With Gas Tax Revenue Down, PA Considers Fee for Electric Vehicles

electric-car-2728143_1920Unlike hybrid vehicles or gas-powered cars, electric vehicles (EV) run solely on electric power. While charging the battery may increase pollution at the power plant, total emissions associated with EVs are still typically less than those for gasoline cars—particularly if the electricity is generated from renewable energy sources like wind or solar.

Almost 400,000 EVs were sold in 2018—more than any other year in the U.S. EV market. In fact, total EV sales for 2018 were up 81 percent compared to 2017, the highest growth rate since 2013.

Current EV sales only represent about 1 percent of all light-duty car sales in the United States, but as sales continue to climb, gas tax revenue—a major source of funding for building and maintaining transportation infrastructure—is slowly evaporating.

Most EV owners pay the same registration fees imposed on traditional vehicles and some transportation-related taxes, but since EVs use no gasoline, they don’t contribute to the upkeep of roads, bridges, and other transportation infrastructure through fuel taxes. And while EVs are only one factor in dwindling gas tax revenues, their rising popularity is forcing state policymakers to rethink the general philosophy of transportation funding.

In order to ensure EV owners are paying their fair share, Pennsylvania is considering legislation to require a special registration fee for EVs. HB 1392—approved last month by the House Transportation Committee— proposes annual EV fees of $150 for non-commercial EVs and $250 for commercial EVs.

According to the bill sponsor, Representative Mike Carroll:

Today, Pennsylvania’s system of roads and bridges, which is larger than New York’s, New Jersey’s, and New England’s combined, is primarily funded by user fees, such as fuel taxes. Although plug-in electric vehicles cause the same wear and tear on our roads as gas-powered vehicles, they contribute substantially less in fuel taxes toward our transportation infrastructure due to Pennsylvania’s confusing and difficult to administer alternative fuel tax on electricity.

Pennsylvania is not alone. 24 states have enacted special fees for EVs, while 16 states are considering legislation to levy new fees or revise current fees, according to the Edison Electric Institute. Maryland does not impose special registration fees for EV owners, but does incentivize the purchase of EVs through an excise tax credit and rebates for the cost of EV charging equipment and installation.

Stay tuned to Conduit Street for more information.

Useful Links

Conduit Street Podcast: Electric Vehicle Shock (On Revenues), School Funding Formulas, and More!

Edison Electric Institute: Electric Vehicle Trends & Key Issues

Pennsylvania House of Representatives: Memorandum: HB 1392

EVs are helping to reduce greenhouse emissions— one of the many mitigation and adaptation strategies for addressing climate change. MACo’s Summer Conference session, “The Climate-Health Connection Will Blow You Away, will explain how climate change and public health are connected in more ways than you may think. The session is scheduled for Thursday, August 15, 2019, from 2:00 pm – 3:00 pm.

The MACo Summer Conference will be held August 14-17, 2019 at the Roland Powell Convention Center in Ocean City, Maryland. This year’s conference theme is “Winds of Change.”

Learn more about MACo’s Summer Conference: