The owners of hybrid cars and trucks would pay an annual registration fee to offset the gas taxes they are saving when their vehicle is moving on battery power, under a bill approved by a Senate committee Wednesday.
The bill would also more than double a registration fee that owners of fully electric vehicles already pay every year in lieu of gas taxes. By 2022, the electric vehicle fee would rise to $275, more than any of the other 19 states with similar fees charge now.
Senate Bill 446 was introduced by Jim Davis and Tom McInnis, Republicans who head the transportation and transportation appropriations committees. The bill is designed to help offset the declining revenue generated by the fuels tax as cars and trucks get better gas mileage or don’t use any gas at all, Davis told transportation committee members Wednesday.
“Right now, they don’t pay any gas tax from the purchase of electricity, and they’re using our roads,” Davis said. “This bill is intended to bring parity so that everybody is contributing their fair share to the gas tax revenue.”
North Carolina’s gas tax, of 36.2 cents a gallon, will generate about $2 billion for the N.C. Department of Transportation, or about 40 percent of its revenue this year.
Owners of electric vehicles have paid a special annual registration fee since 2013, and it was raised to $130 two years later. But this would be the first time hybrid vehicle owners would face such a fee. Under the bill, it would start at $87.50 a year in 2020 and rise to $112.50 the following year and $137.50 in 2022.
After that, both fees would increase each year according to a formula tied to inflation.
North Carolina would become the 9th state to charge hybrid owners a fee in lieu of gas taxes, and like the fee on electric vehicles, it would be the highest, according to the National Conference of State Legislatures.
The size of the fees worries automakers, according to Henry Jones Jr., an attorney who represents the Alliance of Automobile Manufacturers, which includes Ford, GM, Fiat Chrysler, Toyota and eight other automakers. Jones stopped short of opposing the bill Wednesday, but said the alliance would study it and have more to say before it comes before the full Senate.
Ed Turlington, an attorney who represents electric car maker Tesla, indicated his client would be heard from as well.
“Tesla has never objected to the fee and understands the policy,” Turlington said. “But we are concerned about the dramatic increase.”
Some members of the transportation committee also weren’t sold on the proposed fees. Sen. Joyce Waddell, a Democrat from Mecklenburg County, questioned the size of the fees, which she said could discourage people from buying hybrid and electric vehicles.
“If we are in the process of trying to encourage more electric vehicles, it seems like that fee is a little bit more than it should be,” Waddell said.
Davis said the bill was not meant to discourage anyone from buying anything. He said the fees were developed based on simple assumptions that each car and truck drives an average of 15,000 miles a year and gets 20 miles per gallon, paying about $271.50 a year in state gas taxes.
Davis, who represents far western North Carolina, acknowledged that the fees are an imperfect and probably short-term fix for the gas tax problem. He said all 50 states are trying to figure out how to make up for shrinking income from fuel taxes and that he thinks from all that study and experimentation will emerge a long-term solution.
The transportation committee approved the bill and sent it on to the finance committee. Sen. Bill Rabon, a Republican from Southport, said the fees for hybrid and electric vehicle owners are a matter of fairness.
“On the roads that they travel they cause just as much of a problem as my light pickup truck,” Rabon said. “I’m paying 36 cents a gallon to ride on that road, and it is only fair that they pay an equal amount.”