More States Considering Miles-Traveled Fee for EV: A Fair Burden or a Disincentive?
For several years now, a handful of states in the U.S. have encountered and tried to solve a vexing problem: Gasoline taxes have traditionally be a major source of funding to help repair roads and other needed infrastructure.
But with high-mileage vehicles and electric cars starting to show up more and more on roads, the money raised by gas taxes is dwindling. And as more major auto manufacturers join Nissan, Tesla, Fisker, and others in making all-electric cars, you have to figure the gas tax money will continue to shrink.
The latest state to try to tackle this problem is Oregon. In that state gas taxes account for approximately 60 percent of the funding used to repair city, county, and state road projects, and clearly, legislators there are concerned about the future.
So in late February a task force of lawmakers, transportation big-wigs and, of course, a few lobbyists, helped Oregon craft House Bill 2453. The bill would apply a per-mile fee to vehicles that get 55 miles per gallon or better efficiency that are produced in 2015 or thereafter.
One big lack of specificity in the bill comes when you look at the per-mile fee; there isn’t one. According to the Eugene Register-Guard, the task force considered a charge of up to 1.56 cents per mile; setting the fee there would mean an annual charge of $234 for an EV owner driving 15,000 miles.
Oregon Rep. Vicki Berger, a Republican, is a strong supporter of HB 2453 and repeatedly stressed to me in an interview that this was not a swipe at electric vehicle owners only.
“We can see the future, and we see vehicles that have great social value, and could become the dominant factor in our future on the roads,” Berger said. “But my issue is, how are we going to maintain our roads and highways? We’re an export state that depends on getting our natural resources to market; roads and bridges are incredibly important to our economy, and we have to think about that here.”
How have other states dealt with this problem? Arizona tried this kind of electric vehicle surcharge; in January 2012 Rep. Steve Farley introduced a bill in the Arizona Legislature that would have imposed a $0.01 per mile tax on electric vehicles. I interviewed Farley and wrote a story about his bill here; at the time, he sounded confident that it would pass, and I thought it might too.
However, the Arizona bill died in committee the day it was introduced.
In Washington state in February 2012, a bill that had much smaller ramifications for EV owners and proponents did pass the legislature. The Evergreen State legislature passed a bill that required electric vehicle users to pay a $100 fee when they register their cars each year, in order to make up for lost revenue on gas taxes.
Now as you can imagine, EV proponents cried foul when reports of Oregon’s bill came to light.
Travis Parman, a spokesman for Nissan USA, which of course has developed the electric Nissan Leaf, did not want to go into specific details about the merits or flaws of Oregon HB 2453. He did, however, issue this statement from the company:
“When new technology is being introduced such as that of the all-electric Nissan Leaf, we’d like to see as few barriers to entry as possible. However, we recognize the need for all drivers to contribute to road-maintenance funds. We think the issue needs to be part of a larger conversation around road funds, which are affected by the variability of fuel economy in all types of vehicles.”
Dan Gage is a Washington, D.C.-based spokesman for the Alliance of Automobile Manufacturers, a lobbying and trade group which represents GM, Ford, Toyota, Mitsubishi and others. He has seen laws like Oregon HB 2453 pop up across the country and said they must be considered on a case-by-case basis. He did say that his group is opposed to a federal VMT (vehicle miles tax).
“In Oregon we are opposed to the proposal on the books because it takes an arbitrary number like 55 miles per gallon and says that’s where the line is,” Gage told me. “It’s government picking winners and losers; what about a vehicle that gets 52 miles per gallon?”
Gage also said he realized states have a big problem to deal with when it comes to replenishing their highway trust funds.
“We understand that problem, but if the overall public policy goal is to reduce the amount of fossil fuels used, and to reduce gasoline use, we need to incentivize the use and purchase of electric vehicles. These kinds of taxes have to be part of a more comprehensive approach, and we don’t want to pit one technology against the other.”
Paul Cosgrove, an automobile industry lobbyist in Oregon, mentioned another big problem he has with HB2453 is cost. “The estimates from the (state) Dept. of Transportation say that the cost of implementing an EV tax is higher than what would be collected,” Cosgrove said. “It would be a number of years before that switched, so you’d have a tax increase that actually loses money.”
While I certainly understand why Gage and Parman and others in the EV industry would be against this bill, the more you listen to people like Berger and an Oregon Department of Transportation manager named James Whitty, the more you realize the issue isn’t so black and white.
First, let’s examine some of the details in the bill, which even Berger admits isn’t likely to pass the legislature this year. The miles-driven rate would be calculated by each high-mileage or electric vehicle owner using a “mileage reporter” that plugs into the car’s diagnostic port. Whitty said three pilot projects done last fall using several different devices (you can even download an app on your phone as well that tracks mileage) showed these reporters to be accurate, and most importantly, they’re not in any way a GPS tracking device.
“People are saying we’re killing the incentive to buy an EV with this bill, but really, when you look at the numbers it’s not much of a disincentive,” Whitty said. “EV users are avoiding the fuel tax, which is about 30 cents per gallon. And with the cost of fuel being $3.50 or $4.00 per gallon, you’re saving quite a bit of money.
Whitty also pointed to statistics illustrating how vast the gas purchase drop-off has been in his state: From 2010 to 2011, gasoline purchases went down three percent in Oregon, and in 2012 it went down another 1.5 percent. That’s nearly five percent less gas bought in just three years. With the economy rebounding, it’s not likely that economic factors played into the steep decline; it’s more likely that EV’s and high-mileage cars accounted for it.
“Our state roads are in pretty good shape right now, but a lot of local and country roads are terrible,” Whitty said. “We have to think about what our roads are going to look like a few years from now, when EV’s are everywhere and roads are crumbling even more.”
Whitty and Berger make good points; something does need to be done about declining gas revenue, and America’s roads are falling apart.
But however you slice it, these taxes would make people less likely to buy EV’s, and that would have a deleterious effect on our desire to improve air quality and our reliance on fossil fuels, so alternative solutions still need to be studied.
After all, those flying cars we were promised in “Back to the Future” aren’t quite on the horizon just yet.