SALT LAKE CITY — With a state tax rebate now long gone, and a federal incentive program about to drop by half for some manufacturers, Utah owners of electric and hybrid vehicles can expect to celebrate the New Year, and the annual inversion season, with a new user fee specifically designed for clean fuel vehicles.
Thanks to a line item in a 2018 legislative bill that made sweeping changes to the Utah Transit Authority and future transit project funding, owners of the 3,588 registered all-electric vehicles in Utah will be ponying up a $60 fee, starting Jan. 1, intended to recoup revenues lost at the gas pump. And the state's 38,000 or so hybrid drivers will be on the hook for $10 if they're rolling in a standard hybrid or $26, if it's a plug-in model. Also, all those fees are scheduled to escalate annually until 2021, when vehicle owners will pay $120 for their all-electric, $20 for a hybrid or $52 for a plug-in hybrid each year at registration time.
The co-sponsor of 2018's SB136, Rep. Mike Schultz, R-Hooper, told the Deseret News the intent of the new fees is to ensure drivers of clean fuel vehicles are paying their fair share of the costs to build and maintain Utah roads.
"Basically, the current owners of electric vehicles aren't paying anything toward road use," Schultz said. "There have been more and more electric vehicles out there and we had to do something."
Schultz said legislators were cognizant of setting fee rates at a level that would not discourage drivers from purchasing a new electric vehicle, and to show their ongoing support of clean fuel transport, will even be pushing a portion of the revenues from the new fees into a fund to build more electric vehicle infrastructure.
Schultz said the effort was aimed at finding the right middle ground.
"We really tried to find the balance," Schultz said. "And it's still less than the average driver is paying in gas taxes per year."
With some 2.7 million vehicles registered in the state, hybrid and electric vehicles taken together still represent less than 2 percent of all vehicles on the roads. The new fee on electrics will generate just over $215,000, compared to the $1.9 billion Gov. Gary Herbert is proposing the state spend on transportation projects in 2019.
Electric vehicle owner Courtney Henley said she believes Utah lawmakers are missing the mark on priorities and, instead, should be looking for ways to incentivize choices that will make positive contributions to one of the area's biggest issues — horrendous air quality. State air quality experts have long cited that combustion engine sources account for almost half of the main component of Utah's wintertime pollution.
"I am strongly opposed to this fee," Henley said. "I think it's terrible governance, especially for the Salt Lake Valley.
"We should, instead, be looking for ways to become the first all-electric vehicle valley in the nation."
Henley said her decision to purchase an all-electric vehicle was motivated by her desire to make a positive contribution to the local air quality problem. She also noted that after trying her husband's Nissan Leaf, she found "it's immediately obvious that the electric power is far superior to the combustion engine." She said the way the state is approaching road fee recovery is sending a terrible message.
"I feel this assessment is a huge slap in the face to me who, out of a sense of civic duty, am trying to make decisions to help clean up the air," Henley said. "Even if I had a gas engine car, I wouldn't generate $120 in a year. It's regressive ... and really upsetting."
On the same day Utah's new fees kick in, the current $7,500 federal tax credit for those who purchase a new electric vehicle made by Tesla or General Motors will drop to $3,750. Electric vehicles by other makers will continue to be eligible for the bigger credit until reaching a sales plateau of 200,000 vehicles. A previous state program that offered a $1,000 tax credit on purchases of a plug-in hybrid, and a $1,500 credit for an all-electric vehicle, sunsetted at the end of 2016.
Rep. Stephen Handy, R-Layton, has tried to exhume the program, but has yet to drum up the necessary support from fellow lawmakers. In a committee hearing in 2017, Handy noted that the purchase price of electric vehicles was at the time running $12,000-$20,000 more than their gas counterparts. Thanks to the differential, Handy argued, the state could expect to see significant offsets from an incentive program through the additional sales tax it collected on the higher priced vehicles. But that argument, it seems, fell on deaf ears and Handy's proposal that session died in the House on a 38-37 vote.
In 2018, the nonprofit group Utah Clean Energy advocated for state legislators to carefully consider what impacts a user fee would have on potential electric and hybrid vehicle purchasers. Clean Energy's government and corporate relations manager, Josh Craft, said his group sees ongoing replacement of gas-powered vehicles with electrics as a critical part of the formula to address air quality issues in Utah.
"We believe that electric vehicles are an important solution not only for the overall climate but in dealing with our air quality challenges here," Craft said. "We didn’t want fees to become a barrier against deployment of electric vehicles, because we could use a lot more of them."
Craft said his team hoped lawmakers would keep the top end of the fee at or below $80 annually, seeing that as a level that would be perceived as less onerous and one that was about equitable with what a driver of a gas model would pay in fuel taxes over a year of driving 10,000 miles. According to the National Conference of State Legislatures, 20 states are assessing fees on hybrid and/or electric vehicles with levels ranging from $50-$200. And 13 states and the District of Columbia have current incentive programs for clean fuel vehicles.26 comments on this story
"I think there's a lot more the state of Utah could be doing to drive the market for electric vehicles," Craft said. "We continue to be concerned that we're not doing enough, collectively, to harness this technology that gives us the tremendous ability to harness air quality problems."
Correction: An earlier version incorrectly stated that federal tax credits for all electric vehicles would decrease from $7,500 to $3,750 on Jan. 1, 2019. Only credits for cars made by Tesla and General Motors will be declining on that date.