Lawmakers seek solution as more electric vehicles mean less gas tax revenue

Minnesota’s roads are seeing a growing number of electric vehicles on them — and that’s a good thing, says Rep. Pat Garofalo (R-Farmington). But, he concedes, it’s a problem, too.

That’s because electric cars use no motor vehicle fuel — a good thing for the environment, but a bad development for the state’s gas tax revenue that is the backbone of Minnesota’s road and bridge funding.

He sponsors one of a pair of proposals heard by the House Transportation Finance Committee on Tuesday that would assess an annual surcharge on electric vehicles to help make up for that loss of gas tax revenue.

Rep. Pat Garofalo

Garofalo’s bill, HF1133, would set an annual $85 surcharge and allow vehicles powered exclusively by electric motors (meaning no hybrids) to use MnPASS lanes without paying any tolls or fees. Rep. John Koznick (R-Lakeville) sponsors another bill, HF1922, that would impose an annual $125 fee on electric vehicles.

The committee approved both bills and referred them to the House Taxes Committee. A Senate companion to Garofalo’s bill, SF2029, sponsored by Sen. Matt Little (DFL-Lakeville), has been referred to the Senate Transportation Finance and Policy Committee. Koznick’s bill has no Senate companion.

“This bill is necessary because of a problem,” said Garofalo, who owns an electric-powered Tesla. “But it’s a problem I’m glad to see happen.”

Rep. Jon Koznick

The proposal isn’t intended to discourage the growth of electrical vehicles, he said. It’s simply a recognition of the important role gas tax revenue plays in funding the state’s road system and the need for electric vehicle owners to pay their way, too. 

Auto industry representatives and electric vehicle advocates expressed concerns with both proposals, saying owners of electric vehicles contribute their fair share through higher sales taxes on the vehicles that often have more expensive purchase prices than traditional vehicles.

Drive Electric Minnesota’s Brendan Jordan told the committee a fairer fee would be in the neighborhood of $24-$30 per year.

“No one would disagree that [electric vehicle owners] should pay their fair share,” he said.

Rep. Frank Hornstein (DFL-Mpls) also voiced his concern that the proposed fee was too high and that an annual fee on electric vehicles “is maybe 10 years early.”

“I think we have to still incent these types of vehicles,” he said, saying they help save energy and reduce air pollution.