California exploring getting rid of the gas tax, replacing it with road charge program

As more drivers turn to zero-emissions vehicles, which don't have to pay anything at the pump, California's gas tax could soon be a thing of the past.

The state is exploring implementing a California Road Charge, which would replace the gas tax with a mileage-based user fee for drivers who use the roads. Essentially, charging by the mile instead of the tank.

California's gas tax is currently about 59 cents per gallon, the country's highest rate. It generates millions of dollars to fund road repairs across the state.

According to Caltrans, Californians with gas-powered vehicles pay about $300 a year in state gas taxes.

But with a rise in electric vehicles, lawmakers are worried it won't generate enough money.

Caltrans officials launched a pilot program in Aug. 2024 to test the road charge system. It concluded in January. The results of the program are expected to be released later this year.

Gas tax revenue is set to fall

Motor fuel taxes are the largest source of transportation revenue for states, according to the National Association of State Budget Officers' most recent report on state expenditures. But the money they bring in has fallen: Gas taxes raised 41% of transportation revenue in fiscal year 2016, compared with roughly 36% in fiscal year 2024, the group found.

In California, where zero-emission vehicles accounted for about a quarter of car sales last year, legislative analysts predict gas tax collections will decrease by $5 billion - or 64% - by 2035, in a scenario where the state successfully meets its climate goals. California and Oregon are among the multiple states that will require all new passenger cars sold to be zero-emission vehicles by 2035.

The downward revenue trend is already playing out in Pennsylvania, where gas tax revenues dropped an estimated $250 million last year compared with 2019, according to the state's independent fiscal office.

Inflation has also driven up the cost of transportation materials, exacerbating budget concerns.

The Associated Press contributed to this report.