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Texas’s offer to charge electric vehicles has failed – for now

The attempt to introduce a special state tax on electric vehicles failed in the recently concluded legislative period, although the exemption from the new road tolls could be temporary.

That’s because the debate on the issue has mainly centered on how much and when – not if – owners of electric and other non-gasoline vehicles should pay. The possible fees are expected to come up again in 2023 in the next ordinary session of the legislature, but at the latest in a special session.

“We think we should pay a fair fee, but the question is what is fair?” said Tom “Smitty” Smith, executive director of the Texas Electric Transportation Resources Alliance, a lobby group that advocates the sector.

He was opposed to the law that would have set the fee for most electric cars at $ 200 a year, nearly double the amount that many drivers of equivalent conventionally powered vehicles pay each year in gasoline taxes.

Much of the 38.4 cents per gallon federal and state gas taxes levied on conventional vehicle drivers is used for road maintenance. However, electric vehicles don’t run on gas, which means their drivers don’t pay the tax.

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This has raised concerns among Republicans and Democrats alike that the money spent on road maintenance will decline as electric vehicles and other alternative powered vehicles grow in popularity.

The issue is growing in focus, as Tesla – the world’s leading maker of electric cars and the world’s most valuable automaker by stock market value – is working to complete a factory in southeast Travis County that will make Texas a strong position in the world in the quiet – burgeoning EV sector. The Tesla factory is scheduled to go into operation at the end of this year.

State Representative Terry Canales, during a House hearing last month, lamented the potential decline in “one of the state’s most reliable sources of income” as electric and other alternative-powered vehicles become more common on the roads of Texas.

“Now is the time to put in place a funding mechanism to absorb this lost revenue that our state desperately needs to move forward,” he said.

Canales, D-Edinburg, was the house sponsor of the Senate Act of 1728, a measure penned by Senate Senator Charles Schwertner, R-Georgetown, that would have charged fees for electric vehicles, as well as gas-electric hybrids and other alternative fuel vehicles.

The bill was the last move at that session that would have imposed the fees that would have cleared the Senate, but ultimately died on the House of Commons without going to a vote while the legislative maneuvers voted during the slacking days of the session. Neither Schwertner nor Canales responded to requests for comments on Tuesday.

More than two dozen other states are already charging special EV fees to make up for their drivers’ lack of gasoline taxes. But such charges have in many cases been denounced as exorbitant compared to what conventional vehicle drivers give up on gasoline taxes – a criticism repeated by much of the opposition to the unsuccessful legislative measures aimed at inciting them in Texas .

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SB 1728 was amended during the legislative process to base charges on kilometers traveled using a sliding scale. However, many EV proponents said the scale was set too high and still resulted in high fees for typical drivers.

In addition, some said the state should wait to impose special fees until the number of electric and alternatively powered vehicles increases on the roads of Texas. The number has grown, but tiny compared to conventional vehicles, they said, leaving Texas little to gain from the fees but much to lose economically and in terms of environmental benefits when the burgeoning industry is hit.

Fuel taxes generated approximately $ 2.6 billion for the state’s highway fund for the 2020 fiscal year ended last August, according to the state auditor’s office. An analysis by the state’s Legislative Budget Board found that SB 1728 would not produce more than about $ 67 million annually for the Highway Fund through fiscal year 2026.

“It’s amazing why (some state lawmakers) are jumping at it with such energy,” said Matt Holm, president of the Tesla Owners Club of Austin. “It just seems punitive down the line.”

Holm, who spoke at the House of Representatives last week before SB 1728 passed away, said introducing such fees just before the Tesla factory opened would send the wrong message to the company, as well as to suppliers and others in the industry who are already here, send or consider moving here.

“It’s a slap in the face,” he said. “We’re definitely not going to say, ‘Welcome to town. Let’s have fun doing business. ‘”


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