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GOP states raise fees on electric cars as gas tax revenue falls

At least eight states, all but one controlled by Republicans, now require drivers of electric vehicles to pay a hefty annual registration fee of $200 or more. GOP lawmakers say it’s an effort to make up for lost gas tax revenue. EV advocates say it’s an effort to block sales of the environmentally friendly vehicles.

The new fees come as thousands more electric cars take to the roads, thanks in part to incentives backed by President Biden and Democratic lawmakers. But some Republicans say that movement has had unintended consequences — including a decline in gas tax revenue, which they have aimed to reverse with EV fees and taxes that are sometimes double the amount paid by owners of gas-powered cars.

The latest state to adopt increased fees was Texas, where the policy went into effect last month. Seven other states have also imposed taxes at charging stations. In all but one case — Pennsylvania, where partisan control is split — the state governments are controlled by Republicans.

“It’s what is fair,” said Florida state Sen. Ed Hooper (R), who plans to reintroduce a bill for next year’s session requiring EV owners to pay a $200 annual registration fee. “By 2035, between 20 to 25 percent of vehicles in Florida are going to be electric. We use gas taxes to build and maintain our roads, and those that are buying EVs are getting a free ride.”

Critics of the measures say they are part of a larger culture war on the right against electric vehicles, which conservatives see as a virtue symbol for wealthy elites and a dagger aimed at the oil industry. Former president Donald Trump warned autoworkers this summer that EVs would “decimate” their industry, and Florida Gov. Ron DeSantis (R) said in an opinion piece last month that he would “not let the government force you into buying an electric vehicle” if he were elected president.

Democrats and some experts say the fees and taxes could slow down sales and technological advances, and they dispute that the rise in EV ownership is to blame for depleted state transportation budgets. Gas tax revenue is also down because conventional vehicles have become more efficient and don’t require fueling up as often, and because the coronavirus pandemic triggered a sharp and sustained drop in work commutes.

State transportation officials and consumer advocacy groups say EV registration fees and taxes will do little to fill the funding gaps. According to their projections, the extra funds will increase transportation budgets by 0.1 to 3 percent.

“It’s such a small piece of transportation funding,” said Pennsylvania state Sen. Lindsey Williams (D), who voted against legislation to enact a $290 registration EV fee in her state. “You cannot fill the hole this way. What’s needed is a complete overhaul in how we fund infrastructure, but that would cost a lot of money, so there is a resistance to talking about it.”

Mark Fagan, a political scientist at Harvard University, said politicians backing the new fees are really trying to prove to constituents paying gas taxes that EV owners “are not getting a complete tax-free ride.”

States collect registration fees for all vehicles — regardless of fuel type — to help build and maintain roads, bridges and other transportation infrastructure. For decades, the main source of transportation revenue had come from state and federal gas taxes, collected each time a car tank was filled.

Since EV owners don’t pay this second tax, states have enacted laws and policies charging an additional registration fee for electric cars; 33 states have such fees, with some as low as $50.

But gas tax revenue has taken a significant drop over the past seven years. In 2016, it represented more than 41 percent of state transportation funds, but that fell to about 38 percent last year, and the downward trend is expected to continue, according to the National Association of State Budget Officers. Some states predict gas tax revenue could drop an additional 10 percent over the next few years.

Some conservatives blame the booming market for EVs and hybrid plug-ins — which have grown since 2020 from 2 percent of vehicles in the United States to about 9 percent — particularly as the Biden administration has backed EV-friendly policies, including an Environmental Protection Agency proposal to lower tailpipe emissions that could result in two-thirds of the new-vehicle market shifting to EVs by 2032. The administration also has provided states billions of dollars to install electric charging stations along the nation’s highways.

Democrats in blue states have followed suit, with incentives and complete bans in California and eight other states on sales of new combustion-engine vehicles by 2035.

Republican lawmakers in some states have moved in the opposite direction, turning to higher annual fees for electric vehicles. EV drivers in Texas will now pay an annual $200 fee, though the state’s motor vehicle department had suggested an annual $123 registration fee, an amount in 2020 that was equal to projected gas taxes on modern gas-powered cars.

But Republicans argued that the growing popularity of larger EVs — such as heavy-duty pickup trucks and SUVs — will do more damage to the roads, necessitating higher fees. That argument gained traction, and, for a time, it appeared Republicans might adopt an annual $300 fee.

“Our vote count in the [House transportation] committee was very close as to whether the $200 or $300 fee was going to prevail,” said Tom “Smitty” Smith, director of the Texas Electric Transportation Resources Alliance, an EV advocacy group. “In the end, we never endorsed the $200 fee, but it was clearly the better option. We saw that we could lose.”

Other GOP-led states have run into resistance in raising rates. In Florida, a bill proposing a $200 EV registration fee passed the state Senate this year but stalled in the House after a study by the University of South Florida said a fairer rate would be between $125 and $146.

“We fought it through good old-fashioned lobbying,” said Bruce Edelston, chair of the policy committee at Drive Electric Florida, an EV advocacy group. “The research helped make the case.”

Just one state led by Democrats has imposed EV fees exceeding $200: Washington, which charges $225 annually. However, $75 of that money goes to a grant program that helps install charging stations in apartment and condo complexes.

Some Republican lawmakers have also begun imposing new taxes at EV charging stations — where vehicle owners pay a fee per kilowatt-hour of electricity they download. The lawmakers argue the taxes are another route to ensuring EV owners pay for new roads and road repairs.

During a legislative hearing in March on a bill that proposed an EV charging tax in Georgia, state Senate Majority Leader Steve Gooch (R) argued that the cost would be similar to what owners of gas-powered cars face when refueling. “Let’s say you go to Buc-ee’s or RaceTrac or whatever on your way to Savannah this weekend, and you pull in and charge at a public charging station — you would be charged the equivalence of a motor fuel tax,” Gooch said.

The tax bill passed and became effective in July.

Utah also passed an EV excise tax this year that will work out to about $3 for each full charge. The Republican bill sponsors said this is about what drivers of gasoline-powered vehicles pay when they fill up. (The same bill also lowered the state gas tax by two cents.)

Critics, though, say the new revenue isn’t likely to fix transportation funding shortfalls since most drivers charge their EVs at home. The taxes will also have an outsize impact on middle- and low-income EV drivers, who are more likely to rely on public and commercial charging stations since stations are still rare in apartment complexes and home installation of EV chargers can be expensive.

“Every time one of these bills comes out that creates new financial burdens to EV ownership, it produces fear and causes people to wonder what the next financial burden might enact be to EV ownership,” said Eliza Cowie, policy director for 02 Utah, an environmental nonprofit that attempted to fight the new tax.

Democrats and environmental groups say they will deter commercial establishments like supermarkets and movie theaters from keeping charging stations because many don’t have meters and lack the ability to pass the gas tax onto the consumer. As a result, the establishments could be stuck paying the new taxes themselves.

Some Republicans are pushing against electric vehicles with decisions that go beyond budget concerns. DeSantis in July vetoed a bill that would have increased the number of EVs in government fleets. And in Wyoming, legislators considered a largely symbolic bill that sought to ban the sale of electric vehicles altogether in the state by 2035.

“It was a glib poke in the eye to California and aimed at generating conversation,” said Wyoming state Sen. Brian Boner (R), who co-sponsored a failed resolution that called for a future EV sales ban in his state. “Our tax structure is heavily dependent upon oil and gas and coal and these traditional forms of energy. It’s a heck of a thing to have your own government working very hard to limit your ability to make a living.”

Critics of the GOP push for more fees say they unfairly punish EV drivers, pointing to such studies as an analysis by Consumer Reports in 2019 that found two-thirds of states with registration fees are requiring EV owners to pay at least 50 percent more than what drivers of modern gas-powered cars pay in gas taxes.

“There really has to be a holistic approach that makes sure that all consumers are being treated equitably and are being equally charged,” said Dylan Jaff, an energy policy analyst for Consumer Reports. “Many of these states haven’t increased their gas taxes for decades, and there isn’t the political will to do it. It’s easier to adopt these registration fees for a group of consumers that people typically associate with higher incomes.”

It has been three decades since Texas raised its gas tax of 20 cents per gallon. Congress has also not raised the federal gas tax of 18.4 cents per gallon for several decades.

Some states are experimenting with a potentially more equitable solution: road user charge (RUC) pilot programs that track and charge vehicle owners based on the number of miles traveled — regardless of what energy source is fueling their vehicle. To alleviate privacy concerns, some states are experimenting with devices that can calculate mileage without recording where vehicles have traveled.

However, Max Baumhefner, an EV policy expert with the Natural Resources Defense Council, said these programs are still not equitable because the owner of a Rolls-Royce and the owner of a Honda Civic who drive the same number of miles would end up paying the same amount. As such, the programs don’t discourage gas consumption or encourage consumers to purchase vehicles with lower environmental impacts.

That’s why California state Sen. Scott Wiener (D) worked with the Natural Resources Defense Council and other environmental groups to develop a pilot program, scheduled to start next year, that will compare the results of a traditional RUC program with one that adjusts the per-mile tax to charge some drivers more than others, based on vehicle type.

“The veneer of equity with the traditional RUC program washes off upon closer examination,” Baumhefner said, adding that with the new California program, “all the fees get adjusted based upon the efficiency of the vehicles being driven, so you retain the incentive to reduce the use of gas.”

This post appeared first on The Washington Post

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