Why This New Republican Bill Won’t Save The Highway Trust Fund

Discussions concerning the insolvency of the Freeway Belief Fund (HTF) have been occurring because the early 2000s, and I wrote in 2023 how the booming EV market was going to make issues worse. Whereas a number of committee hearings had been held in the course of the Biden administration, neither the Infrastructure Funding and Jobs Act (IIJA) nor the Inflation Discount Act (IRA) addressed the issue.

In brief, the HTF was funded for almost seven a long time by the federal gasoline taxes which can be collected whenever you refuel an inside combustion engine (ICE). It’s a consumption-based tax that was initially designed to hyperlink using petroleum based mostly, fossil fuels, to the upkeep and situation of our roadways. The issue with a consumption-based tax on gas is that as new applied sciences, progressive designs, and battery breakthroughs occur, the consumption of gas has enormously diminished and continues to say no. 

As an alternative of this being obtained as a great factor, resulting from decrease air pollution, cleaner air, and cheaper transportation, its has prompted appreciable handwringing going again earlier than the early 2000s. The HTF has been operating out of cash, and it has been operating out of cash for a very long time. 

On Feb. 12, 2025, Sen. Deb Fischer (R-Neb.) reintroduced a invoice that she says is supposed to rebalance the scales, and make sure that EV house owners are paying their justifiable share of the prices to take care of the roads they use. Along with Fischer, the laws is co-sponsored by Sens. Cynthia Lummis (R-Wyo.) and Pete Ricketts (R-Neb.). Rep. Dusty Johnson (R-S.D.) launched an identical companion laws within the Home.

Named the “Honest Sharing of Highways and Roads for Electrical Automobiles Act,” or the “Honest SHARE,” act, it proposes a one-time charge on the battery on the point-of-sale to producers totaling $550, “on every battery module with a weight of larger than 1,000 kilos….supposed to be used in an electrical car.”

Secondly, there’s a $1,000 tax positioned on the sale of every EV when purchased by the client. This might, assumedly be utilized in tandem with different latest coverage measures to take away earlier EV tax breaks and incentives. The laws excludes hybrid autos which nonetheless include an ICE as its technique of propulsion and/or charging.

In a press launch from Fischer’s workplace, she accurately states that, “EVs can weigh as much as 3 times as a lot as gas-powered automobiles, creating extra put on and tear on our roads and bridges. It’s solely truthful that they pay into the Freeway Belief Fund identical to different automobiles do. The Honest SHARE Act would require EVs to pay their justifiable share for the maintenance of America’s infrastructure.”

Whereas the issue of solvency for the HTF may be very actual, as is the necessity to deal with the hole that EV and different different gas autos create, this laws has only one drawback: It will not work.

Not solely will it not work, it is of such a small monetary import that it nearly makes it’s important to ask whether or not or not it was really written with the intent to handle the issue in any respect.

Why It Will not Work….And Perhaps Wasn’t Meant To

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Sure, EVs are exacerbating the HTF’s issues, however it is not the root-cause, and the income that the Honest SHARE Act would generate for the HTF is a drop within the bucket in comparison with its real-world shortfall. How far brief?

In accordance with the Eno Heart for Transportation, the HTF ran a structural deficit of $17.8 billion in 2023 (most up-to-date knowledge), and in that very same yr the Congressional Funds Workplace (CBO) estimated that by 2028 that determine can be nearer to a $24 billion deficit. 

In 2023, 1.18 million EVs had been offered in america, which was an enormous 49% improve from 2022. If we apply Fischer’s new invoice to those gross sales, at $1550 per car, it could roughly generate $1.83 billion. 

This might account for roughly 9.15% of the nonetheless rising deficit. Focusing on the more and more standard EV market, on this approach, clearly, can not clear up the true issues with the HTF. That does not imply it is inconceivable.

Different Methods That EVs Can Pay Their Share

The Republican senator’s invoice would not deal with the core issues of the previous, regardless of the issues being well-known and studied. The laws solely targets the signs of the HTF’s illness. If any member of Congress in Washington had been really considering fixing this drawback they’d, on the very least, must keep in mind that the federal gas tax hasn’t been adjusted since 1993.

Why? As a result of it is quite a bit much less standard to sponsor a invoice which can immediately increase the value on the pump for everybody, even when would utterly clear up the HTF shortfall, than to announce your going to tax EVs, and act like that can clear up the issue. 

Nonetheless, even elevating the federal gas tax and slapping a charge on EV gross sales wont make up the financial distance wanted. Figuring this out is crucial for sustaining our roadway infrastructure, and, subsequently, maintaining the asphalt trade alive and effectively.

Utilization Vs. Consumption

What is the distinction between taxing utilization versus taxing consumption? Consumption taxes are in every single place, and we perceive them implicitly. It is how the gas tax works already. You purchase a specific amount and pay a tax on the amount. 

The longer term success of the HTF and our infrastructure funding depends upon severing the ties to this consumption based mostly mannequin, and transferring to a utilization based mostly one. Like Fischer identified in her assertion, the EVs really use extra of the highway than their ICE counterparts. Per mile pushed, they’re placing extra pressure on our streets.

The manager director for the Washington State Transportation Fee (WSTC), Reema Griffith, spoke in the course of the U.S. Home of Representatives Committee on Transportation and Infrastructure Subcommittee on Highways and Transit listening to titled, “Operating on Empty: The Freeway Belief Fund,” which befell on Oct. 18, 2023, and hosted by congressional Republicans.

In her testimony, she defined that:

“The WSTC has been conducting a legislatively directed evaluation of Highway Utilization Charging since 2012, finishing up intensive analysis and testing on the subject. A Highway Utilization Cost (RUC), additionally known as a Mileage Primarily based Consumer Payment (MBUF), or a Car Mileage Tax (VMT), is a per-mile cost drivers pay for using public roadways, embodying the “person pay, person advantages” idea. In Washington State, RUC is being assessed as a alternative to the 49.4 cent-per-gallon state gasoline tax, and as such, throughout a transitional time the place RUC and gasoline tax would each be collected, drivers would obtain gasoline tax credit for taxes paid, and people credit can be utilized in direction of their RUC. This method was efficiently demonstrated in Washington State’s year-long, 2000-driver statewide pilot check of RUC in 2018 and 2019.”

Any actual dialog about fixing the HTF should embody an method alongside these strains if it has any hope of constructing a distinction. In reality, it can doubtless take a utilization based mostly tax, together with a gas tax improve on a sliding schedule to extend over time (maybe tied to inflation), and, maybe, point-of-sale charges, too. 

For now, nonetheless, this piece of laws, because it presently stands, isn’t a helpful resolution.