The Mineta Transportation Institute has released How Do California’s Local Governments Fund Surface Transportation? A Guide to Revenue Sources, a new report to help policymakers and researchers tackle the challenge of funding local transportation.

“The complexity of local government transportation budgets is a major barrier to identifying long-term reliable and adequate funding sources,” said Dr. Asha Weinstein Agrawal, lead study author and director of MTI’s National Transportation Finance Center. “Quite frankly, the system is bewildering even to experts. Every year, California’s 482 cities, 58 counties, and numerous special districts must piece together the puzzle of their transportation budgets with revenue from dozens of taxes and fees imposed by federal, state, regional, and local governments.”

According to MTI's new study, a 2021 report from the League of California Cities found that expenditures for local streets, roads, and bridges in California would need to increase over current levels by $64 billion over the coming decade to achieve a state of good repair. 

The MTI study presents an overview of the primary federal, state, and local taxes and fees that raise revenue ultimately spent by local governments to fund transportation. The majority of the money comes from taxes and fees paid directly by drivers and transit users. User fees at the local level include transit fares and tolls. In addition to user fees, both the state and local governments raise revenue from general taxes, such as parcel taxes, hotel taxes, and sales taxes.

Looking just at streets and roads, local governments contribute almost half of total spending, state sources contribute approximately one-third, and federal contributions are around 10%. As the figure shows, for the last two decades local governments have consistently raised the largest amount of revenue for streets and roads, according to MTI.