Agency outlines phased mileage‑based user fee to address fuel‑tax shortfalls; committee weighs statutory mandates

The Agency of Transportation presented the committee with modeling and an implementation plan to address steady declines in fuel‑tax revenue attributable to electric vehicles, improving fuel economy and erosion of fuel‑tax purchasing power.

Patrick Murphy, the agency’s state policy director, told members the state currently has about 13,000 fully electric vehicles and estimated an annual loss to the transportation fund of roughly $1 million today. The agency outlined a phased approach that would: (1) enroll battery electric vehicles first (implementation target January 2027), (2) add conventionally more fuel‑efficient vehicles in a later phase (proposals discussed referenced 2029), and (3) bring all light‑duty vehicles into the system in an out‑year phase (references in the draft statute pointed to 2031). The agency emphasized the value of piloting the small initial group before expanding and said an FHWA grant ($3M; roughly 80% federal share) would support IT contracts, public outreach and transition planning.

Under the draft approach, the first operational mileage fee would be reconciled with the state’s existing flat fees: current flat user/road‑use fees (about $89 per year in the draft discussion) would be credited against the initial mileage bills. The draft statutory model discussed a per‑vehicle cap (the transcript cites $178 as a cap in current draft language, roughly the flat‑fee equivalent of about 12,700 miles) to limit exposure for high‑mileage drivers while systems and reporting options mature. The agency also proposed using an inflation index tied to construction costs (National Highway Construction Cost Index) to keep the fee aligned with the cost of maintaining roads.

Committee members raised equity and administrative concerns: how to avoid double taxation of out‑of‑state miles, protections for low‑mileage drivers (rural and elderly residents were cited), whether the cap should remain, and the agency’s and administration’s comfort with statutorily mandating later phases. The agency recommended learning from the EV phase and then returning recommendations for expansion; several senators indicated they preferred removing the statutory bake‑in for later phases (sections 21–23) and instead requiring the agency to report back with implementation findings and a plan. Staff said draft amendments that strike the later mandatory phases and require reporting could be ready at the committee’s next meeting.

What’s next: the Agency is required by language already in the draft to submit transition planning and several reports (initial transition plan, then interim and final reports ahead of broader rollout). Committee staff said they would prepare amendment language for the next meeting that either preserves the statutory dates or replaces them with reporting and evaluation requirements, depending on committee direction.