Senator Collins, Representative McLean, and members of the Joint Standing Committee on Transportation,
My name is Dylan Voorhees and I am the Clean Energy Director for the Natural Resources Council of Maine (NRCM.) Thank you for allowing us to present this testimony. NRCM strongly opposes this legislation. The bill would impose an arbitrary and punitive tax on Mainers using cleaner vehicles. That would harm the state and be in direct conflict with our goals of cleaner air, less dependence on imported oil, and more affordable energy bills. Not only would the bill do virtually nothing to address highway fund shortfalls, it seems designed to distract Maine people and policymakers from real solutions, which must include updating the gas tax.
To reduce energy costs and achieve healthier air, Maine should encourage purchase and use of cleaner, more fuel-efficient vehicles, not penalize them.
Transportation accounts for two-thirds of Maine’s consumption of petroleum. The state’s statutory goals for reducing the use of oil[1] cannot be achieved without deep cuts in the transportation sector. Likewise, the burning of petroleum for transportation—primarily cars and light-duty trucks—is the single largest source (43 percent) of Maine’s climate-changing carbon emissions. In fact, we likely cannot achieve Maine’s medium- and long-term carbon reduction goals[2] without increased fuel economy and significant vehicle electrification.
Consumers are choosing fuel-efficient vehicles, including hybrids[3], so they can spend less on gas. That is good news for consumers and the state as a whole. Electric vehicles (EVs) are significantly cheaper per mile to drive than gasoline vehicles. Here in Maine, it generally costs about 35 percent less per mile to “fuel” an EV compared to a gasoline vehicle, the equivalent of buying gasoline at $1.45/gallon.
Spending less money on gasoline means keeping more of our hard-earned money at home in the Maine economy. That would be true even if most of electricity was imported (like our oil) because EV drivers spend less overall for fuel and therefore can spend more on other things. Fortunately Maine produces a large portion of our electricity from in-state renewables. Therefore EVs are an opportunity to transition from imported energy to local energy. EVs even have the potential to increase the efficient use of the electricity grid and reduce costs for all ratepayers.
For all of these reasons, many states are using and exploring ways to encourage the use of cleaner cars, specifically electric vehicles. As this committee has heard, Maine is poised to deploy millions of dollars for EV charging stations across the state. This bill undermines all of those benefits.
This bill would impose an arbitrary, punitive fee on certain efficient vehicles.
The title of this bill is grossly misleading: it does not make transportation taxes fairer, it makes them less fair. All Maine drivers today pay less in gas tax as their cars become more fuel-efficient. They spend less on gasoline and they pollute our air less. Furthermore, for 99.9% of drivers, including hybrid drivers, the more miles they drive, the more they pay in gas taxes. But LD 1806 is wildly unfair:
- For a typical driver[4], it would require hybrid owners to pay 55 percent more in taxes than someone with the fuel economy of an average new car. Hybrid owners who drive relatively few miles on our roads—say 6,000 miles per year—will have to pay 150 percent more in taxes than someone with an average new car.
- LD 1806 would make two different drivers that consume the exact same amount of gasoline and drive the exact same number of miles pay wildly different amounts in transportation taxes. Consider the Honda Fit and Nissan Rouge: same fuel economy but one uses “hybrid technology.” Today typical drivers of these cars pay $100/year in gas tax; under this bill, one would pay $250/year.
Cleaner cars are not causing revenue shortfalls; taxing them won’t address the problem.
Gasoline consumption in Maine has increased steadily over the last several decades, reaching an all-time high in 2015 of 780 million gallons.[5] NRCM desperately wishes that this trend was changing more rapidly, but even as fuel-economy has inched up, miles travelled continue to grow and gasoline consumption is not waning. The unfortunately tiny number of all-electric vehicles on the road has had virtually no impact so far on gasoline consumption or tax revenue.
The highway revenue problem is not caused by cleaner cars. It is patently obvious that over time a gas tax that does not keep pace with inflation will leave the state with substantially less ability to cover costs, even if those costs are not increasing.[6]
The proposed tax on hybrid vehicles in this bill is the most egregiously unfair part of the bill, and would raise less than five percent of the funds needed to cover the structural gap in transportation funding. The proposed tax on electric vehicles would raise less than 0.1 percent. That is a measly sum for which you would be undermining the State’s energy policy and impose a grossly unfair new tax.
The Committee has other legislation before it which would raise the gas tax. This bill seems designed to distract public—and policymaker—attention from that difficult but critical policy debate. The bill is like others we are seeing across the country, which seek to scapegoat cleaner cars, either to dampen demand for this beneficial vehicles or simply to keep the gas tax low despite crumbling roads.
The arbitrary and unfair nature of the bill reveals its true nature. It is not about fairness or raising revenue and cannot be improved by fiddling with the numbers.
Like previous sessions, this Legislature seems likely to consider another substantial transportation bond to cover some of the highway fund shortfall. Since 2012 there have been $435 million in transportation bonds, which has crowded out many, many other needs for public investment in our economy, education, natural resources, and infrastructure. How long will Maine keep borrowing to avoid addressing the underlying problem?
Eventually Maine should evaluate and adopt new funding models that meet multiple goals.
Fuel-efficient and electric vehicles are the future. If our broader energy and climate policies are effective, consumption of gasoline will eventually begin to decline significantly. We believe there are alternative approaches to ensure that all drivers—gasoline, electric, and in-between—pay a fair share of maintaining our roads. Designing and implementing them will take time, but we have time. This bill is ill-timed as well as ill-conceived.
We urge you to reject this punitive legislation and return to the hard work of more effectively and comprehensively addressing highway funding. When Maine truly begins accelerating toward a more electrified transportation system, we look forward to working with this committee and others to further modernize our transportation taxation regime.
Thank you.
[1] e.g. 30% by 2030, 50% by 2050, 2 MRSA §9
[2] (e.g. 40% by 2030 and 80% by 2050, 38 MRSA §576
[3] This bill singles out hybrid technology, but that is just one of many technologies to improve the fuel efficiency of gasoline-powered vehicles. Others include lighter materials, advanced automatic transmissions, and smart engine idling. By the logic of the bill title, these should be taxed, too.
[4] Throughout this testimony we refer to someone travelling 12,000 miles/year—Maine’s average—as a typical driver.
[5] U.S. Energy Information Administration. https://www.eia.gov/state/seds/data.php?incfile=/state/seds/sep_use/total/use_tot_MEa.html&sid=ME
[6] Not only does this bill not really address highway fund revenues, it ignores the cost side of the funding gap.
