How Will States Pay for Roads When Gas Taxes Evaporate?
Back in 2001, seven years before Tesla introduced its electric-powered Roadster and a dozen years before the more affordable Chevrolet Spark EV went on sale, lawmakers in Oregon recognized that the adoption of EVs and hybrids would eventually mean less revenue from the state’s gas tax, which would mean less money to pay for roads and bridges. So they formed a committee to study the problem. After considering a tire tax, a battery tax and numerous other options, the committee concluded that Oregonians should be charged based on how many miles they drive.
Twenty-two years later, the Road User Fee Task Force continues to operate small pilot programs. But like most other states that have seen gas taxes start to evaporate, Oregon still doesn’t have a mandatory alternative revenue plan in place. Legislatures are in a bind: They can no longer afford to ignore the decline in gas-tax revenue, but all proposed solutions are problematic.
Electric vehicles currently account for only about 5% of new car sales in the U.S., but that figure will climb to at least 40% by 2030, according to S&P Global Mobility forecasts. Two years ago President Biden signed an executive order calling for half of the vehicles sold in the U.S. to be electric by the end of the decade.
A few states, such as California, have been even more aggressive, mandating that all new cars sold after 2035 meet zero-emission standards. States pay for roads in a variety of ways, including vehicle registration fees and tolls, plus money from their general funds. Gasoline taxes account for a large portion of revenue, with the average U.S.
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