Washington’s transportation revenue forecast, published in November, predicts decreased revenues for both the 2023-25 and 2025-27 biennia. Issued by the state Economic and Revenue Forecast Council (ERFC), the report revises the forecast down even further from the Council’s September forecast, which also estimated losses.
As they head into the 2025 legislative session, transportation leaders face a tough economic environment and difficult budgetary decisions, compounding the challenge of insufficient resources for projects already planned or underway. They will be considering a variety of potential alternative revenue sources to make up for the forecasted declines, such as a statewide road usage charge or redirecting vehicle sales tax revenues from the operating budget to the transportation budget.
The ERFC’s report points to a drop in gasoline consumption as the primary cause of the revenue decline, leading to a drop in Motor Vehicle Fuel Tax (MVFT) revenues. Revenues from licenses, permits, and fees are also slightly down, as are ferry revenues. The Council estimates a decrease of $75 million in 2023-25 and $94 million in 2025-27.
The MVFT is the largest source of transportation funding in the state, making up nearly 37% of total transportation revenues and generating $1.6 billion in FY 2024. Cities and towns receive a direct distribution of 3 cents, or 6%, of the 49.4 cents the state collects on each dollar spent on gasoline in Washington. This added up to $512 million in distributions to cities in the 2023-25 biennium. The Transportation Improvement Board, a major funder of local transportation projects, also receives a 6% share.
The Council reports that gas consumption peaked in 2018 and has since continued to decline, while electric vehicle adoption is expected to continue to grow significantly and impact fuel consumption. Electric vehicle fee growth is expected to partially offset losses in MVFT revenues, but not enough to keep overall transportation revenues from declining. The forecast does not include revenues from the Climate Commitment Act, which funds some climate-related elements of the transportation system, such as multi-modal transportation projects.
The ERFC is Washington’s official forecasting body for the state’s economic activity and tax revenue. It is comprised of legislative and executive members and the State Treasurer. The group adopts a bipartisan revenue forecast four times a year, which is used to build the state operating budget. In 2023, the Legislature transferred the responsibilities for the transportation revenue forecast to the ERFC to create better coordination and consistency between forecasts. September’s report was the first transportation revenue forecast adopted by the ERFC.
Follow our coverage of the ERFC’s most recent forecast for the state’s operating revenues here.