Californians already pay the nation’s highest fuel tax. On July 1, the state fuel tax rose again, by another 2.2 cents to 63.4 cents per gallon under a state law’s annual inflation adjustment.
Inflation raises the costs of asphalt, steel, and labor, so a modest yearly adjustment to maintain and build roads and bridges is reasonable, in theory. Unfortunately, drivers aren’t getting their money’s worth in California. Despite annual increases in the state fuel tax, California’s highways are getting worse, not better.
In California, roughly $1.15 of every gallon of fuel purchased goes to federal and state taxes, generating more than $14 billion for transportation in the 2023-2024 fiscal year. This is far more revenue than second-place Texas collects, even though it has a larger state highway network, and should be enough to maintain roads and bridges properly.
Instead, California has the nation’s second-worst-performing, least cost-effective highway system, according to Reason Foundation’s 29th Annual Highway Report, which compares spending, pavement quality, road safety and other measures across all 50 states. California ranks 49th in overall highway performance and cost-effectiveness, only ahead of Alaska, which faces numerous weather and geographic challenges.
California spends the sixth-most on maintenance, which is supposed to go toward road paving and pothole repair. Most drivers would question the results in that area. The state ranks last, 50th, in urban arterial pavement condition, the local roads people use to reach work, school, and the grocery store. Nearly a third of that mileage, 32 percent, is in poor condition, compared with a national average of 13 percent in poor condition.
California’s Interstate pavement is also rough, ranking among the worst: 48th out of 50 urban pavement conditions and 47th in rural pavement conditions. Drivers also lose about 49 hours a year, more than a full work week, sitting in traffic congestion, which is worse than all but three other states.
In taxpayer dollar terms, California spends nearly $50,000 per lane-mile on maintenance, 63% more than would be expected for its level of urbanization. But drivers don’t see the results, and California’s population and density are not the problem. The Annual Highway Report adjusts spending expectations for urbanization so that California can be compared on a like-for-like basis with other states nationwide.
For comparison to similar states, on overall highway condition and cost-effectiveness, Florida ranks 14th and Texas 27th. Both are large, fast-growing states that deliver better road conditions for less money.
As California raises fuel taxes again, three reforms would start to help give drivers better value for the gas taxes they pay. First, the state should adjust its infrastructure project selection tool. California has a process for prioritizing transportation projects. But the Federal Highway Administration criticized it for relying too heavily on politics and failing to properly consider quantitative criteria such as reducing congestion, reducing fatalities, and increasing economic activity. California should conduct a benefit-cost analysis of all potential projects, rank them, and invest in building and expanding the ones with the highest scores. The state should also better prioritize tangible things, like fixing potholes and resurfacing roads, that can be improved more quickly simply by doing them.
Second, California can learn from states that better maintain their roads and bridges. Georgia has some of the best pavement conditions in the country. Its urban arterial road pavement conditions rank second-best in the country, and its rural arterial road pavement conditions rank third-best. Yet only 12 states spend less on maintenance than Georgia does. California can learn from Georgia and other states on how to build and maintain higher-quality roads at lower prices.
Third, California must reduce its costs. The state’s strict environmental review, high labor and union costs, expensive land, zoning laws and not-in-my-backyard (NIMBYs) politics make building and expanding roads, highways, and bridges a challenge. The state needs to reform the California Environmental Quality Act (CEQA), which has become more about process and checking boxes than about protecting the environment, and reduce labor costs in future negotiations with unions.
Californians are paying for a first-rate highway system but aren’t getting one. Before the state increases fuel taxes any further, it should deliver the road quality that drivers are already paying for. Until it does, every tax increase just further raises the price of a broken system.Baruch Feigenbaum is senior managing director of transportation policy at Reason Foundation and lead author of the Annual Highway Report.