[G]ov. Phil Scott is renewing a call to levy a fee on electric vehicles as the state unveils a new incentive program to help more Vermonters purchase EVs.
At a press conference Thursday, Scott and other state officials detailed the $1.1 million allotted for low and moderate income electric vehicle incentives in this year’s transportation bill. The incentives, available for households that make less than $92,000 a year, will shave between $2,500 and $5,000 off leased or purchased electric vehicles.
As the incentives roll out, state officials are also considering collecting fees from electric vehicles to go into the fund that supports the state’s transportation infrastructure. Because the cars run on an electric charge, drivers don’t pay a tax at the gas pump — a major source of revenue for the transportation fund.
The governor said that he feels that “everyone needs to pay their fair share in terms of maintaining our infrastructure and improving our infrastructure.”
VTrans Secretary Joe Flynn said at the press conference that the transportation bill tasks the state Public Utility Commission with figuring out the best way to collect “highway user fees” from electric vehicles. As electric vehicles gain in popularity, determining how to capture lost revenue to the state’s Transportation Fund will become increasingly important, he said.
“I encourage the PUC to work with the Legislature on establishing a fee system based on per kilowatt hour charges to give utilities and regulators time to adjust to this new framework before lost revenues from…vehicle electrification become a significant financial issue,” said Flynn.
The governor and other state officials added that any new fee would be low so as not to discourage Vermonters from going electric.
State transportation revenues come from three main sources: the gas tax, the purchase and use tax, and DMV fees. Gas tax revenue has been declining for more than a decade, largely due to increased vehicle efficiency, according to VTrans. Last session, a proposed gas tax hike to increase funding for municipal roads was opposed by both the governor and Democratic leaders.
Jennifer Fitch, deputy commissioner of the Department of Buildings and General Services, stressed that the press conference was celebrating the state’s electric vehicle incentive program.
“There is no new fee being announced today,” she said.
Officials also described other efforts the state has been taking to promote the vehicles, including awarding money from the Volkswagen “clean diesel” settlement for public charging stations and requiring half of all new state vehicles to be hybrids or electric vehicles.
Scott made a point of opposing any new taxes and fees during his first term as governor, though he has relaxed that hardline position some during his second term. This past session, the governor backed a 92% wholesale tax on e-cigarettes, with the aim of discouraging youth vaping.
Earlier this month, the PUC released a report on how the state, utilities, and other actors can reduce barriers to electric vehicle adoption. One of the commissioners recommendations was that the state not levy a new fee on electric vehicles until the technology moves beyond the “early adopter” phase, or around a 15% market share.
State officials say Vermont has around 3,100 electric vehicles registered currently — less than 1% of the roughly 450,000 passenger vehicles registered in the state. VTrans has estimated that electric vehicles could make up 15% of new vehicle sales by 2025.
The PUC report goes on to say that most of the transportation fund’s revenue loss is due to “increased efficiency of internal-combustion vehicles.”
VTrans and other state agencies have estimated that current losses to the transportation fund from electric vehicles are around $200,000, according to the report. VTrans’ total annual transportation budget is over $600 million, with almost 40% of that coming from the state Transportation Fund.
The PUC commissioners add that VTrans has previously estimated that lost gas tax revenue from electric vehicles is more than made up for by higher purchase and use taxes from more expensive electric vehicles, which also provide transportation funding.
In a 2016 report examining a hybrid and electric vehicle registration fee, VTrans found that “EVs are an exceedingly small part of today’s transportation revenue problem.” Vermont should come up with a “stable and comprehensive revenue solution” to boost the transportation fund rather than focus on generating new revenue from EVs, states the report.
“To increase the fees now is at cross purposes with the state’s efforts to incentivize EV purchase and use, and increase the number of EV’s on Vermont’s roadways,” the 2016 report states.
Johanna Miller, energy and climate program director for VNRC, said she agreed that EV users should pay into the transportation fund, but questioned when the appropriate timing for a new charge would be.
“We’re in a nascent market that we’re trying to build,” she said.
Rep. Curt McCormack, D-Burlington, Chair of the House Transportation Committee, said in an interview earlier this month that he does feel it’s time to collect additional transportation fund revenue from electric vehicle drivers — although he felt a new fee would be largely “symbolic” at this point.
“They make the point that we don’t have enough electric cars yet, and it will be a while before it actually matters,” he said, referring to the PUC’s recent report. “But it does matter in the Legislature because … (there are) enough electric cars around that people feel that if you use the roads, you should pay for that.”
