President Joe Biden recently unveiled a $1.9 trillion American Rescue Plan that he wants Congress to turn into legislation and approve as soon as possible. Included in the stimulus plan is a $20 billion investment to “protect the future of transit.” “Safe and dependable public transit systems are critical for a robust and equitable economy recovery,” states the emergency legislative proposal document.
The investment of $20 billion would go to “the hardest hit public transit agencies” to assist with upgrades and connectivity improvements. “This relief will keep agencies from laying off transit workers and cutting the routes that essential workers rely on every day while making these transit systems more resilient and ensuring that communities of color maintain the access to opportunity that public transportation provides,” notes the plan.
The promise of federal relief is significant for California, where unforeseen changes to travel behavior during the pandemic have decreased fuel tax revenues and directly impacted state funding for transportation, including transit systems. The timing and extent of California’s financial recovery from these revenue shortfalls remains uncertain. To help decision-makers navigate that uncertainty, the Mineta Transportation Institute (MTI) has researched the impacts of different post-pandemic recovery scenarios on state-generated transportation revenue.
In the new study named The Impact of the COVID-19 Recovery on California Transportation Revenue: A Scenario Analysis through 2040, MTI used six different economic recovery scenarios to project the state’s future transportation revenue through 2040, finding that:
- By 2040, California’s annual transportation revenue could range from as little as $6.5 billion to as much as $10.9 billion
- The projected cumulative revenue raised between 2020 and 2040 varies across the scenarios by more than $40 billion
- In 2020, fuel taxes will generate roughly three-quarters of state-generated transportation revenue but will likely generate a much smaller percentage by 2040 (less than a quarter in four of the six scenarios)
While there is no certainty that the future will resemble any of MTI’s chosen scenarios, the modeling will help state leaders prepare long-term strategies for raising adequate transportation revenues and design policies that achieve desired outcomes.