California officials sound alarm over shrinking gas tax revenue

By Alex Nieves | 03/04/2025 12:54 PM EST

They said at a hearing Monday that increased fuel efficiency is already cutting into road funding.

A customer pumps gas at a gas station.

The California Transportation Commission estimates that increased fuel efficiency will reduce gas tax revenues by $31 billion over the next 10 years. Nam Y. Huh/AP

California transportation officials Monday warned state lawmakers that declining gas tax revenue could hamper the state’s efforts to maintain and expand its transportation system.

Tanisha Taylor, executive director of the California Transportation Commission, issued the warning during a legislative hearing to discuss shrinking gas tax revenues as drivers switch to more fuel efficient options like electric vehicles and hybrids.

The commission, which holds the purse strings for the state’s transportation funding, estimates that increased fuel efficiency will reduce gas tax revenues by $31 billion over the next 10 years, exacerbating a more than $200 billion projected shortfall in overall funding needs.

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“This means our transportation system may once again be placed on the state auditor’s high risk list due to disrepair, reversing the progress we have made and undermining the commitments made to the voters in SB 1,” Taylor said, referencing the 2017 law that increased gas taxes.

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