By Jay Landers

In the United States, most federal spending for highways and mass transit comes from the Highway Trust Fund, which receives the majority of its funding from federal taxes on gasoline and diesel fuel. Because these taxes have not been raised since 1993, inflation has eroded the value of their associated revenues over time.

Even as highway usage has grown, greater use of more fuel-efficient vehicles has contributed to a decline in funding for the HTF. The same is true for electric vehicles that use no fuel and thus are not subject to fuel taxes. Against this backdrop, the HTF has not kept pace with funding needs. Rather than raising the gas and diesel fuel taxes, Congress has elected to transfer hundreds of billions of dollars from the federal government’s general fund to the HTF since 2008.

Citing the persistent insolvency of the HTF and the growing use of EVs, a handful of Senate Republicans recently introduced legislation that would impose fees on EV production and direct the revenues to the HTF. Titled the Stop EV Freeloading Act (S. 2882), the bill has the support of various organizations, including ASCE, that advocate for increased federal support for infrastructure.

Burgeoning bailouts

In the past 15 years, Congress has conducted 10 transfers from the general fund to the HTF, totaling nearly $272 billion, says Jeff Davis, a senior fellow for the Eno Center for Transportation. Of these transfers, the smallest was $6.2 billion in 2012, while the largest was $118 billion as part of the Infrastructure Investment and Jobs Act that was enacted in November 2021.

Currently, the Congressional Budget Office predicts that the remaining funds from the $118 billion bailout in 2021 will run out during fiscal year 2028, Davis says. Beginning in FY 2029, the HTF is expected to have an annual deficit of $40 billion, he says. This shortfall will continue to increase “to the point that, by 2031, one out of every two dollars spent by the Trust Fund will be supported by something other than current-law excise tax receipts on highway users,” Davis says.

Federal subsidies for EVs are intended to promote greater adoption of the vehicles. Under provisions of the Inflation Reduction Act that was passed in August 2022, buyers of certain new EVs are eligible for tax credits of up to $7,500, according to the IRS website.

2 tiers of taxes

On Sept. 21, Sen. Deb Fischer, R-Neb., introduced S. 2882, which is co-sponsored by Sens. Pete Ricketts, R-Neb.; John Cornyn, R-Texas; and Cynthia Lummis, R-Wyo. The bill was referred to the Senate Committee on Finance.

The legislation “would require EVs to contribute to the HTF through a two-tier fee structure,” according to a summary of the bill released by Fischer’s office. The first tier would include a “one-time fee of $1,000 on all-electric vehicles to be imposed at the manufacturer level, at the point of sale,” the summary notes.

The $1,000 fee was selected because it is comparable to the “average amount consumers currently contribute to the HTF from gas taxes calculated over a span of 10 years,” or the approximate average life span of an internal combustion engine, according to the summary. By comparison, the “average life span of an electric battery is 10-15 years,” the summary states.

The second tier would take the form of a “one-time fee of $550 on each battery module with a weight greater than 1,000 pounds to be imposed at the manufacturing level,” according to the summary.

This second fee is necessary to account for the fact that EVs “weigh up to three times more than their internal combustion engine counterparts due to the weight of their batteries,” the summary notes. “The significant increase in weight has a tremendous impact on roads, necessitating more maintenance and repairs over time,” according to the summary. The weight-based fee for EV batteries is modeled after an existing tax that is imposed on heavy trucks to help offset the increased wear and tear they place on roads and bridges.

With research and development underway to increase the range of distance that EVs can travel without having to recharge, batteries for EVs are expected to get heavier in the future. “Due to current technology gaps, the (EV) batteries will only continue to increase in size and weight to accomplish the long-range goals,” the summary states.

The requirements of S. 2882 would not apply to hybrid vehicles that employ an internal combustion or heat engine using fuel and a rechargeable energy storage system, according to the legislation.

For fairness

Fischer and the bill’s other sponsors characterized the legislation as a means to ensure fairness among drivers of different vehicle types. “It’s not fair to force the millions of Americans who don’t drive EVs to foot the bill for those who do,” Fischer said in a Sept. 25 news release.

“Our legislation will stop EVs from freeloading and force them to pay into the Highway Trust Fund like other vehicles,” Fischer said. “If the Biden administration plans to continue pushing EVs on the American people, the least Congress can do is require EVs to support the upkeep of our nation’s infrastructure.”

“It’s patently unfair that EVs increase the wear and tear on roads and bridges without paying their fair share for maintenance,” Ricketts said in the news release. “Citizens fueling up their vehicles should not be forced to subsidize the costs incurred by EV drivers.”

“Every car that drives on our federal highways is responsible for paying into the Highway Trust Fund, and electric vehicles should be no exception,” Cornyn said. “This legislation would ensure EVs pay their fair share and can’t cheat the system.”

Helping the HTF

Supporters of the bill, including ASCE, highlighted the need to shore up the ailing HTF. “It is critically important to protect the solvency of the Highway Trust Fund as we embrace a sustainable clean energy future that includes a much greater market share of electric vehicles,” said Tom Smith, ENV SP, CAE, F.ASCE, the executive director of ASCE, in the Sept. 25 news release.

“This bill provides a sensible way to ensure that all of us who use the nation’s transportation network help fund its maintenance and modernization,” Smith said. “We look forward to working with Sen. Fischer’s office as this legislation progresses.”

“Highway and bridge users supporting the system from which they directly benefit has been the foundation of federal surface transportation investment for nearly 70 years,” said David Bauer, the president and CEO of the American Road & Transportation Builders Association, in the news release. “Sen. Fischer’s proposal is a commendable step toward restoring integrity and equity to that time-honored practice.”

Additional supporters of S. 2882 include the Associated General Contractors of America, the National Association of County Engineers, and the National Association of Counties, according to the news release.

Accounting for use

Although supportive of efforts to ensure that EV drivers contribute their fair share to the HTF, Davis notes that the “downside of any registration fee, annual or permanent, from a user-pay perspective is that it does not distinguish between high-use and low-use vehicles.”

The $1,000 fee for individual EVs called for in the Fischer bill is “indeed in the ballpark of what an (internal combustion engine) vehicle might pay on average, but being fair to the average does not mean being fair to every car and driver,” Davis says. “A mileage-based EV fee would be preferable, but those are harder to implement and collect.”

The Zero Emission Transportation Association, an organization that advocates for greater adoption of EVs, declined to comment for this story, as did the Alliance for Automotive Innovation, which represents vehicle manufacturers, equipment suppliers, battery makers, and semiconductor producers. The Electric Vehicle Association and the World Electric Vehicle Association did not return requests for comment.

At the state level, 33 states impose additional annual registration fees on EVs, ranging from $50 to more than $200, according to an Oct. 16 Washington Post story.

This article is published by Civil Engineering Online.