Asha Weinstein Agrawal of San José State University’s Mineta Transportation Institute described an eight‑scenario analysis projecting revenues through 2040. “All the lines go down,” she told the committee, summarizing the study’s central result: under plausible futures — especially those with rapid electric vehicle adoption or reduced vehicle miles traveled — the state could see steep declines in fuel‑tax receipts, with worst‑case scenarios reducing annual revenues by roughly half by 2040.

Experts and regional officials described program impacts. Tanisha Taylor, executive director of the California Transportation Commission, said the CTC oversees allocations from those revenues and expects to see shortfalls in some large, flexible programs. “We will have fewer resources to address the types of projects I described earlier,” she said, noting that some programs are formula driven while others are more vulnerable to revenue declines. The commission’s draft 2025 assessment projects roughly $758 billion in system needs over 10 years and about $541 billion in available revenues, producing an anticipated shortfall of roughly $217 billion over that decade.

James Corless, executive director of the Sacramento Area Council of Governments, described how regional planning depends on state fuel‑based revenues. He said fuel taxes supply about one‑third of the funding counted in his region’s 25‑year plan and that without replacement revenues his region faces multi‑billion‑dollar shortfalls for planned projects, transit operations and investments that support greenhouse gas reduction targets.

Local governments and pavement specialists explained the consequences on local streets and bridges. Margo Yap of NCE reviewed local pavement and bridge needs, citing a statewide pavement condition index around 65 and estimating tens of billions of dollars in local pavement, active‑transportation and bridge needs over the next decade. She warned that deferring maintenance raises future reconstruction costs and that climate events — floods, mudslides and wildfire debris removal — are already producing large, sometimes one‑time costs that further strain budgets.

Policy options and constraints discussed at the hearing included:
- Expanding or rebalancing existing vehicle fees such as the transportation improvement fee and the road improvement fee (RIF), which currently charges zero‑emission vehicle owners an annual amount (transcript cited roughly $118). Speakers noted tradeoffs between equity and usage‑based fairness if fees are set as flat annual charges.
- Developing a road‑usage charge or mileage‑based fee. Panelists and several public commenters discussed existing pilots and legislation (Senate Bill 339 was referenced as authorizing study of road‑user programs) and emphasized that a transition to a per‑mile charge would require design choices (privacy, equity exemptions, rural adjustments) and substantial lead time.
- Continuing mixed revenue strategies (baskets of fees, vehicle registration revenues, targeted general‑fund augmentations or bond dollars) and updating multi‑scenario forecasts regularly to guide legislative choices.

Committee members at times stressed equity and affordability concerns for rural residents and lower‑income drivers who must travel long distances. Several members and witnesses urged that any replacement mechanism protect low‑income households and account for rural travel needs and goods‑movement impacts.

Public commenters included labor and industry groups, environmental organizations and local government associations. Transportation California said it commissioned an analysis of revenue tools; trade and goods‑movement groups urged that trucking and freight be included in deliberations; and Native American representatives asked legislators to consider tribal tax implications if state fuel taxes were replaced by mileage charges.

The hearing concluded with committee leaders and panelists agreeing the issue requires continued study, scenario monitoring and early legislative planning. Multiple witnesses urged beginning work now rather than waiting for revenues to fall further.

Ending: The hearing produced no formal actions or votes but set the stage for follow‑up oversight and technical hearings to explore specific replacement mechanisms, equity protections and implementation timelines.