CHICAGO — With 2019 not an election year, states have been rolling out proposals to increase fuel taxes to raise funding for infrastructure. Some are considering fixed cent-per-gallon (CPG) increases, while others are weighing variable-rate models that adjust over time. Also up for discussion: an increase to the federal 18.4-CPG gas tax, which has not gone up since 1993.
Meanwhile, more than 20 states have adopted registration fees for hybrid and plug-in electric vehicles (EVs). Proponents of the fees argue that they offset lost gas-tax revenue from EVs, which make up about 1% of the U.S. vehicle fleet.
Here is roundup of state gas-tax developments for the first half of 2019 ...
In March, Iowa Gov. Kay Ivey signed into law a 10-CPG, staged increase to the state gas tax. It will rise first by 6 CPG on Sept. 1, 2019, with additional 2-CPG increases in October 2020 and October 2021. In 2023, the tax will shift to a variable-rate structure that connects to highway construction costs. The legislature also passed a new, annual registration and license fee of $200 for EVs and $100 for plug-in hybrids.
Illinois legislators approved a 19-CPG increase to the state fuel tax, doubling it to 38 CPG, effective July 1. It also is indexed to inflation. The state’s annual registration fee for gasoline-powered vehicles rose from $40 to $148, while the annual EV registration fee grew from $17.50 to $248.
Michigan Gov. Gretchen Whitmer, a Democrat, has proposed a 45-CPG increase to the 26.3-CPG state gas tax in her 2020 budget bill, although it has not budged under opposition from Republican legislators. It would increase in three 15-CPG stages from October 2019 to October 2020. Including sales taxes, the state tax per gallon would hit 89.13 CPG, giving Michigan the highest in the nation. Whitmer has also proposed increasing EV fees from $130 to $360 per year and hybrid fees from $47.50 to $150.
Democratic Gov. Tim Walz has proposed a 20-CPG increase to Minnesota’s gas tax, which would hit 48.5 CPG under his plan. Republican lawmakers have resisted the idea of raising fuel taxes and instead considered borrowing money to pay for road projects, TwinCities.com reported. Democratic legislators, meanwhile, are discussing a debt-service surcharge to the gas tax that would add “a few cents per gallon” to the cost of fuel, according to the report.
Ohio passed a 10.5-CPG increase to the current 28-CPG state gas tax and a 19-CPG increase to the state diesel tax, effective July 1, 2019. Gov. Mike DeWine, who had originally proposed an 18-CPG increase to the gas tax, has also proposed indexing the gas tax to inflation. The state also enacted a $200 annual registration fee for EVs and $100 fee for hybrids.
The state’s Transportation Commission will vote on its recommendations this December on a proposal to replace Washington’s 49.5-CPG gas tax with a pay-per-mile system for owners of passenger vehicles, The Olympian reported. The new system would likely be phased in over 10 to 25 years, and drivers would pay either by the mile or the existing gas tax.
Washington also levied a new $75 fee on EV owners to help pay for the development of EV charging infrastructure. This is in addition to an annual $150 EV registration fee.
Wisconsin Gov. Tony Evers, a Democrat, has proposed a 9-CPG increase to the 32.9-CPG state gas tax. Republican state legislators have fought the plan, with one—Rep. Rob Hutton—introducing a bill that would require the state to post a sticker with the total federal and state fuel taxes on gas pumps during annual inspections. Republicans are instead proposing raising vehicle registration and title fees, Wisconsin Public Radio reported.