California Is Running Out of Money to Fix Its Roads – and the Solution Could Change What Every Driver Pays

Trinity County roads are rated among the worst in California — and the residents who drive them, many among the state’s poorest, already pay more toward road maintenance through gas taxes than electric vehicle drivers do, while absorbing hundreds of dollars annually in additional vehicle wear from the deteriorated roads they have no choice but to use.[Stock photo by Alysha McCaffery]

The Problem: Less Gas, Less Money

California has funded road maintenance through a gas tax since 1923. The system worked when most vehicles burned similar amounts of fuel. It is struggling now that they don’t.

As more Californians drive electric vehicles and fuel-efficient cars, gas tax revenue is projected to fall by $5 billion — roughly 64% — by 2035, according to the Mineta Transportation Institute. The California Transportation Commission estimates the state could fall $216 billion short of what is needed for road maintenance over the next decade.

That shortfall didn’t appear overnight. According to the 2022 California Statewide Local Streets and Roads Needs Assessment — an annual report produced by SaveCaliforniaStreets.org and funded by every county in the state — decades of deferred maintenance have left California roads in declining condition statewide, with rural counties hit hardest. Humboldt County roads score a 53 on the Pavement Condition Index, Mendocino a 47, and Trinity a 48 — all well below the statewide average of 65, which the report characterizes as already cause for concern. Combined, the three counties face an estimated $1.6 billion in repair needs over the next decade.

The deferred maintenance problem has been compounded by a history of funds not reaching roads. During the early 2000s fiscal crisis, $2.5 billion in gas tax revenues were diverted to general government programs. Further diversions followed through accounting mechanisms in the years after, until voters passed Proposition 69 in 2018 — a constitutional amendment specifically designed to prevent lawmakers from raiding transportation funds again. Meanwhile, California’s high-speed rail project, approved by voters in 2008 with an estimated price tag of $18 billion, has ballooned to an estimated $128 billion, remains unfinished, and had approximately $4 billion in federal grants terminated in 2025. For rural communities watching local roads deteriorate during those same years, the contrast has not gone unnoticed.

The Proposed Solution: Pay by the Mile

With gas tax revenue declining, California has been studying whether to shift to a road user charge — essentially a per-mile fee that every driver pays regardless of what fuel their vehicle uses. The idea addresses the core problem directly: EVs and hybrid drivers, who currently contribute little to road funding, would pay their share based on how much they actually use the road.

California has conducted four rounds of research on the concept since 2014. The 2017 Road Charge Pilot under SB 1077 enrolled 5,000 vehicles and tracked 37 million miles over nine months, testing mileage reporting technologies and finding that 73% of participants considered a per-mile charge fairer than the gas tax. That pilot simulated but did not actually collect revenue. The most recent study — the 2024-2025 Collection Pilot under SB 339 — was the first to use real money, with participants paying actual road charges and receiving credits for gas taxes paid during the study. Full results are due to the Legislature by December 31, 2026.

Assembly Bill 1421, introduced by Assembly Transportation Chair Lori Wilson, a Suisun City Democrat, would order the California Transportation Commission to summarize all existing research on road user charges and prepare recommendations for lawmakers. The bill does not propose implementing a mileage tax — it proposes studying the path to one. No legislation to actually implement a per-mile charge has been introduced.

The Environmental Tension

California has spent years and billions of dollars encouraging drivers to go electric — offering rebates, building charging infrastructure, and setting a deadline to phase out new gas vehicle sales by 2035. The push has created an unintended consequence: the more successful California is at moving drivers into EVs and fuel-efficient vehicles, the less money flows into the fund that maintains the roads those vehicles drive on. A fully electric California fleet would generate zero gas tax revenue while still requiring billions in annual road maintenance. A per-mile road charge does not undermine clean transportation goals — it simply ensures that whatever vehicle a driver chooses, they contribute to maintaining the infrastructure they use.

Researchers and policy advocates note that the two goals — encouraging clean transportation and equitably funding road maintenance — may require separate funding mechanisms. EV incentives draw from general revenue and dedicated clean energy funds. Road maintenance has historically drawn from gas taxes. A mileage charge bridges that gap by tying road funding to road use rather than fuel consumption, regardless of what powers the vehicle.

What Happens If the Gas Tax Just Goes Away?

Some Republican lawmakers have proposed suspending or eliminating the gas tax entirely, arguing it would provide immediate relief at the pump. The evidence from other states suggests that relief may not materialize — and for rural communities, the consequences could be particularly damaging.

When states have reduced or suspended gas taxes, oil companies have not always passed the savings to consumers. A University of California San Diego analysis found that when Illinois and Indiana suspended their gas taxes during a 2000 price spike, roughly 30% of the savings were absorbed by producers rather than passed to consumers. A Penn Wharton Budget Model analysis of the 2022 state gas tax holidays in Maryland, Georgia, and Connecticut found that price reductions were often smaller than the tax suspended. The Institute on Taxation and Economic Policy has concluded that gas tax holidays are unlikely to meaningfully benefit consumers and carry significant risks for infrastructure funding.

California’s fuel market makes this risk more acute. The state’s boutique fuel formula, concentrated refining industry, and limited competition mean California consistently pays the highest gas prices in the nation regardless of tax policy. Gov. Newsom has stated that removing the gas tax carries no guarantee of lower pump prices.

For Humboldt, Mendocino, and Trinity residents — who already pay above-average fuel prices due to distance from supply infrastructure and limited retail competition — a gas tax elimination that oil companies absorb as profit would produce the worst possible outcome: no savings at the pump and no road funding either.

This is why most serious policy proposals — including the Oregon model and California’s pilot programs — are structured as a hybrid rather than a straight swap. The gas tax stays, at least partially, to prevent oil companies from capturing the margin. The mileage charge layers on top, with gas tax payments credited against the mileage bill so drivers are not paying twice.

What Oregon Has Done

Oregon is the furthest along of any state in implementing this model. Participants in Oregon’s OReGO program pay 2.3 cents per mile and receive a credit for fuel taxes paid at the pump, so gas drivers are not double-taxed. EVs and fuel-efficient vehicles that pay little in gas taxes receive no significant credit, effectively paying more than they do now. As of 2027 the program extends to new EV owners, and by 2028 to hybrid owners statewide. Oregon’s program is currently voluntary.

California’s SB 339 pilot used a similar credit structure. Participants paid road charges on miles driven and received credits for gas taxes paid during the pilot period, with the rate set at 2.5 cents per mile for light-duty vehicles.

What It Could Mean in Real Numbers

To understand how the math works, it helps to compare four types of drivers side by side.

The average Californian drives roughly 14,000 miles a year and pays approximately $300 annually in state gas taxes, based on California’s excise tax of 59.6 cents per gallon and an average fuel economy of around 28 mpg. Under a mileage system at 2.5 cents per mile — the rate tested in California’s most recent pilot — that same driver would owe $350 in road charges. They would receive a credit for the $300 in gas taxes already paid, leaving a net additional cost of roughly $50.

An average California EV driver covering the same 14,000 miles currently pays almost nothing toward road maintenance. Under a mileage system they would owe the full $350 with no gas tax credit to offset it.

A rural Emerald Triangle resident driving 20,000 miles a year in a fuel-inefficient truck averaging 15 mpg burns roughly 1,333 gallons annually — generating approximately $794 in state gas taxes at the current rate, more than double what the average Californian pays. Under a mileage system that same driver would owe $500 in road charges but receive a credit for the $794 in gas taxes paid — resulting in a net refund of approximately $294.

A rural EV driver covering the same 20,000 miles currently pays almost nothing in gas taxes despite using rural roads heavily. Under a mileage system they would owe the full $500 with no meaningful credit to offset it.

The pattern across all four examples: gas drivers — particularly rural ones in fuel-inefficient vehicles — would likely pay less or receive a refund under a hybrid mileage system. EV drivers, regardless of where they live, would pay more than they currently do. The core argument for the switch is not that it adds a new tax, but that it shifts who pays — bringing EV drivers into the road funding system for the first time.

The catch is that revenue-neutral rates do not come close to addressing the $216 billion maintenance backlog. As rates rise to meet actual road needs, every driver pays more over time. For rural drivers covering long distances out of necessity with no ability to reduce their mileage, the dollar impact of any rate increase falls harder than it does on an urban driver covering 6,000 fewer miles a year.

What It Currently Means for Rural Drivers

Rural counties already receive less road funding per mile maintained than urban counties because the current distribution formula is based on registered vehicles rather than road miles. The Mineta Transportation Institute research found that rural drivers would likely pay less under a revenue-neutral road charge than under the current gas tax, because equalizing the per-mile rate removes the penalty for driving less fuel-efficient vehicles. However, the same research flagged that a flat per-mile rate would fall hardest on drivers who cannot reduce their mileage regardless of financial incentive — a condition that describes most rural Emerald Triangle residents.

Humboldt Transit Authority operates fixed-route service along portions of the region, though runs are limited in both frequency and reach. For much of the Emerald Triangle — including inland Mendocino and Trinity County — public transit is effectively nonexistent, passenger rail is absent, and ride-sharing coverage is minimal.

Driving on deteriorated roads carries its own financial cost. According to transportation research cited in the 2022 Needs Assessment, poor road conditions cost motorists an estimated $400 to $1,000 or more annually in additional vehicle wear, tire damage, and fuel consumption — a cost that falls disproportionately on rural drivers using the worst-rated roads.

Whether a mileage charge would be distributed more equitably than the current gas tax depends entirely on whether the distribution formula is reformed — something no current legislative proposal addresses. And whether eliminating or reducing the gas tax would produce savings at the pump for rural drivers remains uncertain, given California’s concentrated fuel market and Gov. Newsom’s acknowledgment that a gas tax reduction carries no guarantee of lower prices for consumers.

Where Things Stand

As of early 2026, California has four rounds of road charge research and one bill proposing further study. It has no legislation to implement a mileage tax, no reformed distribution formula, no rural necessity exemption, and no revenue protection equivalent to Prop 69 attached to any proposed road charge system. The SB 339 pilot results, due by the end of 2026, will be the most comprehensive data yet on how a real-money road charge works in practice.

For Humboldt, Mendocino, and Trinity counties — where roads are already rated poor to at-risk, where the current funding system already shortchanges rural communities, and where drivers have no realistic alternative to their vehicles — the outcome of that policy debate will have direct consequences on the condition of roads they depend on daily and the cost of driving them.