Flagged Bill: SB 139 – Transportation Funding Revisions, Sen. Harper and HB 74 – Energy Efficient Vehicle Tax Credits, Rep. Snow

Senator Wayne Harper (Republican - Taylorsville)
Senator Wayne Harper (Republican – Taylorsville)

***Note: this bill has been substituted, this analysis may no longer be valid***

One of the principal topics dominating the legislature this year has been air quality and air pollution. Though lawmakers agree that something must be done, few have been willing to lay down specific guidelines for businesses or citizens to follow, with the general statement that personal responsibility, not government interference, is the best course of action.

One of the other discussions taking place on the hill is what to do with transportation funding in light of the fact that the state is currently not meeting its ongoing transportation maintenance costs and that this problem will only worsen over the next 30 years as our roads become more taxed and maintenance dollars get spread even thinner.

Somewhere in the middle, we run into an interesting problem policymakers never could have perceived 90 years ago when the state’s first gas tax was put into place: cars that do not use gasoline as their primary fuel source are still using (and therefore degrading) our roadways.

Because of this fact, some have argued that natural gas, electric, and hybrid vehicle owners are not paying their fair share when it comes to the gas tax. An electric vehicle, for example, pays no gas tax but still drives on gas tax funded roads.

Senator Wayne Harper (Republican – Taylorsville) is looking to make things more equal with SB 139 – Transportation Funding Revisions.

The bill would create several different payment requirements at the time you register or renew a vehicle’s registration depending on that vehicle’s power source. Traditional gas or diesel vehicles would pay $43 at the time of registration, natural gas gets hit with a $133 fee, while electric and hybrid vehicles are hit with $138 and $163 charges respectively.

If Harper’s intention was to make gas tax payment equitable, some quick math proves that he has missed his mark by a wide margin.

Under Harper’s proposal, electric vehicle owners would still pay $27 less than fossil fuel counterparts, while hybrid owners are forced to pay nearly $32 more over the course of a year.*  These types of discrepancies of roughly 5 percent should be expected, but will grow as standard vehicles become more efficient.

Representative Lowry Snow (Republican - St. George)
Representative Lowry Snow (Republican – St. George)

After receiving harsh criticism from Utah Democratic Party Executive Director Matt Lyon, Harper told the Deseret News that his proposal is intended to go hand-in-hand with Representative Lowry Snow’s (Republican – St. George) HB 74 – Energy Efficient Vehicle Tax Credits. Snow’s bill would raise the one-time tax credit on purchasing or leasing an electric or hybrid vehicle to $2,500 from the current $605.

This move is a dangerous one to presume. The divvying up of state policy into several bills is nothing new, but if one particular policy derails, there can be gaps in the overall policy goals of lawmakers. It is quite possible that Harper’s bill passes and Snow’s fails or vice versa. Furthermore, the argument that this one time tax credit will ease the pain appears to be the state robbing Peter to pay Paul. We must, therefore, consider each policy independent of one another.

If Harper’s intention with SB 139 is to equalize the amount of money drivers contribute to the repair fund, he will start to come better in line with his bill. But, what he has also done is send up a bill that appears to discourage people from buying electric and hybrid vehicles – an interesting policy considering the annual inversion and state leaders constantly telling us that it is the public’s responsibility to clean the air with cleaner vehicles. HB 74 from Snow would achieve this goal independent of Harper’s bill, and would be more in line with policymakers incentivising hybrid and electric use.

The fiscal impact of Harper’s bill is not yet known, however Snow’s bill is expected to cost the state roughly $3 million annually. To offset the cost of this $3 million, 25,000 electric hybrid vehicles will need to be registered in the state annually. Ultimately, Harper’s bill will most likely be profitable for the state and achieve the goal of beefing up road construction costs. Furthermore, the nearly $1,900 bump to the tax credit in Snow’s bill (and assuming Harper’s bill also passes) means that it only truly affects people’s pocketbooks negatively after 16 years of ownership.

In short, Harper’s bill is only sound policy if Snow’s bill is successful. Only then will it put more money in our state coffers and not dissuade hybrid and electric ownership. Snow’s bill, independent of Harper, would at least achieve the goal of reduced air pollution.

Ultimately, Harper’s bill points to the need for us to move away from the standard measure of gallons used for our “gas” tax, as gasoline is starting (and will most likely continue) to decrease in usage as new technologies take hold. These stop-gap policies will work in the near future, but are ultimately not sustainable.

To contact Senator Harper, click here or call 801-566-5466. To contact Representative Snow, click here or call 435-703-3688.

Senator Harper’s SB 139

Impact on Average Utahn
High Impact   5 . 4 . 3 . 2 . 1 . 0   No Impact

Need for Legislation
Necessary   5 . 4 3 . 2 . 1 . 0   Unnecessary

Lemon Score
Sound Legislation 5 . 4 . 3 . 2 . 1 . 0 Clunker

Representative Snow’s HB 74

Impact on Average Utahn
High Impact   5 . 4 . 3 . 2 . 1 . 0   No Impact

Need for Legislation
Necessary   5 . 4 . 1 . 2 . 1 . 0   Unnecessary

Lemon Score
Sound Legislation 5 . 4 . 3 . 2 . 1 . 0 Clunker

You can track these, and all of our other flagged bills, by clicking here. Need an explanation of scores? Click Here.

*Assuming the average vehicle travels 12,000 miles a year and the MPG of any passenger vehicle (including trucks and SUV’s) is 20 MPG, the average vehicle requires 600 gallons of gas or diesel in a year. 600 gallons multiplied by the gas tax of 24.5 cents per gallon means that the state can expect $147 per car in annual gas taxes. This, on top of the proposed $43 registration fee means that traditional vehicle owners pay $190 in fees directly to the state.
Assuming the average hybrid (which still consumes gas and therefore pays some gas tax, has an MPG rating of 50) requires 240 gallons of gas in a year and pays $58.80 in gas taxes, under Harper’s proposal, hybrid vehicle owners pay $221.80 in fees directly to the state.

2 Replies to “Flagged Bill: SB 139 – Transportation Funding Revisions, Sen. Harper and HB 74 – Energy Efficient Vehicle Tax Credits, Rep. Snow

  1. Harper’s bill is ridiculous. Instead of lauding the very people who are making a concerted effort to reduce their emissions, this would penalize them. Despite what everyone thinks, hybrids don’t always get dramatically better gas mileage, they cost more up front, repairs (especially as they age) are expensive–all things owners are willing to deal with because of their commitment to doing their part–more than their part–to reduce emissions. Now Harper is proposing to tax them 3-4x.

    Yes, we need transportation dollars, going after the most efficient and lowest emitting cars on the road should not be the way. I would have given it a 1 on need and a 0 on clunker.

  2. Sen. Wayne Harper: “We all support clean air and are committed to improve it. We also need
    safe and properly maintained roads to drive upon.”
    My response: Please provide me the EVIDENCE that a 3,242 pound Nissan Leaf has caused
    road damage equal to the damage caused by 73,000-113,000 pound heavy vehicle/semitractor
    trailers!
    When and where has the Nissan Leaf spilled thousand gallons of oil, gas and damaging
    chemicals on the highways and causing fires and evacuations; left deep ruts in the paved
    roads; left slabs of rubber tires on the road for other vehicles to hit and become damaged;
    Show me reports that the Nissan Leaf emits huge puffs of black smoke from the exhaust pipe
    causing pollution such as heavy trucks and tractor trailers have!
    Sen Wayne Harper: “SB 139 is about equalization and fairness.”
    My response: NOT “Equal” and “Fair” to hybrid owners!! SB139 will add Prius owners $111.00
    in fee a year although they will save only $18.60 a year in gas tax compared to a similar nonhybrid
    auto. Driving an average of 1000 miles a month. An non-hybrid that averages 35 mpg,
    uses 28.57 gal. (1000mi./35mpg), pays $6.99 (28.57 gal X 0.245 tax) in gas tax per month=
    $83.88 per year. A Prius that averages 45 mpg, uses 22.22 gallons (1000mi./45mpg), pays
    $5.44 (22.22 gal X $0.245 tax) per month= $65.28 per year. Prius owner saves only $18.60 a
    year in gas tax compared to non-hybrid auto owners.
    At the $168 registration fee amount, Prius owners will pay approximately $111.00 a year
    MORE than present tax rate (SB139=$168-$57.00). Subtract the $18.60 savings from the
    $111.00, results in a $92.40 ADDITIONAL fee per year compared to a non-hybrid auto owner
    with no fee increase. This is NOT “equal” or “fair” taxation.
    Additionally, the $168 fee will move Utah hybrid owners from 30th to 14th in tax and fee
    ranking and ranks 23rd in overall operation cost for hybrid owners over non-hybrid owners in
    Utah, (http://www.bankrate.com/finance/auto/car-ownership-costsbystate.
    aspx#ixzz2uZcOh0KX): SB139 NOT FAIR AND EQUAL to hybrid owners who ends
    with a $92.40.00 fee increase !!!
    SB139 does NOT benefit the low income by increasing their income, it only benefits the state
    Of Utah. HB139 will only decrease income of hybrid owners: not good for business.
    Sen. Wayne Harper: “We all want to benefit from efficiency and technology. Electric vehicles
    are cheaper to operate and better for the air. But they are also expensive to purchase. Many
    in our state cannot afford a new electric car.”
    My response: NOT TRUE! A Stephen Wade finance officer stated that a person’s credit score
    is the defining factor. He stated that he has sold hybrids to unemployed people, grandparents
    and students with good credit scores. He further stated that a person with high earnings with
    a low credit score would not be eligible to purchase a hybrid. The finance officer also stated
    that the 2014 Prius C is only $21,000. A sales person at Larry H Miller Bountiful Chrysler-
    Jeep-Dodge-Ram quoted a 2014 Dodge Dart Aero 2.4 turbo at $18000 plus to $23,000 plus.
    According to Sen Wayne Harper’s justification, no low income person is able to afford an
    expensive vehicle solely because it’s a hybrid which is NOT TRUE. The ability to finance
    depends on the vehicle price and credit score, not the method of propulsion.
    The price of many hybrids are comparable with non-hybrids, given equal options such as the
    backup camera, some non hybrids are even more expensive http://www.reviews.cnet.com.
    The Nissan Leaf’s price is $21,480 to $24,500 which is within the price range of the Dodge
    Dart Aero ($23,164 at http://www.bountifulchryslerjeep.com/ )
    Some people of low income are able to afford a new hybrid with the same leasing or longterm
    financing options and proper money management as a person with higher income: it
    depends on the credit score! If a low income person or high earning person cannot afford an
    expensive vehicle, it makes no difference if hybrid or non-hybrid. Also, used hybrids are
    available and a low income person is NOT restricted to purchasing just a new hybrid and the
    long term savings from a hybrid will reduce the overall price to the low income owner.
    (http://consumerreports.org/cro/2012/01/hybrids-diesels-do-they-save-money/index.htm).
    Finally, the concern of the hybrid being too expensive for low income auto buyers appears
    disingenuous since SB139 would add, over a 10 year period, between $924-$1300 to the
    price of the hybrid making it more expensive to the low income buyer.
    Sen. Wayne Harper: “All vehicles cause wear on our roads. A gas tax is a user fee, as is a
    registration fee.”
    My response: “Wear on the roads” has been addressed above. A fee is not a tax. According to
    http://www.taxfoundation.org: “The public understanding of “tax” aligns with the widely
    understood definition of a tax as a charge imposed with the primary purpose of raising
    revenue. This is in contrast to a “fee,” a charge imposed for the primary purpose of recouping
    costs incurred in providing a service to the payer, and a penalty, a charge imposed for the
    primary purpose of punishing behavior.” Since SB139 does NOT provide a service to the
    payer, SB139 IS PUNISHING HYBRID OWNERS!
    Also, http://legal-dictionary.thefreedictionary.com/ definition does not include a non-usage of a
    fee as justified by Sen. Wayne Harper.
    Sen Wayne Harper: “It is unfair to require only those who cannot afford to purchase a new,
    expensive electric car, to pay the taxes that are used to maintain the roads that everyone,
    including electric vehicles, use.” Sen Wayne Harper told KUER: ”…they pay zero towards the
    maintenance of the roads they’re driving on.”
    My response: NOT TRUE! Believe it or not, those who purchase hybrids and electric vehicle
    pay sales tax, registration fees, annual property tax and tax on gasoline at an equal rate to
    others or electricity used to recharge the electric car: regardless of income. How is the
    statement “they pay zero” true? Presently hybrid pay slightly less I gas tax but not “ZERO”!!
    Sen. Wayne Harper: “SB 139 would require all vehicles, regardless of fuel type, to pay a
    proportionate fee for their use and impact on maintaining roads.”
    My response: A Nissan Leaf curb weight is 3,277lbs (www.nissanusa.com) and according to
    Oak Ridge National Laboratory “The EPA estimates the typical weight of an unladen Class 8
    tractor-trailer combination is on the order of 35,000 pounds while payloads typically max out
    at about 40,000 pounds. So while 80,000 pounds is the load limit for Class 8 trucks, well over
    90% of the tractor-trailers weigh in at less at 73,000 pounds.”
    (https://www.fhwa.dot.gov/ohim/hwytaxes/mv103.pdf) The fee on a semi tractor trailer
    presently ranges from from $422 for a single unit TTR to $999 for doubles. Although a semi is
    22+ times the weight of the Nissan Leaf, the fee is would only be 7.4 times the fee. This
    comparison does not include the tractor-trailer doubles. The Semi’s leave ruts in the road,
    slabs of rubber or spill dangerous chemicals and cause huge fires on the roads or
    evacuations that requires repair and maintenance.
    Sen Wayne Harper: “We want to encourage the use of vehicles that are better for the air. This
    is why SB 139 is being run as a companion bill HB 74. HB 74 offers new tax credit to those
    who are in a financial position to purchase a new electric vehicle.”
    My response: Those hybrid owners’ ( or those who wish to purchase a hybrid) whose taxable
    income is “0” on TC40 line 22 “Utah Income Tax”: the Energy Efficient Vehicle Tax Credits (HB
    74) will not apply. This includes those senior citizen who purchased a hybrid prior to
    retirement when their income was higher compared to their income after retirement.
    Many senior citizens are receiving Social Security alone; (9 percent below poverty
    (http://www.eitc.irs.gov/central/eitcstats/), 200,000 Utahan’s who are reported as receiving
    Federal EITC (http://www.eitc.irs.gov/central/eitcstats/), and some Utah citizen not receiving
    EITC are low income. This includes veterans with a combat-related severe disability, service
    connected disabled veterans and others receiving non-taxable income. SB 139 will be a
    detriment these low income hybrid owners of these groups by charging a $168 fee but not a
    tax credit.
    SB139 will financially hurt senior citizens, veterans, and other low income people, in addition
    to vehicle sales and clean air!
    Nelson Raver
    3511 West 200 North
    Hurricane Ut. 84737-4458
    435-635 -3157
    nelson.raver@gmail.com

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