The Joint Legislative Audit and Review Committee told the House Finance Committee on Jan. 14 that eight tax preferences intended to increase alternative-fuel vehicle adoption in Washington coincided with a large rise in licensed alternative-fuel vehicles but that the policies’ specific effects are unclear.

Pete Van Moorsil, JLARC staff, said the preferences together are estimated to save about $98 million in the current biennium and that the largest single preference — an alternative-fuel vehicle sales and use tax partial exemption — accounts for roughly $53 million of that total.

JLARC found the number of alternative-fuel vehicles licensed in the state increased 230% from the period when the preference became available through the end of 2023, but only about 40,000 vehicles claimed the tax preference during that span. “The legislative auditor concludes that alternative fuel vehicles and associated infrastructure have increased in Washington, but that the effect of the preferences is unclear because changes in the market and other increased state and federal incentives also influence adoption of these technologies,” Van Moorsil said.

The sales-and-use tax exemption applies only to vehicles meeting the committee’s stated eligibility rules: new vehicles may not be priced over $45,000 and used vehicles may not exceed $30,000; the exemption is partial (about $15,000 currently) and the exempt amount declines every two years until the preference expires in August of the preference year listed in statute. Plug-in hybrid vehicles qualify only if their electric range is at least 30 miles, Van Moorsil said.

Committee members and JLARC staff discussed other factors that could explain EV adoption, including falling EV prices, a wider model selection, federal incentives and an expanding charger network. Van Moorsil recommended the Legislature determine whether to continue the eight preferences and, if so, at what level. The report also advised consulting the Electric Vehicle Coordinating Council; the Department of Commerce provided written concurrence and recommended shifting limited funds from tax expenditures to rebate programs and better aligning the sales-and-use tax exemption with the state’s instant rebate program.

Rep. Bridal asked whether incentives for natural-gas or propane vehicles were included; JLARC staff said the clean-alternative-fuel definition includes natural gas and propane but that registrations for natural-gas vehicles are a small share (roughly 1,300 statewide) of the total qualifying vehicle count. Rep. Jacobson asked about the Citizen Commission that oversees JLARC’s review schedule; Van Moorsil described the commission’s appointment process and public testimony role.

JLARC’s recommendation asked the Legislature to decide whether the objective of increasing alternative-fuel vehicle registrations is being met by the tax preferences and to set performance metrics if the preferences are continued.