Legislators in 11 states push for more fees on electric, hybrid vehicles

March 24, 2021

Keith Goble

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Steps are being taken at statehouses around the country to supplement transportation funding via electric and hybrid vehicles.

Popularity for such vehicles is expected to grow in the coming decades. As a result, state officials are taking steps to make sure they will be able to capture needed transportation revenue from owners of fuel-efficient vehicles.

About 30 states impose a special registration fee for plug-in electric and/or plug-in hybrid vehicles. Fees range from about $50 annually for plug-in hybrid vehicles in Iowa to $225 yearly for plug-in electric vehicles in Washington.

Below is a rundown of notable efforts in statehouses to raise more revenue via alternative fuel vehicles.

Alaska

Alaska’s House Transportation Committee has taken the first step toward approval of a notable transportation funding bill.

The main component of the bill from Rep. Andy Josephson, D-Anchorage, is a provision to double the 8-cent excise tax on gas and diesel purchases to 16 cents.

Also included in the bill is a provision to increase in biennial registrations for electric vehicles from $100 to $200. Hybrid vehicle registrations would increase from $100 to $150.

The Alaska Department of Revenue estimates the fuel tax increase would raise $33 million annually for transportation work. Increased fees on alternative fuel vehicles initially would raise about $100,000 yearly.

HB104 awaits further consideration in the committee.

Arizona

One Arizona bill halfway through the statehouse would tap alternative-fuel vehicles as a new funding source.

The Senate-approved bill would impose an annual tax on electric vehicles and vehicles that use a combination of fuel and electric power, or hybrids.

SB1108 calls for collecting an annual $110 flat fee on electric vehicles. Hybrid vehicle owners would pay $44 per year.

A fiscal note attached to the bill shows the new fees are estimated to raise about $9 million each year.

The bill, SB1108, awaits assignment to committee in the House.

Arkansas

A new law in Arkansas reverses course on the state’s pursuit of additional revenue via alternative fuel vehicles.

In 2019, the state authorized an additional registration and annual renewal fee of $100 to be collected from hybrid vehicle owners. An additional $200 fee was applied to electric vehicle registrations.

The registration and renewal fees for hybrid and electric vehicles were estimated to raise $1.9 million annually.

The Legislature approved a bill to reduce the additional registration fee and annual renewal fee for hybrid vehicles to $50. Gov. Asa Hutchinson has since signed SB225 into law.

Reduction of the annual fee is estimated by the state’s Department of Finance and Administration to reduce revenue by $1.1 million.

Florida

In Florida, the Senate Transportation Committee has approved a bill that calls for collecting more money from owners of electric and hybrid vehicles.

Sponsored by Sen. Jeff Brandes, R-St. Petersburg, SB140 would apply a $135 flat fee to license an electric vehicle up to 10,000 pounds. The rate would increase to $150 in 2025.

Affected vehicles weighing at least 10,000 pounds would include a $235 license fee. The fee would be raised to $250 in 2025.

Hybrid vehicle owners would be responsible for paying a $35 licensing fee. The amount would increase to $50 in 2025.

Revenue raised via the licensing fees would be deposited into the state’s Transportation Trust Fund.

Passage of the bill is contingent upon approval of a related bill from Brandes to setup a grant program.

The bill, SB138, would let state agencies and local governments apply for funds via the fees authorized in SB140. The revenue would be used to develop plans to add charging stations.

Both bills await further committee consideration.

Minnesota

A Minnesota bill introduced in the past week would increase surcharges on electric vehicles and hybrids.

Sponsored by Rep. John Petersburg, R-Waseca, the bill would increase the surcharge for electric vehicles from $75 to $229. A surcharge of $114.50 would be collected on hybrid vehicles.

Both fees would be tied to the state’s fuel tax.

Bill advocates say taking action to have electric vehicle owners contribute to the road fund like fuel-powered vehicle owners already do would help address concerns about regressive fuel taxes.

“Electric vehicles are heavier than their gas counterparts, and as long as they’re benefiting from state roads, they should be paying to maintain them, too,” Senate sponsor Jeff Howe of Rockville said in recent remarks.

HF2250 is in the House Transportation Finance and Policy Committee.

Montana

The Montana Senate Highways and Transportation Committee held a hearing last week on a House bill to tap electric vehicles to help cover costs for road upkeep and construction. The fee would not apply to hybrid vehicles.

Sponsored by Rep. Denley Loge, R-St. Regis, the bill would implement a new annual fee on all electric vehicles registered in the state. Specifically, affected vehicles under 6,000 pounds would be charged $150. Affected vehicles between 6,000 pounds and 26,000 pounds would be charged $250. Larger electric trucks would pay $500 annually.

Loge says the annual cost would be cheaper than what fuel-powered vehicle owners pay for pump taxes.

“There is the same wear and tear of an electric car as there is of a gas-run vehicle or diesel-run vehicle,” Logue testified. “This just puts them in a bracket they can be paying for some of the road use the rest of us are paying.”

A fiscal note attached to the bill reports there are 996 electric vehicles in the state. The number of such vehicles is expected to grow annually.

The proposed fees are estimated to raise $241,350 by fiscal year 2025.

The committee did not vote on HB188. If approved there, the bill would head to the full Senate. House lawmakers have already approved it.

North Dakota

On Monday, March 22, a North Dakota House-approved bill covering transportation revenue received its first consideration on the Senate side.

The Senate Finance and Taxation Committee held a hearing to discuss a bill to increase the state’s fuel tax rate. Owners of alternative fuel vehicles would also pay more.

The state now collects 23 cents per gallon on diesel and gas sold.

HB1464 would increase the excise rate by 3 cents to 26 cents. Additionally, the $120 and $50 road use fees for electric and hybrid vehicles would be increased to $200 and $100 respectively.

The committee did not vote on the bill.

Oklahoma

The Oklahoma Senate has approved a bill that focuses on collecting additional revenue from electric and hybrid vehicles.

Bill sponsors say the effort is intended to ensure all vehicles using Oklahoma highways are contributing to the cost of maintaining the systems in a “fair and equitable manner.”

HB2234 would enact a 3-cent per kilowatt hour tax at public for-profit charging stations. Specifically, a vehicle with a 50kw battery could fully charge for a tax of $1.75 or less.

In-state electric vehicle owners would be eligible for a tax credit up to the amount of their annual registration for fees paid at public charging stations.

Advocates say the tax would let the state collect revenue from out-of-state vehicles.

Additionally, an annual vehicle registration fee would be applied for electric vehicles. A bill summary states the fee would vary based on vehicle model, ranging from $110 to $1,687.

“While some states have passed laws that are punitive to the electric vehicle industry, the intent of this legislation is simply equity,” bill sponsors said in a recent joint statement.

The bill has moved to the House Finance Committee.

South Dakota

A new law in South Dakota enacts an annual flat-rate registration fee on many electric vehicle owners.

Previously HB1053, the new law charges affected noncommercial vehicle owners $50 annually for registration.

An estimated $8,000 annually will be directed to the state’s road maintenance fund.

Sen. Mary Duval, R-Pierre, said on the Senate floor it is time for owners of electric vehicles to contribute to repairs to state roads and bridges.

“This is the right thing to do now to make sure we have good roads and bridges,” Duval said.

Texas

One Texas bill would impose an additional fee for the registration and renewed registration of electric and hybrid vehicles.

Sponsored by Rep. Ken King, R-Hemphill, HB427 would collect an additional fee of $200 for electric vehicles and $100 for vehicles that use a combination of fuel and electric power, or hybrid vehicles.

King introduced an identical bill two years ago.  The effort received a public hearing but the House Transportation Committee failed to advance the bill.

Collecting the additional fees is estimated to raise $55 million over the next two years for the state’s highway fund, according to a fiscal note.

This year’s bill is in the House Transportation Committee.

West Virginia

Two West Virginia bills would reverse course on the state’s collection of fees from owners of electric and hybrid vehicles.

A 2017 state law authorized the collection of annual fees totaling $200 on electric vehicles and $100 on hybrid vehicles.

HB2223 and SB94 call for ending collection of the fees.

Supporters say the change is needed to avoid penalizing residents who are encouraged to purchase fuel alternative vehicles.

The bills are in committee. LL

More state trends

Keith Goble, state legislative editor for Land Line Media, keeps track of many trends among statehouses across the U.S. Here are some recent articles by him.

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Keith Goble

Keith Goble has been covering trucking-related laws since 2000. His daily web reports, radio news and “OOIDA’s State Watch” in Land Line Magazine are the industry’s premier sources for information regarding state legislative affairs.