Hobbs, some lawmakers want electric-vehicle owners to pay fair tax share

Howard Fischer

PHOENIX — Gov. Katie Hobbs wants state lawmakers to enact new laws to ensure that the drivers of electric vehicles pay their fair share for road construction and maintenance.But she said she doesn’t have anything specific in mind yet.Hobbs’ willingness to take on the issue could provide some impetus for efforts that go back nearly a decade to equalize the taxes paid by motorists whose fuel comes from a charger with those who pay the state’s 18-cents-a-gallon gas tax every time they fill up.The issue remains unresolved amid arguments ranging from personal privacy to who should bear the costs as people’s vehicle choices shift.Changing trends will put pressure on lawmakers to settle it, though. The latest figures from the state Motor Vehicle Division show the number of all-electric vehicles registered in Arizona  ballooned from fewer than 35,000 in 2020 to more than 58,000 last year.

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None of those owners, who are using state roads, pay a penny toward the $538 million generated last year in gasoline taxes, much of that earmarked for road construction and maintenance.”We are working on fair solutions,” Hobbs said when asked about the issue at a press event last week touting “green energy” in Arizona.”I recognize this is a huge issue as we look at depletion of highway funds and to make sure that everyone who uses the highways are paying their fair share,” she continued. “And electric vehicles are a part of that.”Many alternative and electric vehicles are far heavier, and could be more punishing to streets, than their similar-sized fossil-fueled cousins.Stalemate in Legislature Hobbs acknowledged there isn’t a simple fix.”Given the Legislature, that is challenging,” the Democratic governor said, referring to the Republican-controlled Legislature.But this hasn’t been a partisan issue. In fact, it is a dispute between two Republican lawmakers that resulted in the current stalemate.And it has been Republicans, who control the state House and Senate — and, until this year, the governor’s office — who have been unable for years to come up with a solution.They have had some success.Rep. Noel Campbell, a Prescott Republican, spearheaded efforts that repealed laws setting annual registration fees for alternative fuel and electric cars at a rate just a fraction of what a similarly priced gas-fueled vehicle would require. Now the owners of cars and trucks pay registration fees on the same basis: the cost of the new vehicle.But finding a levy to compensate for the lack of fuel taxes paid for electric vehicles has proven elusive.Mileage tax proposalBob Worsley, then a senator from Mesa, trotted out an idea in 2016 for a “vehicle mileage tax.”This wouldn’t involve cutting-edge technology, Dave Williams, a vice president of Knight Transportation, noted at the time. He said the trucking industry already uses global positioning to track its vehicles.But the idea failed to gel, partly over whether the method would be foolproof. Williams said it’s possible to cheat using a GPS jammer. “So, they could leave the house and drive for four hours and come back to the house, and nobody knows they ever left,” he said.Technology aside, Williams questioned whether members of the public would be OK being tracked like truck drivers.That hurdle remains today, to the dismay of Rep. David Cook, R-Globe, who chairs the House Committee on Transportation and Infrastructure.”We all pay at the pump for the Highway User Revenue Fund,” he said, referring to the special account into which all gasoline taxes flow.But that “all” doesn’t include drivers of everything from high-end Teslas and Lucids to all-electric Ford F 150s, the Chevy Bolt and the Nissan Leaf. “Well, they don’t go to the pump,” said Cook.He said that leaves one option, a mileage fee. He said it wouldn’t complicated — or intrusive.”On my new Ford pickup, I have an app. That app tells me everywhere I’ve gone, it tells me the mileage on the truck, it tells me when to service it,” he said.Privacy issues citedBut Cook and supporters of a mileage tax have run headlong into the Arizona Freedom Caucus, a group of conservative lawmakers who say they fight government overreach.Sen. Jake Hoffman, R-Queen Creek, its chairman, proposed legislation that would have made it illegal for any level of government to track someone’s movements through things like traffic cameras, license plate readers, or any other data from private sources.His bill included a specific bar against imposing or collecting any mileage fee or tax, a per-mile charge or anything else based on the miles driven by anyone.Hoffman said such restrictions on government are justified.”One thing we know for certain is that taxing and tracking people’s movements is a significant infringement on Arizonans’ freedom of mobility, something we can all agree is a highly undesirable and anti-freedom outcome,” he said.Hoffman’s bill cleared the Senate but died in the House when Cook would not provide the required 31st vote.Cook said one alternative proposed by foes of a vehicle-mile fee that would help capture lost revenues would be a tax on electricity. But he said that is not an option, because it would mean “everybody gets a tax on electricity to pay for electric cars, even if you don’t have one. It’s not well thought out.”He said there are options he thinks would be appropriate, without tracking the comings and goings of individual motorists.One parallels the fact that drivers of most gasoline-fueled cars and trucks need to take them in, at least on a biennial basis, for an emissions test. He said owners of electric vehicles could be required to bring them in to a state-operated facility where mileage on the odometer could be recorded, with a fee assessed based on the miles driven since the last time.And if that’s too intrusive, Cook said the state could compute the average number of miles driven in Arizona, what that would have generated in fuel taxes in a regular car, and then levy a fee that, like the gasoline taxes, would go into the Highway User Revenue Fund.The bottom line is “how do we get them to pay their fair share,” he said.Find the money elsewhere, senator saysHoffman, however, said all those ideas are based on what he called a flawed assumption that roads and highways should be built and maintained only with fuel taxes and the like.Vehicles are becoming more efficient, needing less fuel for every mile traveled, he said. There’s also the fact that the state’s 18-cent-a-gallon gasoline tax has not been increased since 1991.So Hoffman said an entirely different paradigm is needed.”Building and maintaining roads is a foundational responsibility of government,” he said.”The simplest and most responsible way to ensure this happens in the least financially oppressive manner possible is for the gas tax to be completely eliminated through innovation and higher efficiency vehicles,” Hoffman said. That would require governments “to properly reprioritize this important public asset in their baseline expenditures, he said.But Hoffman offered no suggestions of what other current spending might be cut given the opposition of the Arizona Freedom Caucus to virtually any tax increase.
Derick Waller test drives the new EV Ford Mustang with professional driver Yolo Freeman at the New York Auto Show.

Howard Fischer is a veteran journalist who has been reporting since 1970 and covering state politics and the Legislature since 1982. Follow him on Twitter at @azcapmedia or email azcapmedia@gmail.com. 

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