Michigan debates added fees for alternative fuel cars

Michigan is facing daunting economic challenges. Its roads and other transportation infrastructure are crumbling. Detroit, once the heart of American car manufacturing, is a ghost town – shattered by the financial meltdown of 2008. Property in the city is still selling for pennies on the dollar more than 7 years later.

The budget process is always a grueling task – there are always more needs than there is money to meet them. Right now, the Michigan legislature is facing this bleak task and is considering added fees for alternative fuel cars of up to $225 a year.

The bill under consideration, House Bill 4612, would assess owners of hybrid vehicles like the Toyota Prius an additional $100 a year on top of their normal annual registration fee. Electric car drivers and plug-in hybrid owners would pay a higher fee of $225. The money would help pay for repairing the state’s roads, bridges and tunnels.

The nub of the issue is that drivers have always helped fund highway and road repair by paying the state tax on gasoline. Hybrid, plug-in, and electric cars use less gasoline, which some argue means they are getting a “free ride” when it comes to paying their fair share to maintain the roads. This debate is going on in many states around the nation.

Representative Eric Leutheuser, who sponsored the legislation, called the proposal a “small part of the puzzle” on road funding but said it would ensure an “equitable contribution” by electric and hybrid owners. But advocates for alternative fuel vehicles disagree.

Charles Griffith of the Ecology Center in Ann Arbor told lawmakers that higher sticker prices mean higher registration fees – which are another major road funding source for the state. For instance, someone who buys a $35,000 Chevy Volt instead of a $20,000 Chevy Cruze will pay $600 in additional registration fees over the life of their vehicle but save only $500 in gas taxes.

“Owners are already paying a premium over similar gas-powered vehicles, and adding these fees would make it harder to justify upfront costs, taking away the rationale for buying these vehicles in the first place,” said Griffith.

Liz Treutel of the Michigan Environment Council told lawmakers that the fees could discourage potential buyers and send a signal that Michigan is “deaf” to advances in automotive technology and design. She notes that a Chevy Tahoe hybrid that gets 23 mpg would be subject to a $100 fee but a Ford Focus that gets 40 mpg would not. “This makes it tough to view this as anything but a penalty on this very specific technology,” she told the state solons.

But Representative Pete Pettalia defended the fee proposal, argued that current law benefits those rich enough to afford a new electric vehicle while poorer residents who buy used cars continue to pay more in fuel taxes. “Electric vehicles are not paying their fair share to drive on our roads,” he said, thus proving he did not hear one word that Charles Griffith said.

The bill will come up for a vote later in the legislative session.