Montana tries again on annual fees for electric vehicles
(Daily Montanan) Another attempt to impose annual fees on electric vehicles in Montana saw its first legislative committee hearing Friday following Gov. Greg Gianforte’s 2021 veto of a similar measure — and extensive work done since by an interim committee to come up with what the sponsor says is a good compromise.
House Bill 60, sponsored again by Rep. Denley Loge, R-St. Regis, would impose yearly fees on electric vehicles and plug-in hybrid electric vehicles when a Montana resident registers or updates their registration in order to offset state losses in gas tax revenue.
That is because fully electric vehicles do not use gasoline or diesel but still contribute to damage and degradation of roads and infrastructure, Loge said at the House Transportation Committee hearing.
The fee would be broken down by the weight of each vehicle into classes:
- Class 1: A vehicle that weighs less than 6,000 pounds
- Class 2: A vehicle that weighs between 6,000 and 10,000 pounds
- Class 3: A vehicle that weighs between 10,000 and 26,000 pounds
- Class 4: A vehicle that weighs more than 26,000 pounds
A new electric Ford F-150 Lightning weighs just more than 6,000 pounds, while all of Tesla’s vehicles weigh under 6,000 pounds, for instance. A fiscal note for the bill estimates and assumes 85 percent of Montana EVs and PHEVs are Class 1 vehicles, while 15 percent are Class 2. There are currently zero Class 3 or 4 vehicles, the note says.
Under the measure, a fee structure would be in place that increases based on the weight of the vehicle, with owners of heavier vehicles paying more. The fees would be lower for plug-in hybrid electric vehicles (PHEVs) than for electric vehicles (EVs):
- Class 1: $130/year for EVs; $70/year for PHEVs
- Class 2: $190/year for EVs; $100/year for PHEVs
- Class 3: $340/year for EVs; $210/year for PHEVs
- Class 4: $1,100/year for EVs; $700/year for PHEVs
According to the fiscal note for the measure and an interim committee report, there were 2,895 vehicles (1,893 EVs and 1,002 PHEVs) in Montana as of Jan. 1, 2022, whose owners would have to pay the fee. But analysts with the Governor’s Office of Budget and Program Planning estimate the number of vehicles to which the fees would apply will grow by 30 percent every year.
For instance, the fiscal analysis estimates there will be 4,893 EVs and PHEVs registered to Montanans in FY2024, which would bring an estimated $570,790 into the fund that pays for road and bridge maintenance and construction, among other things.
That would increase to an estimated $742,026 in FY2025; $964,634 in FY2026; and $1,254,025 in FY2027, according to the analysis.
When Gianforte vetoed the 2021 bill that passed both chambers, he wrote that he supported the bill’s intent but said the fees imposed were too high. They would have been among the highest in the nation, he said in his veto letter – something Loge said Friday was why he was bringing the bill again.
“It was because of amendments that brought the price to be a little unreasonable,” Loge said.
Under the measure that reached Gianforte’s desk, light vehicle owners would have paid $195 annually and heavy truck owners would have paid $375, though the initial bill contained lower fees.
Ian Lund, with the Montana Environmental Information Center, said the fees are still “a little high.” But Lund, the lone person to testify in opposition to the bill at Friday’s hearing, also said he supported the idea of an electric vehicle registration fee and appreciated Loge’s and the interim committee’s work on the measure.
He said 31 states have similar fees and 20 of them are lower than the proposed fees contained in the bill. He said only five of the states have higher fees than what the Class 2 EV fee would be should the bill as introduced become law.
And he argued that combined with other registration fees over the first four years a vehicle is owned, a Class 2 vehicle owner would pay more than $400 each of those years.
“That would make Montana the most expensive state to own an electric truck,” Lund said.
For this year’s measure, which was in the works during interim committee meetings last year, Loge said he went through insurance figures and other data he could find to check on the average mileage Montana drivers travel each month in a vehicle. He said he came up with an average of about 14,000 miles, then decided on average fuel consumption for each class of vehicle.
Gasoline users provide 33 cents per gallon to the gas tax, while the diesel rate is 29.75 cents per gallon. Loge said he used the average miles per gallon per class, multiplied by the tax rates for gas and diesel, to come up with the proposed fees per class, saying it was at least a “workable solution” to some of the unknowns.
“It’s a very fair, equitable and transparent user fee for people in Montana,” said Darryl James, the executive director of the Montana Infrastructure Coalition who testified in favor of the measure. Those sentiments were shared by a dozen others involved in roads, bridges, construction, trucking and business who testified in support of the measure.
Loge and others who testified in support said the extra money going into the gas tax fund would be necessary in order to meet the match needed for federal road funding, especially as the federal government encourages more electric vehicles and EV infrastructure nationwide in order to offset greenhouse gas emissions from gas and diesel-fueled vehicles.
“I think this is the most fair bill we can come up with right now to make it work,” Loge told the committee.
The Federal Highway Administration in September approved Montana’s Electric Vehicle Infrastructure Deployment Plan, which explains the state’s goals for using $43 million in federal funding over the next five years it will receive under the National Electric Vehicle Infrastructure Formula, which was part of the Bipartisan Infrastructure Law.
If passed as introduced, HB 60 would apply to electric vehicles that are registered or re-registered starting July 1.