U.S.
5:48 pm
Thu August 15, 2013

States Target Hybrids As Gas Tax Revenues Ebb

Originally published on Thu August 15, 2013 5:50 pm

Americans are buying less gasoline than they did just a few years back. While many people believe this is a good thing, it does present a problem: Most road construction is paid for with fuel taxes. Less gas tax revenue means less money for roads.

One reason gas purchases are down is that more people are driving more efficient cars, such as hybrid and electric vehicles. Now states are looking for solutions, including charging hybrids extra fees or imposing fees based on miles driven.

Sara Busch of Havertown, Pa., owns a 2011 Chevrolet Volt. "I'm really a stickler about staying below the speed limit — not to avoid a ticket but to maintain efficiency," she says. Recently, Busch says, she was achieving 94 miles to the gallon. That means she rarely stops at a gas station — good news for her, but not for the federal Highway Trust Fund.

For each gallon of gas sold in the U.S., 18.3 cents goes into the fund. Most of that is dedicated to road construction. This system worked well for about five decades — until the most recent recession, when people started driving less. In 2008, the fund ran out of money.

Polly Trottenberg, undersecretary for policy at the U.S. Department of Transportation, reminded a congressional subcommittee in July that Congress has been allocating money in recent years to keep the fund solvent.

"By the end of 2014, the Highway Trust Fund will be nearly depleted again and Congress will have transferred, over the course of the recent years, $54 billion in general funds to keep the program afloat," Trottenberg testified. Some members of Congress have talked about raising the federal gas tax, but there's been no movement on that.

On top of the federal gas tax, each state levies its own tax, mostly to pay for roads. These range from 8 cents a gallon in Alaska to about 50 cents a gallon in New York. State lawmakers have been searching for ways to make up the lost revenue.

"We've found more than 240 bills that have been introduced in 39 states and DC," says Jaime Rall, senior policy specialist at the National Conference of State Legislatures. Rall says 22 states have enacted legislation. She says Vermont, Maryland, Virginia and the District of Columbia are moving away from a cents-per-gallon tax and toward a percent-based gas tax. That could raise more money and help gas tax collections keep up with inflation.

Oregon is planning a program that could eventually replace that state's gas tax with a "road usage charge." The state will begin in 2015 with 5,000 volunteer participants who may pay 1.5 cents for every mile they drive.

While details haven't been worked out yet, the state agency plans to make several options available for measuring miles traveled. That may include using "infotainment" systems in newer cars — these often include navigation and smartphone integration along with the stereo system, says the program's manager, Jim Whitty with the Oregon Department of Transportation. If auto manufacturers include a way to track miles traveled, Whitty says, that would make a tax like this a lot easier to administer and simpler for users.

"They wouldn't have to add anything to the car," Whitty says. "All they have to say, is say, 'I want to use my system and agree to the report of those miles to the tax processor.' "

That makes sense to Toyota Prius owner Len Shatz of Cheltenham, Pa. "Let's say I drive 10 or 15 miles a day," says Shatz. "I shouldn't have to pay as much as someone who uses the roads a lot more."

A few states have considered something Washington state and Virginia have already done: charge an extra fee for electric and hybrid cars to make up for lost gas tax revenue.

Prius owner Pamela Harvey of Glenside, Pa., does not like that and argues it's fair for gas guzzlers to foot more of the country's road construction bill. "We should be the ones who get the bonus, for driving hybrids and moving this country forward," she says.

As federal and state policymakers look for ways to resolve the problem of declining gas tax revenue, here's one big problem they are likely to face: The gas tax has been relatively invisible for decades now — it was just part of the cost of a gallon of gas. But whatever comes next could be much more visible, such as a tax bill at the end of the year for how many miles you traveled. That could make implementing a solution to the current problem more difficult.

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Transcript

ROBERT SIEGEL, HOST:

Hybrids and other fuel efficient cars are causing a problem for state and federal highway agencies. Money for road construction comes primarily from gas taxes. But thanks in part to cars that are more fuel frugal, Americans are buying less gasoline. Gas sales peaked in 2007 and are expected to continue to decline. So, policymakers are looking for new ways to raise money to build and repair roads.

More from NPR's Jeff Brady.

JEFF BRADY, BYLINE: One reason gas purchases are down, people like Sara Busch of Havertown, Pennsylvania, are buying hybrid and electric cars.

SARA BUSCH: Its push-button start for one thing. I enjoy the push-button start.

BRADY: Busch points to the dash of her Chevrolet Volt. There's a green ball that moves up and down and changes color, to show when she's driving more efficiently.

BUSCH: So I'm really a stickler about staying below the speed limit, not to avoid a ticket but to maintain efficiency with the...

(LAUGHTER)

BUSCH: ...with the electric mileage, so I can go farther on one charge.

BRADY: And Busch is doing well. She's getting 94 miles to the gallon. That means she rarely stops at a gas station. Good news for her but not for the Federal Highway Trust Fund. For each gallon of gas sold, 18.3 cents goes into the fund. Most of that is for road construction. This system worked well for about five decades until the recession a few years back, when the decline in gas consumption started.

State governments are facing a similar problem. Each state levies its own gas tax on top of the federal one, ranging from 8 cents a gallon in Alaska to about 50 cents a gallon in New York.

JAIME RALL: This year, we're seeing so many bills from states looking at how to pay for transportation infrastructure.

BRADY: Jaime Rall is with the National Conference of State Legislatures. She's counted 240 bills on this topic introduced across the country. Oregon is planning a volunteer program based on how many miles a person drives each year. The more someone drives, the more they pay.

Jim Whitty, with the Oregon Department of Transportation, says so-called infotainment systems in newer cars could be an option for tracking mileage.

JIM WHITTY: That's what we're hoping for long-term.

BRADY: These include things like navigation and Smartphone integration, along with the stereo system. If auto manufacturers include a way to track miles traveled, Whitty says that would make a tax like this a lot easier to administer.

WHITTY: This system all of the sudden becomes very simple for a lot of people. They wouldn't have to add anything to the car. All they have to say is I want to use my system and agree to the report of those miles to the tax processor.

(SOUNDBITE OF A VEHICLE)

BRADY: In Elkins Park, Pennsylvania, Len Shatz is standing next to his black Toyota Prius. He says it makes sense to consider how much someone drives when figuring out how to raise more money for roads.

LEN SHATZ: You know, let's say I drive 10 or 15 miles a day. If somebody is driving, you know, 200 miles a day or a thousand miles a day, there ought to be some way to gauge that.

BRADY: A few other states are considering something Washington State and Virginia have already done: charge an extra fee for electric and hybrid cars to make up for lost gas tax revenue. Prius owner Pamela Harvey does not like that. She thinks owners of efficient cars should be rewarded.

PAMELA HARVEY: We should get the break and then huge trucks and the Suburbans and the, you know, the big, big cars - they should get taxed.

(LAUGHTER)

BRADY: Here's one final thing to think about as policymakers decide how to replace declining gas taxes. For a long time, this tax was relatively invisible - it's just part of the cost of a gallon of gas. But what comes next could be much more visible - say, a tax bill at the end of the year for how many miles you traveled. That could make implementing such a tax even more difficult.

Jeff Brady, NPR News. Transcript provided by NPR, Copyright NPR.