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Electric Vehicle Fees Won’t Fix the Transportation Funding Gap

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by Austin Brown and Dan Sperling for CalMatters

Why are we allowing our roads, bridges, and other transportation assets to crumble?

One out of every five miles of highway pavement is in poor condition, and 188 million cars travel across a structurally deficient bridge each day.

There is a $1.1 trillion gap between the amount that government has committed to investing in transportation infrastructure and the amount needed to bring our infrastructure up to par. Many blame electric vehicles.

They argue that because electric vehicles do not use gasoline, they are not paying gas taxes, which are the principal source of funding for transportation infrastructure. The proposed solution is imposing new electric vehicle fees, something 21 states have done, including California, where the fee will go into effect in 2020.

The hope is that the fees will somehow compensate for electric vehicle owners not paying taxes at the pump. And now the federal government is considering following suit.

But the root of America’s transportation funding issues long predates and runs much deeper than electric vehicles. Multiple developments have contributed to our nation’s transportation funding deficit, including:

  • Stagnant taxation. The federal fuel tax and most state fuel taxes do not rise with inflation. (California is an exception.) Maintenance costs do rise. The result is steady erosion of our capacity to fund infrastructure improvements with fuel-tax revenue. Inflation has decreased the purchasing power of the federal fuel tax by more than 30% since 2000 and by more than 64% since 1993, the last time the federal tax was raised.
  • A focus on expansion over maintenance. Federal funding formulas tend to prioritize building and widening roads over taking care of roads we already have. The total lane miles of public roads has increased by 6% over the past two decades even as road quality has deteriorated.
  • Improved vehicle efficiency. Thanks largely to fuel-economy standards, vehicles are getting more efficient. The average on-road fuel economy for all vehicles has grown from 20 to 22.8 miles per gallon, or about 14%, since 2000. Less gas used means less tax paid.

Each of these factors contributes far more to our nation’s transportation funding deficit than electric vehicles, which currently account for only about 0.5% of vehicles in the United States. 

Over the past two decades, by contrast, we have added 6% more lane miles to maintain, built a national vehicle fleet that is 14% more efficient, and—most importantly—seen the purchasing power of fuel-tax revenue drop by more than 30%. 

It doesn’t take a deep analysis to appreciate the difference in scale. Electric vehicles are not responsible for more than a miniscule fraction of the funding gap at the federal level.

And at the state level, electric vehicles pay other taxes such as sales and registration fees that actually offset lost fuel-tax revenue, especially given high electric vehicle average purchase prices so far. Studies in Minnesota and California found that electric vehicles actually generate at least as much revenue (on a per-vehicle basis) for states as gas-powered vehicles do.

So how do we pay for our transportation system?

The first step in closing the transportation-funding gap is to index the federal gas tax to inflation. This is as close as it gets to a “no-brainer” in the policy world. We cannot hope to keep up with natural increases in cost if the primary mechanism we use to generate revenue is artificially fixed decades in the past. 

Such an update to the federal gas tax is hardly unprecedented: many state gas taxes are already inflation-indexed. The federal government should also consider indexing the federal gas tax to total fuel demand as well. This additional provision would ensure that gas-tax revenues remain constant even as vehicle efficiency increases, thereby addressing another long-term challenge to funding. 

In the longer term, as more drivers shift to electric vehicles, revenue from EVs will become increasingly important for transportation funding. The correct approach then will be to shift toward usage-based charges rather than flat annual fees for drivers. Policymakers could place a small tax on each mile traveled by a vehicle. Usage-based charges would distribute the cost burden for transportation infrastructure more fairly than flat fees by placing a greater share of the burden on those who account for a greater share of infrastructure use. 

Such charges also would help decrease congestion and emissions by creating a direct financial incentive for people to drive less. Indeed, a report from the Information Technology and Innovation Foundation found that “road user charges are the most viable and sustainable long-term ‘user pay’ option for the federal government.”

Imposing new fees on electric vehicles now could disrupt the momentum that is slowly building in the market for more efficient, sustainable vehicles.

UC Davis researchers found that imposing EV fees in California could reduce their sales by 10–24%. 

This is especially concerning given the expiration of tax credits for several manufacturers and the uncertain future of federal incentives in general. The result would be a small increase in transportation funding obtained at the expense of the substantial long-term benefits that electric vehicles deliver for individuals and for society.

The upshot is that imposing new fees won’t solve our transportation problems. It will only make them worse.


Austin Brown is executive director of the Policy Institute for Energy, Environment, and the Economy. Dan Sperling is director of the Institute of Transportation Studies at UC Davis.

This article is produced as part of WeHo Daily’s partnership with CalMatters, a nonpartisan, nonprofit journalism venture committed to explaining how California’s state Capitol works and why it matters.

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The Most Expensive Home in LA Cost Jeff Bezos Only 0.13% of Net Worth

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LOS ANGELES (Los Angeles Times) — Amazon CEO Jeff Bezos walks onstage for the launch of the Fire Phone in Seattle. It can be hard to grasp the wealth of Jeff Bezos, the planet’s richest man.

Thankfully his decision to spend $165 million on a Beverly Hills mansion last week — a California record — offers some clarity.

For starters, there’s this easy calculation. Amazon’s stock, the source of Bezos’ fortune, bounces around daily, but as of the close of markets last week, Bloomberg’s Billionaires Index calculated his net worth at $130 billion despite a $833 million stock market hit Friday.

That means the nine figure sum he’s shelling out for the former estate of movie mogul Jack Warner amounts to only 0.13% of his net worth, rounded up ever so slightly. Not too many Angelenos could […]

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Faring Seeking $375M in Construction Financing for WeHo Mixed-Use Project

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Faring Seeking $375M in Construction Financing for WeHo Mixed-Use Project

WEST HOLLYWOOD (Commercial Observer) — Faring is seeking $375.2 million in construction financing for Robertson Lane , its mega mixed-use development in West Hollywood, Commercial Observer has learned.

The five-year, floating-rate lending opportunity is being marketed by Cushman & Wakefield ’s Rob Rubano , Brian Share , Ernesto Sanchez , Joseph Lieske , Becca Tse and Keith Paden , according to an offering memorandum shared with CO. Officials at C&W declined to comment.

Sources said the deal hit the market on Tuesday.

When completed, the 1.92-acre project— located at 652 North La Peer Drive , at the edge of Beverly Hills—will include a 5-star, 182-room hotel, a private members’ club with 19 guest rooms and high-end retail, restaurant, office and banquet space. The development will also feature a three-level subterranean […]

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Amoeba Hollywood is Moving to El Centro Complex

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HOLLYWOOD — Amoeba is the community’s source for music, music, and more. It is going to have a new space by labor day on the corner of Hollywood Blvd. and Argyle, in the heart of everything.

It will cover a large ground level space in the new “El Centro” complex in downtown Hollywood. This is just 2 blocks east and 2 blocks north of the current location, and right next door to the Fonda Theatre. 

While it is a bit smaller, Amoeba will be able to house all the usual formats and goodies. It is a virtual Hollywood institution. The store expects to close temporarily to get set up. In the interim, the store will continue to have live shows, signings, DJ Sets, and meet-and-greet events every week, as they do now.

In addition, the trade counter will be right up front in the new location, like it is now. There will be a few short-term meters on Argyle for easy unloading.

In the El Centro complex there will be great L.A.-based businesses such as Urban Radish Market & Healthy Spot as our neighbors. Next door is the always rockin’ Fonda Theatre, and just across Hollywood Blvd. is the new Funko Pop store and Shake Shack, with the historic Pantages Theater and Frolic Room just west of us on Hollywood Blvd. Additionally, there are many eateries, coffee shops, retail shopping, and the huge W Hotel all within easy walking distance.

According to Mayor Garcetti, “Los Angeles is a creative capital — a place filled with dreamers who move and inspire us every day. Amoeba Music reflects the best of this creative spirit, and Angelenos are fortunate this beloved cultural treasure has found a new home guaranteeing its place in our city for years to come.” 

In the words of Mitch O’Farrell, Los Angeles City Councilmember, “I think I speak for most Angelenos when I say that we are thrilled that our beloved Amoeba Music is staying in Hollywood.”



Follow Amoeba’s social channels (FacebookInstagramTwitter) and/or sign up for the weekly email newsletter in the space below. They’ll be posting updates online at amoeba.com/moveupdate.

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