Revised local streets and roads revenue estimates show modest growth

The League of California Cities released new local streets and roads revenue estimates for the current and upcoming fiscal years. The allocations come from tax revenues collected at gas pumps and other sources. Despite lower fuel consumption, allocations to cities and counties have grown at a modest pace. 

Overall allocations from the Highway Users Tax Account and the Road Maintenance and Rehabilitation Account are projected to climb 5.1% for the fiscal year 2022-23. Allocations are projected to grow 11.4% for the 2023-24 budget year.

The estimates are based on new statewide tax revenue estimates released by the California Department of Finance with Gov. Gavin Newsom’s revised budget proposal.

Fuel consumption dropped sharply during the height of the COVID-19 pandemic but has mostly recovered. Fuel prices have increased steeply, but the price of fuel no longer has a direct effect on local revenues because all rates are per gallon, regardless of price.

Estimates for individual agencies, together with an explanation of the formulas and trends, as well as guidance for long-term projections, are available in the California Local Government Finance Almanac. Local officials should use these updated figures for budgeting.

For more information contact Cal Cities Fiscal Consultant Michael Coleman.