States Seek Gas Tax Alternative

In a bid to top up dwindling gas tax coffers, most states now charge electric vehicle owners a fee (POLITICO).

What’s going on: “The gasoline tax—long the backbone of transportation funding— has lost potency as vehicles become more efficient.”

Adjusting for inflation, gas-tax collections in the first quarter of 2023 declined by 11.5% when compared to the same period in 2021, according to the Pew Charitable Trusts.

What it means: The continued popularity of EVs is leading lawmakers “to design alternative funding models” to pay for roads and bridges.

Though this has also entailed imposing more tolls and creating retail delivery fees, “[s]tates’ most common approach … has been to levy more costs on EV owners.”
Thirty-nine states—including West Virgina and Mississippi, which have the fewest EVs—now assess a fee of some sort on hybrid and EV owners.

A “balancing act”: “States face a balancing act: The more quickly drivers go electric, the more quickly gas tax revenues decline; the more states lean on EVs to make up lost gas tax revenue, the more it weighs down EV demand.”

Meanwhile, “1 in 3 bridges needs repair, according to an American Road and Transportation Builders Association analysis of federal data, and about 7 percent are structurally deficient.”

Carrot, then stick: “The push-and-pull between climate and budget goals has left 13 states with policies that offer drivers extra money to buy an EV, before charging them extra for that purchase.”