The Pilot Program could serve as a replacement for the gasoline tax.
California, the nation’s largest electric vehicle (EV) market, is grappling with a significant budget shortfall for road maintenance due to its reliance on gasoline tax revenue. As the state sees a growing shift towards battery-powered cars, this traditional source of funding is rapidly diminishing. To address this financial gap, lawmakers are exploring a new mileage-based tax system to replace the gasoline tax. A pilot program to test this new system is set to launch in August 2024.
Lauren Prehoda, a spokesperson for Caltrans, shared with ABC7 that maintaining California’s extensive road network costs approximately $8.5 billion annually. The bulk of this funding has traditionally come from gasoline taxes, which are collected every time a driver refuels their vehicle. The increasing adoption of EVs and hybrids is eroding this crucial revenue stream. In 2022, California had about 1.1 million electric vehicles and 1.3 million hybrids on its roads, leading to a substantial loss in gasoline tax income.
“On average, Californians pay about $300 a year in state gas taxes,” Prehoda explained. In contrast, EV owners currently pay a $100 annual registration fee, resulting in an estimated $200 million annual loss for the state. With California planning to ban the sale of gasoline-powered cars by 2035, the state’s gasoline tax revenues are projected to eventually plummet to zero.
To counteract this impending shortfall, Caltrans is proposing the California Road Charge, a system that would track the number of miles driven by each vehicle annually and tax drivers accordingly. Although the exact rate for the Road Charge has not yet been determined, the program’s website features a cost simulator with three potential rates: $0.02, $0.03, and $0.04 per mile. The simulator also suggests that some drivers might actually save money under this new system. For instance, a driver of a 2023 Honda Pilot traveling 1,000 miles per month would face a monthly Road Charge of $20, $30, or $40, depending on the chosen rate. This is compared to the current $27.57 monthly fuel tax for the same mileage. However, EV drivers, who currently do not pay gasoline taxes, would see an increase in their costs under the Road Charge system.
Drivers participating in the program will have several options for reporting their mileage to the state. They can use an electronic device connected to their car, the car’s built-in tracking system, or simply send a photo of their odometer to Caltrans. “Everyone has different levels of comfort when we’re managing our data between efficiency and privacy, and that’s why it’s really important to have options from low tech to high tech,” Prehoda emphasized.
Interested drivers can sign up for the pilot program on the California Road Charge website. State officials will select participants in July 2024. These motorists will then make monthly Road Charge payments from August 2024 to January 2025 and complete two surveys about their experience. To offset costs, the state will refund their gasoline tax or EV registration fee at the end of the program. Additionally, Caltrans is offering up to $400 in gift cards to make participation more appealing.
The pilot program aims to gather essential data to help lawmakers decide whether the Road Charge should officially replace the gasoline tax. This initiative represents a critical step in adapting California’s infrastructure funding model to the evolving automotive landscape. As the state moves towards a future with fewer gasoline-powered vehicles, innovative solutions like the Road Charge are necessary to ensure continued investment in road maintenance and improvement.
In conclusion, California’s shift towards a mileage-based tax system reflects a broader trend of adapting to new transportation technologies and environmental goals. As the largest EV market in the country, California’s approach could serve as a model for other states facing similar challenges. The upcoming pilot program will provide valuable insights into the feasibility and public acceptance of this innovative funding mechanism, potentially paving the way for its broader implementation.
