Is Rhode Island’s EV Fee Too Soon?
Rhode Island is contemplating a new registration fee for electric vehicles, but is it the right move, right now? While the state aims to prepare for a drop in gas tax revenues, current data suggests the fuel tax remains robust.
EV charging station in Rhode Island
Governor Dan McKee’s proposed budget includes a $300 fee for every two-year registration of a battery electric vehicle (BEV) and $150 for plug-in hybrids. The logic is straightforward: as more people drive EVs, less gasoline is sold, and gas tax revenue drops. However, that decline hasn’t materialized—yet.
Gas Tax Collections are Strong
Despite more EVs on the road, Rhode Island’s gas tax collections have remained strong.
- Collections increased last year.
- They’re projected to rise again this year.
- Further increases are possible next year.
In fact, the state collected a record $163.6 million in gas tax revenue in 2019, before COVID disrupted travel patterns. Collections dipped to $140.5 million in the fiscal year ending June 30, 2021, but have since rebounded, reaching $149.1 million in fiscal 2022-2023 and $162.9 million in the year ending last June.
The gas tax rate also contributes to the figures, adjusting every two years to reflect inflation. The current rate is 37 cents per gallon and is slated to increase to 38 cents per gallon in July. Even with that increase, the “per penny yield” of gas tax collections nudged up.
What’s Driving the Fee?
If the fee is approved, the fees would be added to normal registration costs. This hasn’t been popular, with some groups opposing the fee.
- Green Energy Consumers Alliance argues against the fee.
- Transportation is the largest source of greenhouse gas emissions in Rhode Island
- The alliance says that a flat fee isn’t the best solution.
Long-term projections suggest that gas tax revenue will decline as EVs become more common, but those forecasts had assumed specific levels of federal support for electrification, which could affect the outcome.
Alternatives and Considerations
While the McKee administration projects a long-term decline in gas tax revenue starting in 2026-2027, critics suggest there might be a better approach. The Green Energy Consumers Alliance suggests a weight-based fee to better reflect road wear and tear. Weight-based fees correlate with more expensive cars
Public transportation usage never reached pre-pandemic levels, with a drop in ridership. The state anticipates the current fiscal year will end with $163.6 million from the gas tax, matching the record from 2019.
In Conclusion
The issue represents a delicate balance between planning for the future and the current fiscal realities. As Rhode Island considers this EV fee, stakeholders debate timing and fairness, looking at the current state of gas revenues and long-term shifts in driving habits. Some worry that fees will increase the cost burden to low-income drivers and could disincentivize EV adoption.
