Fuel savings bring worry about gas tax revenue
State officials eye new funds for road upkeep
The rise in both the fuel efficiency of new cars and trucks and the popularity of hybrid vehicles threatens to eventually undermine the effectiveness of the gas tax, some transportation officials and lawmakers fear, forcing them to search for novel ways to pay for the escalating cost of caring for the state’s roads and bridges.
One Republican lawmaker has proposed an additional registration fee for fully electric vehicles. Some officials suggest looking at charging all motorists per mile traveled; others say more tolls are the answer.
They all contend that with revenue from the gas tax expected to taper off in coming decades, it’s time to end the free ride for some motorists.
“That person who switches to an all-electronic vehicle, they’re paying nothing for the benefit of the upkeep, maintenance, and filling of potholes on the roads,” said Representative Bradley H. Jones, who earlier this month unsuccessfully pushed an amendment for the new registration fee. “The issue is really one of equity.”
Less than one year after the state increased the gas tax by three cents, transportation advocates and antitax activists continue to bicker over the future of gas tax indexes, an issue that will be on the November ballot. Yet vehicles are becoming more fuel-efficient, requiring drivers to purchase less gas, and more consumers are turning to gas-electric hybrid vehicles, requiring even less gas still.
According to the US Energy Information Administration, annual sales of hybrid, all-electric, and fuel cell vehicles in New England are expected to double between now and 2040.
Some, like Jones, are already pushing for an alternative tax; the amendment he introduced would have charged drivers of all-electric cars at least $100 per year. Though the amendment got little traction in the House, Jones warns that taxing fully electric vehicles is an issue that lawmakers will have to contend with, sooner or later.
“Eventually, you’ve got to have that discussion,” Jones said. “If everybody ultimately switches over to electric cars, what would you do?”
Others agree that now is the time to begin considering the alternatives.
“We are going to continue to rely on the gas tax for quite a while to maintain the safety of our roads and bridges,” said Kristina Egan, the director of Transportation for Massachusetts, a coalition of organizations pushing for more investment in transit. “But it is really important for us to start exploring sources to supplement the gas tax as cars become more fuel-efficient.”
For now, the focus of transportation funding in Massachusetts remains on the state’s gas tax, which was raised to 24 cents per gallon last year — the first increase in 20 years. The law that mandated that tax hike also stipulates that the tax rate increase automatically to match inflation rates.
Some detractors have launched a campaign to repeal those automatic increases, garnering more than 100,000 signatures to put the question of repealing the gas tax index on the November ballot.
But data show that the gas tax may become a waning source of revenue in coming years. From 2004 to 2012, the average fuel economy on new cars and trucks sold in the United States increased 22 percent, according to a December report from the Environmental Protection Agency .
And fuel efficiency is no longer the domain of a small subset of manufacturers seeking to appeal to niche buyers: This month, BMW introduced its first fully electric vehicle to the US market, a car that can run for 81 miles just on its battery charge. With gas in the tank, it gets 124 miles per gallon.
One way to make drivers of hyper-fuel-efficient vehicles contribute to road upkeep is to collect more tolls.
Jeffrey Mullan, state secretary of transportation from 2009 to 2011, said he anticipates that highway tolls will become more widespread in many states, including Massachusetts, as part of an attempt to tax people for roads they use, not just how much gas their cars guzzle in the process.
“We need to develop a new proxy, and for me, the easiest and most useful option — and the one users are more familiar with — is tolling,” Mullan said.
The prospect of new tolls on highways other than the Massachusetts Turnpike may soon gain more momentum: Last month, President Obama’s administration proposed getting rid of restrictions on the ability of states to introduce new tolls on interstate systems.
Mullan said that adding tolls is a particularly attractive option for states, which would no longer have to wait for the federal government to dole out their share of highway funds.
“I predict we will see more tolling as a solution — partly because people are familiar with it, but also because states are beginning to take matters into their own hands,” he said. “They’re relying less on federal resources to finance their own programs.”
The prospect of new tolls remains unattractive to many legislators, especially those who fear it will be a burden on businesses that depend on shipping goods by truck.
Other experts see possibilities in new fees.
Jones’s idea for an electric vehicle registration fee intrigued Barbara Anderson, the executive director of Marblehead-based Citizens for Limited Taxation, which is among the groups working to repeal gas tax indexing. She’s not quite a supporter, but said new fees could help bring about parity by spreading the tax burden to those who own electric cars.
Egan, too, said she was curious about the idea. An electric-specific tax could be controversial because it might discourage people from buying environmentally friendly vehicles, she said.
“I think there’s a balance you have to strike,” Egan said. “We want to have an incentive for people to buy cleaner cars. But we don’t want that incentive to be so much that only people who are using gas are paying for roads and bridges.”
There are other options, including a miles-traveled tax. In Oregon, 5,000 volunteers have signed up to pay a usage tax starting in 2015, using a GPS device or odometer readings to track their miles traveled over the course of the year. Participants must also track their gas purchases, and at the end of the year they can apply for a refund of the gas taxes they paid.
Mullan is skeptical that a similar tax could catch on in Massachusetts. Residents may feel that a different tax system is an extra tax burden, he said, even if the price is comparable to a year’s worth of gas taxes.
“The reaction is often, ‘Why do I have to pay more? Don’t punish me,’ ” Mullan said. “New things are difficult to implement, especially when people are just not 100 percent certain of it.”
In Oregon, the tax was set at 1.5 cents per mile, to be comparable to the 30 cents per gallon gas tax. Egan said that success stories from other states, such as Oregon, could dissolve some of the trepidation among Massachusetts drivers.
“A lot of fear would melt away,” Egan said.