Lawmakers Look to Gas Tax Alternatives as State Budgets Run on Empty

Published May 19, 2011

Owners of electric and fuel-efficient vehicles might be in for a bumpy road if some lawmakers have their way. Several states are looking at alternatives to motor fuel taxes, such as levying an electric vehicle tax or basing a tax on the number of miles driven as a way to fund transportation projects.

In Minnesota, the state transportation department recently announced it is recruiting 500 volunteers to test a system that tracks miles driven. Beginning in July, motorists participating in the study will be given smart phones with a GPS application that allows them to submit information about how much they drive.

“This research will provide important feedback from motorists about the effectiveness of using technology in a car or truck to gather mileage information,” said Cory Johnson, project manager for the transportation department.

‘Researching Alternative Financing’
“We are researching alternative financing methods today that could be used 10 or 20 years from now when the number of fuel-efficient and hybrid cars increases and no longer produce enough revenue from a gas tax to build and repair roads,” he said.

In 2007 Minnesota lawmakers appropriated $5 million for the research. The study is scheduled to conclude in December 2012.

Texas, Nevada and Iowa also are conducting research into mileage-based fees. Oregon completed a similar study in 2007 but has yet to implement such a tax.

In Washington State, lawmakers are considering charging electric car owners a $100 yearly fee as a way to close a $5 billion budget deficit and find additional sources of revenue to make up for declining gasoline tax revenue resulting from more fuel-efficient vehicles on the highways. The state’s gas tax rate is 37.5 cents per gallon, the sixth-highest in the nation. A Washington driver pays about $200 a year in gas taxes based on 12,000 miles per year driven in a car that gets 23 miles a gallon.

‘Ensures Fair Share’
“Electric vehicles put just as much wear and tear on our roads as gas vehicles. This simply ensures that they contribute their fair share to the upkeep of our roads,” said bill sponsor State Sen. Margaret Haugen (D-Camano Island).

Currently there are about 1,300 electric vehicles registered with the state. The state senate has already passed the bill. It awaits action in the house.

Gov. Christine Gregoire (D) has yet to state publicly whether she would sign the bill if it reaches her desk.

Plug In America, an electric car advocacy organization, opposes such fees and instead favors taxes based on the number of miles driven each year.
“Electric vehicle drivers certainly want to pay their fair share. The danger you get into is if you treat electric vehicles in some radically different way than you treat the rest,” said Jay Friedland, legislative director for Plug In America.

A recent state report noted Washington’s transportation revenues would decrease by approximately $25 million between now and the conclusion of the 2011-2013 biennium budget. Most of that is the result of decreased gas tax revenues.

Opposition from GM
General Motors, maker of the Chevy Volt, opposes states levying electric vehicle fees.

“There will be a time and place when electric vehicles should pay their fair share for road maintenance and those associated costs. But we’re not there yet. Right now, we need to create a market that incentivizes people to buy these cars,” said GM spokesman Shad Balch.

State Sen. Dan Swecker (R-Rochester), a co-sponsor of the bill, says something has to be done to make up for declining motor fuel tax revenue.

“The question is how do you account for those trends and begin to capture revenue that reflects actual road usage? We thought $100 was a place to start,” he said.

Nick Baker ([email protected]) writes from Washington, DC.