DES MOINES — Legislation that won bipartisan approval in the Iowa House will add a supplemental registration fee that, when fully phased in, will cost owners of electric vehicles an additional $130 a year.
The goal is to maintain the Road Use Tax Fund that supports construction and maintenance of Iowa roads and bridges, bill manager Rep. Ashley Hinson, R-Marion, said before the House voted 78-20 to send the bill to the Senate.
The Road Use Tax Fund provides 45 percent of the funds for state, county and city roads, Hinson said, and the goal of House File 767 is for every vehicle owner to support the transportation system.
“If you use the infrastructure, you should pay for it,” Hinson said.
The Iowa Department of Transportation is concerned that as electric vehicle sales grow, federal and state motor fuel tax revenues that traditionally have supported transportation will continue to decline. Registration fees on electric vehicles contribute to the Road Use Tax Fund but add little or nothing to fuel tax revenue, which makes up 40 percent of the fund, according to the DOT.
Hybrid and electric vehicles use less gasoline than standard gas-powered vehicles or no gas at all, but they do contribute to wear and tear on the transportation system. So the supplemental registration fees are seen as a way to maintain equity among drivers regardless of what fuels their vehicles.
Based on estimates by the Iowa Department of Transportation and the nonpartisan Legislative Services Agency, the impact from the growing use of electric vehicle — both battery electric and plug-in hybrids — could range from $19.6 million to $129 million by 2035 and as high as $240 million by 2040.
Rep. John Forbes, D-Urbandale, acknowledged that he’s not paying his fair share to support the Road Use Tax Fund because he doesn’t pay motor fuel taxes when driving his electric vehicle.
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He endorsed the graduated fee that would start at $65 a year per battery electric vehicle and increase to $130 in 2022. The bill also includes fees for plug-in hybrids and other electric and hydrogen vehicles.
The fees would raise $185,000 next year and $1.3 million by 2022, the Legislative Services Agency said.
Rep. Chuck Isenhart, D-Dubuque, agreed there is “indisputable logic” in wanting all vehicle owners to share in the upkeep of the road system. However, he argued there are inequities in the bill. For example, people who buy electric vehicles pay a higher registration fee because of the higher cost of the vehicles.
If the Senate concurs and the governor signs the bill, Iowa will join 20 states that have special fees for electric vehicles, according to the National Conference of State Legislatures. The fees range from $50 each year in Colorado to $200 annually for plug-in electric vehicles in Georgia and West Virginia. Wyoming became the first state of 2019 to pass legislation on electric vehicle fees, increasing the current fee from $50 to $200 annually.
Electric vehicles account for just 1 percent of light-duty car sales. However, the bumper is growing. Last year, more than 361,000 were sold in the United States, an 81 percent increase from 2017.
In Iowa, the number of battery electric vehicles is growing. In June 2016, the Iowa Economic Development Authority identified 163 battery electric vehicles and 854 plug-in hybrid electric vehicles. In April 2017, the Legislative Services Agency reported there were 397 battery electric vehicles. Iowa DOT reported 800 registered electric vehicles in December 2018. A follow-up Iowa Economic Development Authority study the same month found there were 1,043 battery electric vehicles registered in Iowa.
The number of plug-in electric vehicles has grown from approximately 854 in June 2016 to 1,964 in December 2018.
The Legislative Services Agency projects more than 7,300 plug-in hybrids in Iowa by 2024 and nearly 5,500 battery electric vehicles.
House File 767 proposes additional registration fees and other fees for hybrid and electric vehicles. The proposed fees are:
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• $130 for a battery electric vehicle (BEV) beginning Jan. 1, 2022. There is a phase-in fee of $65 during 2020 and $97.50 during 2021.
• $65 for a plug-in hybrid electric vehicle (PHEV) beginning Jan. 1, 2022. The phase-in fee during 2020 would be $32.50 and $48.75 during 2022.
• $9 for a battery electric or plug-in hybrid motorcycle beginning Jan. 1, 2022. The 2020 phase-in fee would be $4.50 and $6.75 during 2021.
• 65 cents per gallon of hydrogen used as fuel (under the bill, 2.49 pounds of hydrogen are equivalent to 1.00 pound of diesel fuel).
• 0.026-cent tax on each kilowatt hour of electricity purchased at a non-residential location.
In other action, the House:
• Approved HF 596, 97-0, extending incentives for five years — until 2024 — for school districts involved in whole-grade sharing. The bill provides an incentive for districts that have whole-grade sharing agreements and adopt a resolution to study the effect of reorganization or dissolution before July 1, 2024. In whole-grade sharing agreements, school districts share educational programs for all or a substantial portion of students.
• Voted 97-0 to approve a change in a law relating to conflicts of interest in certain government contracts. Senate File 283 increases the threshold barring school board members as well as city and county officers and employees from entering into contracts with the applicable governmental entity if the contract amount is less than $6,000. The current thresholds range from $1,500 to $2,500.
• Voted 96-1 to approve SF 227 to no longer require a front license plate on vehicles at least 25 years old and vehicles built to resemble models at least 25 years old.
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