Transportation is the largest single source of US greenhouse gas emissions making up nearly 30% of the national total, and electrification is one of the most effective ways to reduce emissions.
The Federal government has set a target calling for 50% of new cars to be electric by 2030, and 100% by 2035, and many states have similar targets. Major automobile makers are on board.
Meeting the EV sales goal by 2030 would mean 14% of the fleet will be EV.
EV Share of Fleet
EVs don’t use gas…yet building and maintaining transportation infrastructure and highways is still largely funded by gas taxes.
Revenue from state gas taxes average between 40% and 50% of state transportation funds.
Federal gas taxes in most states represent the next highest share and are also threatened by EV growth and improved fuel economy.
Other sources include vehicle sales taxes and registration fees and transportation infrastructure bonds.
State gas tax rates vary from 9 cents a gallon in Alaska to 57 cents in California, with most states charging 20 to 35 cents a gallon.
States also depend on the Federal gas tax, which has not increased since 1993, while infrastructure costs have increased substantially.
Thus, the purchasing power of those tax dollars is half of what it was in 1993. In 2022, inflation has reared its head in ways not seen in decades.
State Gas Tax
Declines in Transportation Fund Purchasing Power by 2035
With EV sales increasing, how durable is our ability to build and maintain highway and transit infrastructure through current means once more electric vehicles are on the road?
How do we assess the implications and potential soultions when every state seemingly has a different funding approach?
Washington Real Revenue
Washington Nominal Value of Gas Tax to Meet Expenditures
Strategies to Offset Revenue Loss
Consider related areas of concerns about transportation fund revenue from gas taxes
What types of expertise does Fehr & Peers offer and how can we help you?
Data analysis, transportation, and economic modeling as demonstrated above
VMT and GHG Forecasting and mitigation including mitigation fees and infrastructure banks
Working relationships with federal and State DOTs and environmental agencies
Interested in talking more about this topic?