AARIAN MARSHALLBUSINESS05.20.2021 07:00 AM
All Those Electric Vehicles Pose a Problem for Building Roads
Gas taxes are the largest source of funding for highway construction and maintenance. As the Ford F-150 Lightning and other vehicles increasingly plug in, that revenue is shrinking.

State and federal motor fuel taxes account for 40 percent of transportation funding—the largest revenue source. But electric vehicles don't use gas.PHOTOGRAPH: GETTY IMAGES

LAST WEEK, WASHINGTON governor Jay Inslee—the guy who, while running for president two years ago, proposed a nationwide ban on sales of gas-powered cars by 2030—vetoed a statewide ban on gas-powered car sales by 2030.
The reason for the puzzling move, Inslee said in a statement, was a provision tucked into the legislation. The language said the 2030 target would take effect only if lawmakers created a program to charge drivers based on how far they drive each year.
The bill had been hailed as pathbreaking for electric vehicles and US climate policy, more aggressive than deadlines from states like California, Massachusetts, and New York, which have set their sights on 2035. Washington plans to follow California's rules and phase out the sale of gas-powered cars by 2035.
But there’s a hitch in those plans: The nation uses gas taxes to fund the construction and upkeep of everything from roads and bridges to buses and ferries. As more electric vehicles—including the Ford F-150 Lightning, which goes on sale next year—hit the road, gas sales will decline, along with the revenue from taxing them.

Matthew Metz, founder and co-executive director of the Seattle-based environmental group Coltura, says he was surprised and disappointed that Inslee missed a chance to set the earliest zero-emission sales deadline in the country. He says signing the legislation, even with the attached per-mile tax program, would have staved off future angst about paying for the state’s infrastructure. Lawmakers “can keep kicking this issue down the road, but eventually it’s going to have to stop,” Metz says.

In the US, state and federal motor fuel taxes account for more than 40 percent of transportation funding—the largest revenue source. But the federal government hasn’t raised the gas tax since 1993, when it was fixed at 18.4 cents a gallon. Since 2008, Congress has allocated additional funds from elsewhere, but the situation is not sustainable: The Congressional Budget Office says that if the funding system doesn’t change by 2030 federal transportation funding will exceed its budget by $188 billion. At least 36 states have increased their fuel taxes since 2010 to bring in more money.

Meanwhile, vehicles have gotten more fuel-efficient—and a small but growing share of US vehicles aren’t using gas at all. Automakers promise to spend the next decade rolling out battery-powered models. (Anyone want an electric version of the best-selling vehicle in America, the Ford F-150 pickup? You can buy one in 2022.)
Lawmakers “can keep kicking this issue down the road, but eventually, it’s going to have to stop.”
MATTHEW METZ, CO-EXECUTIVE DIRECTOR, COLTURA
That transition is important to the planet. Twenty-nine percent of the country’s greenhouse gas emissions waft from the transportation sector, and nearly 60 percent of those are from light-duty vehicles. Many believe that electrifying the country’s transportation system must be a key element of any plan to beat back climate change.
“Lawmakers are realizing that yes, you’re meeting this environmental goal” by setting ambitious electrification targets, says Douglas Shinkle, who directs the transportation program at the National Conference of State Legislatures. “But at the same time, you’re negatively impacting the system that those vehicles drive on.”
Which is why policymakers like those in Washington state are interested in road user fees. In theory, the policy is simple: Instead of paying a tax on each gallon of gas they use, drivers would pay a tax per mile they drive. US Transportation secretary Pete Buttigieg endorsed the idea in March, though it didn’t make it into President Biden’s infrastructure proposal. Also in March, the Federal Highway Administration announced it would fund eight state- and regional-level road-user-fee pilot programs. At least 13 states have introduced legislation concerning road user charges, Shinkle says.
But states that have experimented with and even implemented road user fees—a club that includes California, Hawaii, Minnesota, Oregon, Utah, and Virginia—have run into plenty of thorny questions. Collecting a gas tax is easy and cheap; drivers pay at the pump. But a per-mile charge would require gathering data and fees from millions of vehicles. Some states have experimented with radio transponders, others with devices that plug into vehicles and send data to transportation departments. Skeptics have raised concerns about tracking residents’ locations. And it’s not clear that such a system would raise more money than it costs.

Others question whether such a road user fee is fair. Rural drivers tend to drive farther just by virtue of where they live; should they always pay more? Critics also argue that the whole idea, like the gas tax itself, amounts to a regressive tax, one that will collect a larger share of low-income drivers’ earnings.
Governments will have to convince residents that change is good. In 2019, drivers in Hawaii received a curious letter in the mail, something the state Department of Transportation called a “Driving Report.” The letter quoted the state DOT head: “The gas tax is no longer doing its job. Help us by joining the conversation.” It presented drivers with two numbers: an estimate of the gas taxes they paid that year, and what they would be taxed if they paid per mile. Hawaii is a particularly handy place for this kind of experiment. It’s one of a handful of states that collect odometer readings as part of its safety inspection process, a less-invasive way to track how far a vehicle has traveled each year. And unlike vehicles in smaller (and non-island) states, it’s likely that most of the miles that Hawaii drivers cover annually are driven on Hawaiian roads. The DOT is still studying the implications of a road user charge.

Washington continues to study how to implement a road user charge program. “Setting and achieving a goal of 100 percent electric vehicles is too important to tie to the implementation of a separate policy like a road usage charge,” Inslee said in a statement after he vetoed the 2030 provision.
Some environmentalists, meanwhile, say the whole conversation is backward. A gas tax isn’t all bad, they say, because it charges the drivers of the most polluting vehicles more money. One proposal from the Natural Resources Defense Council would tweak the gas tax, not get rid of it. First, it would index the tax to both inflation (as many states already do) and to nationwide fuel consumption, so that taxes would go up incrementally as fuel use goes down. Then the proposal would see electric vehicles pay an annual tax based on their miles-per-gallon equivalent—basically, how much energy they consume. “That way, the electric Hummer is going to be paying more than the electric Civic,” says Max Baumhefner, a senior attorney in NRDC’s climate and clean energy program. “And that’s the way it should be.”
Updated, 5-20-21, 12:15pm ET: An earlier version of this article said state and federal motor fuel taxes account for 40 percent of transportation funding.

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Aarian Marshall writes about autonomous vehicles, transportation policy, urban planning, and everyone’s favorite topic: How to destroy traffic. (You can’t, really.) She’s an aspiring bike commuter and New Yorker going soft on San Francisco, where she’s based. Before WIRED, Marshall wrote for The Atlantic’s CityLab, GOOD, and Agri-Pulse, an agriculture... Read more
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