State legislative auditors told the House Finance Committee on Jan. 14 that eight tax preferences intended to increase alternative-fuel vehicle ownership in Washington are associated with substantial growth in electric vehicles and charging stations, but the auditors could not determine how much of that growth is attributable to the tax preferences themselves.

The Citizen Commission–mandated review, presented by JLARC staffer Pete Van Moorsil, found the set of preferences saved an estimated $98,000,000 in the current biennium and that the single largest preference — a sales-and-use tax exemption for qualifying alternative-fuel vehicle purchases — accounted for roughly $53,000,000 of that total. Van Moorsil said DOR reported “just over 40,000 vehicles took advantage of the preference,” and JLARC’s analysis shows licensed alternative-fuel vehicles in Washington rose about 230% between the preference’s start and the end of 2023.

JLARC cautioned that the measured increase includes many vehicles that did not claim the tax preference and noted other contemporaneous factors: falling EV prices, growing model availability, federal and other state incentives, and increased charging infrastructure. “The preferences in this review all share a common stated objective, which is to increase the number of alternative fuel vehicles titled in the state,” Van Moorsil said, and the auditor recommended the legislature decide whether to continue each preference and, if so, at what level.

Why it matters: Several of the preferences have near-term expirations (the earliest in July 2025), so the committee must weigh continuing a set of exemptions that coincide with market-driven EV adoption. JLARC recommended that if the legislature amends the preferences it consult the Electric Vehicle Coordinating Council, chaired by the Departments of Commerce and Transportation.

Details and context

- Scope and cost: JLARC estimated the eight preferences together save about $98 million in the current biennium; the single largest exemption (vehicle sales-and-use tax exemption) accounts for about $53 million.
- Eligibility limits: The vehicle exemption requires a clean alternative-fuel vehicle or a plug-in hybrid with at least a 30-mile electric range and has price caps: no more than $45,000 for new vehicles or $30,000 for used vehicles; the exemption amount declines every two years (it was $15,000 at the time of the review) and the preference was scheduled to expire in August (year not specified in testimony aside from an expiration window noted by JLARC).
- Adoption data: DOR-reported claims exceeded 40,000 vehicles in the review period; JLARC also found large rises in zero-emission transit and school buses and an increase of more than 3,000 public EV chargers.
- Complicating factors: JLARC noted falling EV prices, federal and state rebate programs, and expanding charging networks as alternative drivers of adoption that make isolating the tax preferences’ effect difficult.

Committee questions

- Representative Bridal asked whether the qualifying fuel definition included natural gas or propane; Van Moorsil replied that the definition does include natural gas and propane but that Department of Licensing and JLARC data show the vast majority of qualifying registrations were electric or plug-in hybrid vehicles. JLARC staff added that they reviewed separate preferences for natural-gas–fueled vehicles and found only about 1,300 natural-gas vehicles statewide, a small fraction of the total.
- Representative Ed Orcutt asked about the Department of Commerce’s recommendation to shift “limited available funds away from tax expenditures and toward rebate programs.” Van Moorsil described Commerce’s position that rebates can be more effective than tax exemptions and recommended aligning exemptions with Commerce’s instant-rebate program.

What JLARC recommended

JLARC’s legislative auditor recommended the legislature determine whether to continue the eight alternative-fuel vehicle preferences. If continued, the auditor suggested deciding the appropriate exemption level and consulting the Electric Vehicle Coordinating Council before changing statutory structure. The Department of Commerce concurred and suggested prioritizing direct rebate programs over tax expenditures.

Looking ahead

Several preferences in the review have upcoming expirations (one in July 2025). Committee members were told JLARC’s findings are intended to inform possible bills early in the session. No formal action or vote occurred during the hearing.