Are EV Fees a Solution for Road Funding?

Most states forcing electric-vehicle owners to pay more than gas-tax equivalent: report
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YONKERS, N.Y. —States have been active raising gas taxes and implementing or raising ownership fees on electric vehicles (EVs) in 2019. Proponents point to the need for fairness in funding road repair, which is typically supported in part by states’ gas taxes. But a recent analysis by Consumer Reports argues that, in most cases, these EV fees far exceed what the typical driver pays in gas taxes.

According to the September 2019 analysis, of 26 states that currently have EV fees, 11 charge more than the equivalent in gas taxes paid by owners of comparable, gas-powered cars, while three charge more than twice the equivalent amount. About 12 states have proposed new EV fees or increased existing fees in 2019. Ten of these new or increased fees will result in the EV driver paying more than new gasoline-powered vehicles would through gas taxes by 2025, according to Consumer Reports, Yonkers, N.Y.

What is a fair EV fee? The Consumer Reports analysis argues it should be relative to the gas tax paid by a conventional vehicle. It proposed a formula for determining a maximum justifiable fee (MJF): average miles traveled divided by the fuel economy standard, multiplied by the state’s gas tax. By this formula, Consumer Reports found that two-thirds of the proposed state EV fees exceed the MJF.

Current EV fees in Arkansas and Wyoming are the equivalent of the gas tax paid by a vehicle that gets 13 miles per gallon (mpg). Missouri and Arizona have the highest proposed fees—the equivalent of the gas tax paid by vehicles that get 9 and 10 miles per gallon, respectively. For some perspective, of the least-efficient model-year 2019 cars ranked by the EPA, none have a combined fuel economy lower than 11 mpg.

As gasoline-powered vehicles' fuel economy improves, EV fees will grow even more punitive, according to the report. By 2025, EV drivers in 12 states will pay at least 50% more in fees than a driver of the average new internal combustion engine vehicle would through gas taxes. Among states that already have EV fees, the percentage that would require EV drivers to pay more will rise from 42% in 2020 to 69% in 2025.

Consumer Reports also challenged whether the new EV fees were an effective way to provide road funding, pointing out that, because of how few EVs are on the roads, the proposed fees will generate only 0.04% of current state highway funding. This share will rise to just 0.3% by 2025. Meanwhile, about 29% of state revenues that supported highway funding come from state gas taxes, with other sources including registration fees and tolls.

The nonprofit consumer advocacy group advises states to consider vehicles’ actual road usage and contribution to wear and tear and congestion.

“These special fees don’t make a dent when it comes to funding road repair, and these punitive policies could instead discourage people from purchasing a fuel-efficient or gas-free car in the first place,” said Shannon Baker-Branstetter, manager of Consumer Reports’ cars and energy policy.

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