Tuesday, May 28, 2024

Louisiana could use road usage fee to replace gas tax

by BIZ Magazine

By Victor Skinner | The Center Square contributor

Louisiana Department of Transportation and Development Secretary Shawn Wilson is proposing a pilot program to study the feasibility of a road usage fee to replace the state’s motor fuel tax.

Wilson presented the idea on Wednesday to members of the Louisiana Electric Vehicle Task Force as a means to address an anticipated loss of $563 million in fuel tax revenues by 2032 due to increasing fuel efficiency and electric vehicles.

“We are spending about $74 million over the next five years” on EV charging infrastructure, Wilson said. “The downstream effect is … having more vehicles fueled by alternative modes of energy.”

“It all is going to have an impact and we’ve always said that the gas tax we use today … there’s probably not the type of growth that’s necessary” to fund the state’s transportation system, he said.

Louisiana currently collects 20 cents per gallon of gas at the pump to pay for the maintenance and construction of roads and other transportation infrastructure, and has not increased that rate for decades.

report from the Louisiana Legislative Auditor released last fall found higher fuel efficiency and the influx of electric vehicles will reduce motor fuel tax revenues by $563.6 million by 2032, assuming electric and hybrid vehicles account for 30% of new cars sold in Louisiana by then.

Auditors found the declining revenue will be insufficient to address the state’s nearly $15 billion in unmet transportation infrastructure needs, despite fees for hybrid and electric vehicle owners approved by the Legislature last session.

Wilson outlined how other states are exploring a road usage fee system to charge motorists based on miles traveled and other factors, and suggested lawmakers consider a pilot program to test the feasibility of a similar system in Louisiana.

“We have been thinking about doing this and the most easiest and the most appropriate thing, I think, for us to start would be a pilot using DOTD vehicles, where we would develop a pilot program using the department of transportation vehicles and any other state vehicle, whether it’s legislators or other state agencies that want to be a part of this study,” he said.

Wilson said the pilot program would be funded by DOTD and would cover up to 4,000 vehicles. The pilot program would be paired with pro-bono research from the Reason Foundation and others on the broader implications to the state as a whole, he said.

“We would be paying gas taxes for … this pilot, but we would also be tracking data to see what it would be had we done the alternative, which is charging them for the mileage-based user fees,” Wilson said. “Those are the two ideas (research and pilot) we have that I think would provide this body and the legislative body some real good data to assess and put into the hopper as you think about how do we fund transportation for the next 15, 20 years.”

Wilson noted that a vehicle sales tax devoted to transportation approved in the last session will help fund projects in the short term, “we also know it’s not going to be enough to sustain that.”

A LLA supplemental report on Louisiana’s Transportation Trust Fund released Monday estimates that if the motor fuel tax is not increased, a road usage fee of $116 per year for internal combustion engines and $271 per year for electric vehicles would be necessary to fully eliminate the current transportation project backlog by 2053.

Lawmakers and Wilson noted during the hearing that unresolved issues with a mileage-based user fee include charges tied to vehicles, rather than the operator, and the ability to tax out-of-state residents using Louisiana’s roads.

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