Overview
- Currently, an estimated 1% (or less) of Washtenaw County drivers own electric vehicles, but the market for electric vehicles (EVs) has grown rapidly in recent years and is expected to continue to grow at a fast pace over the coming decade. Electric car sales in the United States increased from a mere 0.2% of total car sales in 2011 to 4.6% in 2021. Although forecasts for the rate of EV adoption over the next decade vary widely given rapid changes in both government policies and the auto manufacturing industry in recent years—many forecasts expect a strong acceleration in EV adoption. S&P Global Mobility forecasts electric vehicle sales in the United States could reach 40% of total passenger car sales by 2030, and more optimistic projections foresee electric vehicle sales surpassing 50% by 2030. (Source: *directly quoted* https://www.bls.gov/opub/btn/volume-12/charging-into-the-future-the-transition-to-electric-vehicles.htm)
- Michigan now generates about $1.5 billion in annual fuel tax revenue to help fund road repairs. But because of electric vehicle adoption, experts project the state could lose a third of that money, $500 million, per year by 2030. Michigan’s gas tax is now 28.6 cents a gallon, which combined with a 6% sales tax on fuel that does not fund roads, means state motorists pay the sixth-highest rate in the nation. Baruch Feigenbaum, Transportation Policy Analyst, Senior Managing Director for the Reason Foundation, points out that “The federal fuel tax has lost 25% of its purchasing power in less than two decades due to vehicles with more fuel-efficient internal combustion engines becoming more commonplace on our roads. Electric cars don’t pay fuel taxes. Hybrids and fuel-efficient cars drive further on the gas taxes they pay.” (Source: *directly quoted* https://reason.org/author/baruch-feigenbaum/page/2/)
- The most promising replacement for the gas tax is a mileage-based user fee (MBUF), also known as a road usage charge (RUC) in some parts of the country. As the name implies, with mileage-based user fees, drivers pay for roads based on the miles they drive.
- Some have already raised privacy concerns about placing GPS trackers in vehicles. One common claim from critics of mileage fees is that the government will be able to spy on you. Non-GPS options exist and range from calculating mileage without knowing a vehicle’s location to flat annual fees, both of which have been tested successfully by states.
Transcription
David Fair: This is 89 one WEMU. And welcome to this week's edition of Issues of the Environment. I'm David Fair, and we've spent a lot of time on this weekly segment talking about the transition to electric vehicles and the impact that will have on our environment. We're going to approach that in a little different way today. No matter where you drive this time of year, you're going to encounter some orange construction barrels. Michigan roads and bridges are not in great shape, and there simply isn't enough money to deal with all that needs to be done. As more EVs hit the roads, the wear and tear will still be there. But the fuel tax that supports road maintenance will continue to generate less and less. One of the possibilities under discussion is the prospect of switching from a gas tax model on generating revenue to a miles driven approach. The more you drive, the more you pay. Our guest today is among those looking at the possibilities. Denise Donohue is CEO of the County Road Association of Michigan, and I appreciate your time today!
Denise Donohue: Oh, thanks, David, for having me on!
David Fair: Well, right now, the Michigan gas tax is at 28.6 cents per gallon, and that raises about $1.5 billion a year of dedicated funding to road repair. And I'm curious. Recent efforts have been bolstered by one-time federal dollars through the Infrastructure Act. But do you have an idea of how short we are of having what we really need to address our roads needs and infrastructure needs here in Michigan?
Denise Donohue: As it happens, I do! So, here at the County Road Association, we have all 83 county road commissions. The road departments are our members and have been for 105 years. And so, this is one of the leading issues. How do we have long term sustainable road funding? And so, we do a study here every three years. We hire an outside civil engineer to do this study for us. We just wrapped up one and rolled it out, I think, in February of this year, where the gap between what is needed to maintain what's out there and return it to some specific parameters I can talk about is $2.4 billion. So, that's just the county road portion of Michigan's road network. We have 122,000 miles of roads and highways in Michigan. Our counties are responsible for 75% of those road miles and 52% of the bridges. So, we need the tools to do our job. But we've been falling farther and farther behind. And when I gave that $2.4 billion figure, we're getting about $1.8 billion now. The counties are getting about that now--
David Fair: Which just means we're falling behind further every year.
Denise Donohue: Absolutely. And you mentioned the IIJA--the federal road funding bill. Just to clarify on that. In any given county, the roads under the county's jurisdiction, only about one third of the roads qualify for federal funds--so subdivision roads, streets that are not primary roads. And so, they don't qualify for federal funding, and they are really falling behind.
David Fair: So, right now, less than 1% of drivers in Washtenaw County actually have electric vehicles. Statewide, the push is to get to 50% by 2030. While that seems a bit overly ambitious to me, it does speak to the problem of future funding because EVs simply do not pay a fuel tax. So, what are the concerns of the county road commissions around the state?
Denise Donohue: We also funded a study with our partners in the counties and townships and municipalities a couple years ago with the Anderson Economic Group--find it on our website--where we looked at the impact of fully electric battery-powered vehicles as well as hybrid electric vehicles. Two of those types are paying a surcharge on their license plates. A hybrid car is buying some gas and making some contribution. But in general, after about 14,000 miles a year, they no longer are contributing to the roads where when we fill up with gasoline, we're contributing gas tax every time we fill up. So, there's an inequity there that certainly needs to be looked at. So, we've been pushing for that. I think the other story that really hasn't been talked about very much until very recently is the impact of fuel efficiency. Every car we buy has got better fuel efficiency than the last one. We are selling fewer gallons of gas in Michigan. We're at the lowest point in 24 years, with the exception of the pandemic. So, when you think that 40-41% of the Michigan Transportation Fund comes from gas tax, and that that fund is actually down 10% over the last 24 years. 2009 Toyota Camry got 25 miles to the gallon. The 2019 Camry--so ten years later, it's a hybrid--it's getting 52 miles per gallon. So, all of that gas tax is not showing up at the door.
David Fair: This is Issues of the Environment on 89 one WEMU. And today, we're talking with Denise Donohue. She serves as CEO of the County Road Association of Michigan. And while math tends to hurt my head, if you add it all up, big problems are coming our way down the road if we don't explore some different options. So, before we dive more into mileage-based user fees, Denise, let me ask you this. Would the County Road Association of Michigan be in favor of toll roads in Michigan as part of the solution?
Denise Donohue: I think we are. I have no real opinion about toll roads because they will occur on some of our largely travel corridors: I-94, 75, some of those routes. Those are part of the 8% of the road network that is the responsibility of the Michigan Department of Transportation. We don't see those tolls ever coming to the local roads or even the primary roads that are our jurisdiction. I think that as a mix of fixes going forward, toll roads could be part of the solution in Michigan. But as far as our board and the County Road Association, we don't see that as a game changer in any way for local roads or roads under county jurisdiction.
David Fair: Well, getting an accurate determination as to how much mileage a person is putting on the roadways throughout the course of a year, one of the ideas being bandied about involves putting GPS trackers in Michigan vehicles to get that accurate data for fee assessment. How deeply have you looked into the myriads of issues that would surround something like that?
Denise Donohue: I certainly know privacy is a number one consideration that we hear from legislators and really anybody else. And we've been talking about--
David Fair: Well, isn't privacy an illusion at this point?
Denise Donohue: Wow! Well now, I got a wonderful example of during the pandemic telling my husband-- my raincoat, the pockets are ripped out, blah, blah, blah. You know, it was within five minutes on my social media, ads for raincoats were popping up, right?
David Fair: Right.
Denise Donohue: So, it's there. The tracking is probably in our vehicles, but we just brought the Utah Department of Transportation in to talk to our legislators and to our members and to some media about a month ago, because they are on the road to having no gas tax to be fully crossed over into what they call a road usage charge by 2030 to 2033. They've started their transition, and they have evolved to kind of a you pay one fee and drive as many miles as you want to. Nobody tracks you. You don't report. It's just your premium fee. And you can go on about your business. That's the second method that they've been promoting, and they really did start with electric vehicles and the hybrid electric vehicles. I think that's common across the United States where these are starting up. And there are four states that do have functioning pilots. They start with the electric vehicles and the hybrids. You know, that's the place to start.
David Fair: Our conversation with Denise Donohue from the County Road Association in Michigan continues on 89 one WEMU's Issues of the Environment. Do you have a sense of where public sentiment is right now? Is that something you've been gauging?
Denise Donohue: Well, again, we are members. We have all of our road commissioners. I travel to nine different district meetings around the state and speak at a lot of conferences. And privacy does come up as a question. So, the alternative for reporting your mileage could also be an app on your phone or, in Utah, you are simply screenshotting your odometer, emailing it to a private company, so that your information isn't going to the government. It's maybe a third party, such as an OnStar. It's not OnStar, but it's something like that that you may already have in your vehicle, and that's how you report it. You're getting a statement on a quarterly basis or monthly basis, and you pay it just like any other utility bill. So, I think that our people in particular have seen that road funding has not kept up revenue that we get from gas tax in the last five years since Michigan did a gas tax. It's currently 2% above where it was five years ago. And I say to our people if any of you have had only 2% inflation in the last five years, do let me know, because, of course, that hasn't happened. And so, I think that our people are really dialed in on the fact that we've got to have a solution. We need an immediate solution, which is probably a gas tax. Maybe it's a vehicle registration fee. Maybe it's taking our sales tax off of gas and applying that to roads. That opens up some more problems for schools and our other governmental partners. But we know we need a solution now, and we need to begin towards a pilot study. The Michigan Department of Transportation has submitted a grant to do a study, hopefully moving directly into a pilot. We don't think you need to study the problem anymore. It's big, and it's coming. And other states have gone before us, largely caused by having a good thing--more fuel efficient vehicles. And now, the move into electric and hybrid, as well as maybe some alternative fuels in the future that we have got to move quickly in that direction. But any transition is probably 5 to 7 to 10 years in prospect.
David Fair: And that's probably not quick enough, is it?
Denise Donohue: No. Meanwhile, here we are. As I told you, 2% increase in the gas tax paid over the last five years. We have a nice statement just last week from the Michigan Department of Transportation director saying that the dollar amount it took me to pay the road in 2019 will pave only two thirds of a mile today, and that's just five years later. So, we're kind of in a world of hurt. I know, at this time of year, we do see the orange barrels. The reality is we should be seeing a lot more of them. We should be improving many more miles of roads. Our goal at the County Road Association is that those roads that qualify for federal aid would be 90% good/fair condition. We have a standard rating system that we use. And right now, we're, like, at 62%. So, we got a long ways to go. The nonfederal aid system--we'd like to get that to 60% good/fair. And in reality, we're about at 45% good/fair. So, we're nowhere near. We're not gaining on the problem. And I think I've been doing some presentations in the last year. Why can't we get ahead? Why can't road conditions get ahead? And it is because of this quiet situation that's been going on behind the scenes with increased fuel economy of our vehicles. You know, we expect, I think by 2030, the average fuel economy to be 32 miles per gallon. Right now, we're at 26. So, the march continues. It is a good thing for the environment. And yet, it calls on us to solve another set of problems.
David Fair: So, best guess. If you and I have this conversation again next summer, do you imagine that we would be in the beginnings of a pilot program at that time?
Denise Donohue: I am an optimist. And so, I am going to say yes. I know the grant that's been put in could take a year or two to know if we receive that grant, but it's the fact that it has been submitted is part of it. Should the state decide to fund its own pilot project--again, no more studies--we need to move to that thing. And should the state decide to fund its own, I think we could run a lot more quickly. And we really think that's certainly a direction that the Legislature should be looking at.
David Fair: Well, I thank you so much for the time today, Denise. This is a conversation we're going to have to continue as we move forward.
Denise Donohue: You call me next year at this time, and we'll see.
David Fair: All right. Thank you so much. That is Denise Donohue. That is the CEO of the County Road Association of Michigan, discussing the possibility of a mileage-based user fee as a potential replacement or supplement to the current fuel tax that generates revenue for road repair and maintenance in Michigan. For more information on this Issues of the Environment conversation, pay a visit to our website at wemu.org. Issues of the Environment is produced in partnership with the office of the Washtenaw County Water Resources Commissioner. You hear it every Wednesday. I'm David Fair, and this is your community NPR station, 89 one WEMU FM, Ypsilanti.
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