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December 17, 2019 04:02 PM

States roll out EV fees, road usage charges to combat drop in gas tax revenue

Alexa St. John
Automotive News
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    Oregon Department of Transportation

    With more electric vehicles in use and fewer vehicle owners paying gasoline taxes, some regulators fear EVs are driving down revenue to maintain state roads.

    But not buying gasoline doesn't mean a free pass.

    EV owners in many states are getting hit with fees in lieu of traditional gasoline taxes. And, in some cases, they are putting far more into state coffers than their counterparts who pay at the pump.

    Existing and proposed annual EV fees in 26 states are up to four times higher than the annual gasoline tax would be for the average new car in 2025, according to a Consumer Reports analysis.

    Aside from these fees, some state governments are considering road-usage charges to boost revenue.

    EV owners in Oregon have two options once they pay the base vehicle registration fee that all vehicle owners pay:

    • They can also pay the annual enhanced registration fee Oregon charges for electrified vehicles; or
    • They can participate in OReGO, the Oregon Department of Transportation's road-usage charge program.

    Any eligible vehicle can participate in the OReGO program, regardless of powertrain, but only full-electric vehicles can get the enhanced EV registration fee waived. A registration fee waiver for vehicles that aren't full EVs but get at least 40 mpg takes effect Jan 1.

    Participants in OReGO pay 1.7 cents per mile they drive. Mileage is tracked through a plug-in device. The 1.7 cents they pay is designed to roughly equal the state's fuel tax rate of 34 cents a gallon. Drivers who still have to buy gasoline or diesel fuel, such as those driving plug-in hybrids and gasoline-electric hybrids, receive a credit on the fuel tax they pay.

    Maureen Bock, OReGO program manager, said some drivers participate in the program because of the pay-as-you-go option.

    "If they drive very few miles, they'll probably be better off being enrolled in OReGO," Bock said.

    More than 1,600 vehicles have participated in the program since its launch in July 2015. About 600 vehicles are now participating. The program originally capped the number of vehicles at 5,000, but the cap will be lifted starting in 2020.

    The Utah Department of Transportation will also implement an opt-in road-usage charge program, open to owners of EVs and hybrids, at the start of 2020.

    Participants will be exempt from the state's annual flat fees, which differ based on a vehicle's fuel source, according to Eileen Barron, UDOT's strategic communications manager. The accrual of per-mile charges will be capped at the equivalent of the vehicle's flat fee each year.

    Oregon and Utah are the first states to enact full road-usage charge programs as part of the Western Road Usage Charge Consortium, a group of 14 state transportation organizations examining the possibility of these charges as a regional policy. At least nine other Western states are researching the programs. The road-usage charge program in Utah could replace the fuel tax for all vehicles in the future, according to the state.

    Nationwide, however, EV fees will generate an average of 0.3 percent of state highway funding revenue at best by 2025, according to Consumer Reports. EVs accounted for only about 1.3 percent of the new vehicles sold in 2018.

    "Clearly the trends are not favoring the gas tax both in terms of fuel economy and inflation, and those two forces are really what's driving down the revenue and what's causing problems for states," Chris Harto, Consumer Reports senior policy analyst, said. "Right now, it's not EV adoption."

    Katherine Stainken, policy director for Plug In America, an advocacy group representing plug-in EV drivers nationwide, says the organization supports road-usage fees or vehicle-miles-traveled programs as long as they apply to vehicles across the board.

    "There's a whole conversation that needs to be had on the gas taxes in general and who's paying for the roads overall," Stainken said. "The current gas tax program isn't sustainable."

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