Senate Transportation debates mileage-based charge for electric vehicles, payment timing and exemptions

Senate Transportation met March 22 to review competing proposals that would shift some road funding to a per-mile charge for electric vehicles and to decide what language the committee should ask staff to draft.

The committee examined two versions: the House Transportation language (which included a pay-as-you-go option and an upfront estimated-payment path) and a Ways and Means amendment that omits statutory pay-as-you-go language and instead narrows payment timing options and adds implementation reporting requirements. The Ways and Means draft also retitles the measure to a "road usage charge" and adds a separate surcharge aimed at EV short-term rentals.

Patrick Murphy, state policy director for the Agency of Transportation, told the committee the administration wants to offer flexibility. "Our hope is to be able to provide as many options for payment as possible, to be as flexible as possible," he said, adding that estimated upfront payments could be paid monthly or quarterly and reconciled at registration.

The committee reviewed the proposed rate and example calculations. Under the agency-proposed per-mile rate (1.4 cents per mile), a driver traveling 11,000 miles would pay about $154 for the year (about $14 per 1,000 miles). Members used that figure to compare impacts on urban and rural drivers and on high-mileage users.

On exemptions and special treatment, both versions exempt the U.S. government. Ways and Means added exemptions for state-owned vehicles and removed statutory language charging EVs an "infrastructure fee" (moving those funds instead into the transportation fund rather than earmarking them for an ACCD charger grant program). The Ways and Means amendment also creates a separate rental-car charge by adding roughly 1 percentage point to the existing purchase-and-use tax on rentals to capture mileage driven by vehicles registered out of state.

The two drafts differ on administrative details that would affect taxpayers. For example, the House version provides a 45-day appeal period for assessments; the transportation draft used a 15-day appeal window. Both permit an appeal to superior court, while the Ways and Means language explicitly adds an administrative appeal to the commissioner. The proposed enforcement provisions include interest charged at 1.5% per month up to 18% annually for late payment and an administrative penalty that would assess mileage at the 98th percentile when a filer fails to provide mileage information, a substantially higher assessment.

Committee members repeatedly pushed for an upfront option that could be paid monthly or quarterly with a year-end true-up to avoid a single large bill at year-end. Several members voiced concern about low-income drivers' ability to make large lump-sum payments and recommended a deposit or other guardrails if monthly plans were used. Damian Leonard, who provided the side-by-side and is drafting committee language, said he would prepare a revised draft that preserves an upfront-estimate option with monthly/quarterly payment choices and an end-of-year true-up.

The committee did not take votes. Members asked staff and agency officials for additional technical detail (modeling for rental EV mileage, the effect on ACCD grant projects, and a schedule showing when revenues would shift) and requested a revised bill draft and implementation timeline for the committee's next meeting.

Next steps: staff will circulate a draft reflecting committee direction and the agency's implementation concerns; the committee expects to review the draft at a future session. Damian was asked to prepare language that reflects the committee's preferences for payment options and transitional credits.