***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.
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.
Senator Harper’s SB 139
Impact on Average Utahn
Need for Legislation
Representative Snow’s HB 74
Impact on Average Utahn
Need for Legislation