Op-Ed by State Rep. Ed Neilson, D-Philadelphia
Recently, the Tribune Review published an editorial titled, “Smart, timely action needed on electric vehicle fees.” While I completely agree that timely action is needed, I wanted to provide readers with much needed context behind the proposed legislation.
Currently, electric vehicle owners charging at home are supposed to be self-reporting the alternative fuels tax on electricity of $0.0172 per kilowatt hour to the Department of Revenue every month. Most EV owners don’t do this because the process is cumbersome, or they are unaware of the tax requirement. In 2023, there were approximately 43,000 electric vehicles registered in Pennsylvania, but the Department of Revenue only collected about $777,000 statewide from this tax. This shows that the alternative fuels tax on electricity isn’t working, and that these owners are not paying their fair share toward the upkeep of Pennsylvania’s roads and bridges.
To address this problem, there have been multiple legislative proposals in the General Assembly over the last few years to replace the alternative fuels tax on electricity with a flat annual fee on electric vehicles, also known as an EV Fee. This session, a proposal by my colleague state Sen. Greg Rothman would have imposed a flat EV Fee of $290 on non-commercial electric vehicles effective immediately. While well-intended, I respectfully opposed this proposal.
A $290 EV Fee would make Pennsylvania the highest fee in the country. It was opposed by car manufacturers, the electric vehicle industry, and multiple environmental advocacy organizations who want to expand Pennsylvania’s growing electric vehicle market. Â At least 32 states have enacted some type of EV Fee, and the current highest fee is New Jersey which recently enacted a controversial EV Fee starting at $250 and eventually increasing to $290, but not until 2028.
I recognize that many in Pennsylvania support an EV Fee as high as $290, maybe even higher, but that is not the case statewide. My inbox is overflowing with emails and my phones are ringing off the hook from residents across Pennsylvania who are opposed to any EV Fee whatsoever.
My legislation, H.B. 2184, is a sincere attempt at a compromise which is required in a divided legislature. It would establish a gradual EV Fee starting at $125 in 2025 and increasing by $25 each year until it reaches $225 in 2029. Starting in 2030, the EV Fee would be adjusted annually for inflation. My legislation was prepared based on feedback from car manufacturers, the electric vehicle industry, and environmental advocacy organizations.
I understand that some feel this is too low or that it takes too long to increase. I will remind those readers that when Gov. Tom Corbett signed Act 89 of 2013 into law, raising the gas tax to its current level, we were not immediately paying 57.6 cents per gallon. Act 89 gradually increased the gas tax over several years until 2017 so that residents would have time to adjust. My legislation is based on the same principle to give electric vehicle owners time to adjust.
Furthermore, Sen. Rothman’s proposal at $290 only applied it to noncommercial electric vehicles. In addition to these vehicles, my legislation also applies the full EV Fee to light duty and medium duty commercial vehicles. It also applies 25% of the EV Fee to plug-in hybrid electric vehicles (PHEV) to balance the fact that PHEV owners are still filling up at the pump and paying the gas tax. While my EV Fee is lower, it is being applied to more vehicles.
Approximately 75% of all road and bridge projects in Pennsylvania are funded by the gas tax which provides about $3.7 billion per year. However, gas tax revenues have declined by $134 million this year alone and are projected to decrease by at least $70 million more per year going forward due to more fuel-efficient vehicles on the road. We also have an annual transportation funding gap of $9.4 billion, which means we need to be spending at least $9.4 billion more per year just to keep our current transportation system in a state of good repair. With nearly 121,000 roadway miles and 32,000 bridges, Pennsylvania is responsible for enough roadway miles to travel from Philadelphia to San Francisco about 42 times.
Let me be clear, no matter how high the EV Fee is, it will not come close to solving this funding problem. According to PennDOT, there are 66,104 electric vehicles and 39,850 PHEVs registered in Pennsylvania as of March 2024. Based on these numbers, Senator Rothman’s proposal at $290 would only generate about $19 million in its first year. Whereas my legislation would only generate about $10 million in its first year while ramping up to over $23 million by 2030. In the context of transportation funding, we are arguing over drops in the bucket. This issue is about fairness, not revenue.
The General Assembly has been debating EV Fees since at least 2019. Here we are, five years later, and electric vehicles are still paying $0. The longer we keep arguing about this, the longer electric vehicles will continue to pay $0. The EV Fee in my legislation may not be as high as some would like, but it is significantly more than the $0 they are paying now.
Since becoming chairman of the House Transportation Committee, I have had countless meetings on this issue and a public hearing. The biggest takeaway is that everybody has a different idea of what a fair EV Fee looks like. I have been pitched on higher fees, lower fees, mileage-based fees, weight-based fees, market-based fees, and even weather-based fees. While each of these has its own merits, they also have their own drawbacks. My priority is to craft an EV Fee that is easy to understand, does not substantially impact electric vehicle adoption, and has enough bipartisan support to pass the Pennsylvania House of Representatives to reach the governor’s desk. I am confident that my proposal does exactly that.
State Rep. Ed Neilson
D-Philadelphia
www.RepNeilson.com
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