As Gas Tax Revenue Shrinks, More States Consider Mileage Tax on EVs

WASHINGTON — As revenue from gas taxes declines with the growing popularity of electric and hybrid vehicles, more states are considering charging fees based on miles driven to cover maintenance costs for roads and bridges, according to a new Stateline report from the Pew Charitable Trusts.

According to author Elaine S. Povich, at least eight states — Hawaii, Massachusetts, Minnesota, Tennessee, Utah, Vermont, Virginia and Washington — considered bills this year that would modify existing programs or set up new pilot programs to tax drivers of electric vehicles based on the miles they drive.

Citing data from the National Conference of State Legislatures, Povich writes that states’ revenue from fuel taxes has been dropping in recent years because drivers of vehicles with better fuel efficiency pay less in per-gallon gas and diesel taxes. 

And she says the growth in sales of electric and hybrid vehicles has only accelerated the trend.

Under some of the current programs, the state installs devices in vehicles to measure the miles driven. 

Other programs rely on drivers to report the miles they’ve driven, or track miles through year-over-year odometer readings when drivers renew their registrations. 

Under all states’ existing laws, vehicle owners voluntarily sign up for the programs.

Legislation pending in Massachusetts would set up voluntary pilot programs to test how a per-mile charge might work. Bills that would have set up a permanent per-mile tax in Hawaii failed this year, but supporters insist they’ll revive the legislation.

Bills in Minnesota and Vermont that would have required all owners of electric vehicles to pay a mileage fee also died. And Tennessee failed to pass a bill to set up a task force on road use fees.

Without a change in tax formulas, the current federal and state gasoline taxes will fail to meet the nation’s infrastructure needs, Povich writes.

The Congressional Budget Office has projected that if the 18.4-cent per gallon federal tax remains the same, and infrastructure spending increases at the average projected rate of inflation, the federal Highway Trust Fund will come up about $140 billion short by 2031. 

The federal gas tax hasn’t been raised since 1993.

According to the National Association of State Budget Officers’ 2021 State Expenditure Report, motor fuel taxes make up nearly 40% of state transportation funding sources. State officials expect that percentage to decline steadily in the next decade.

Dan can be reached at [email protected] and @DanMcCue