The purpose of this study is to estimate any damage caused by utility cuts to pavements and develop a fee schedule to recover the costs associated with such damage using the City of Pacifica, CA, U.S.’s pavement management system (PMS). To accomplish this, the study looked at the functional deterioration of pavements resulting from utility cuts. The City of Pacifica’s PMS containing a vast dataset of pavement distress spanning 15 years, comprising thousands of data points encompassing various pavement ages and conditions, was analyzed to assess the impact of utility cuts. The findings from this study include: 1) Pavements with cuts of any size deteriorate more than pavements without cuts across all age groups with one exception for older residentials with small cuts; 2) On average, pavement condition index drops by 30% if the cut area is greater than 10% of the section area; and 3) Utility cuts inflict greater damage on newer pavements (<10 years old) compared with older ones (≥10 years old). Consequently, new pavements experience an average percent reduction of approximately 33% in their remaining service life, while older pavements suffer a reduction of about 17%. The statistical analyses indicate that utility cuts caused significant damage, and supported a tiered utility cut fee structure based on functional classification, age of pavement, and size of the cut. The resulting fee schedule is based on 2021 material and construction cost estimates; consequently, implementation including an annual adjustment for inflation is recommended. Example fee calculations are provided.