Senator Wiener’s Legislation to Extend Road Charge Pilot Program, Providing Potential Future Source of Transportation Funding, Passes Senate

June 1, 2021

SACRAMENTO - Senator Scott Wiener (D-San Francisco)’s legislation Senate Bill 339, the Gas Tax Alternative Pilot, passed the Senate by a vote of 26-9. This pilot program, which allows California to study a road user charge based on vehicle miles traveled (VMT) instead of relying on gas taxes, is a critical strategy as the state transitions away from fossil fuels. Gas taxes fund California’s roads, highway system, and public transportation systems. With our transition to more fuel efficient vehicles — and ultimately away from carbon-fueled vehicles entirely — gas tax revenue will decline and eventually end. Road usage charges can replace gas taxes and ensure we can continue to fund our roads. Moreover, road charges are more equitable than gas taxes because wealthier people are more likely to be able to afford low and zero emission vehicles, thus avoiding gas taxes while lower income people continue to pay.

The California Road Charge Pilot Program has existed since 2015, and under SB 339, will be extended to 2027 and expanded to include an actual fee collection program (with participants reimbursed with the amount they would’ve paid in gas taxes over that period). Participation in the pilot program is entirely voluntary — no one will be forced to participate. The pilot program will allow state agencies to evaluate and refine the approach for future consideration of broader application.

With many drivers  – particularly wealthier drivers – switching to electric vehicles, and with Governor Gavin Newsom’s recent executive order banning the sale of new internal combustion engine vehicles by 2035, the road charge pilot program offers an alternative option for transportation and road funding. Right now, California’s road maintenance and transportation funding comes primarily from the gas tax, which must be constantly adjusted and raised due to inflation and increasing car fuel efficiency. The Gas Tax Alternative Pilot would expand the current California Road Charge Pilot to further explore a “user pays” system that requires drivers pay for their vehicle miles traveled (VMT) in order to fund road and highway infrastructure and maintenance.  

Rather than pay a fee at the pump when purchasing gasoline, a road charge system determines a driver’s VMT with an in-vehicle device, regular reporting of the odometer, or through various other methods. Unlike prior forms of the program which used mock invoices, SB 339 includes the actual collection of this road charge fee. The VMT fee will be paid by voluntary participants, and in return they will receive a credit at the end of the program that covers what they would have paid in gas taxes during the duration of their participation. This extension is a crucial step and will help better equip the state with the necessary information regarding the potential for a road charge system to replace the gas tax to fund transportation infrastructure and maintenance.

To generate consistent revenue for long-term transportation funding, California must both deal with inflation and find an alternative to a “pay-at-the-pump” model, which relies on fuel inefficiency to generate funding. While SB 1 (Beall, 2017) took positive steps to address inflation issues, the gas tax is not a viable long-term solution: revenue from the tax is based on fuel consumption, and as critically important climate-friendly policies discouraging fuel consumption continue to be implemented, gas tax revenue will go down. 

The current tax structure also causes an inequitable burden that has an outsized impact on low-income communities. Fuel efficient vehicles, hybrids, and electric vehicles on average cost more than less efficient vehicles. This allows those with the financial means to drive an efficient car — thus using less gas — to pay less overall to fund the roads they’re driving on. A road charge program would allow for funding to be based on how much a person is using the road, rather than how much gas they purchase, more equitably distributing the costs of road and transportation maintenance. 

SB 339 is sponsored by Transportation California and supported by the California Transportation Commission. Assemblymembers David Chiu (D-San Francisco) and Phil Ting (D-San Francisco) and Senators Bob Wieckowski (D-Fremont) and Josh Newman (D-Fullerton) are co-authoring the legislation. 

“We need long-term, sustainable ways to fund transportation that don’t overburden low-income people who can’t afford electric vehicles,” said Senator Wiener. “Electric vehicles are an incredible innovation, but their wider adoption means that we need alternative ways to fund transportation that don’t rely on gas consumption. To combat climate change, we need to completely phase out gas cars, and the Gas Tax Alternative Pilot will help us figure out how to do that in a way that means our transportation infrastructure will still receive critical funding.”