House lawmakers eye higher fees for electric vehicle owners

The move toward electric vehicles has been afoot on Minnesota roads for at least the last decade. But Rep. Natalie Zeleznikar (R-Fredenberg Township) believes that how the state funds the upkeep of those roads hasn’t kept pace.

One of the three primary revenue sources for the state’s roads is the motor fuels tax. It’s currently at 31.8 cents per gallon for gasoline and diesel, having gone up 3.3 cents per gallon on Jan. 1 because that tax rate is indexed to the rate that highway construction costs rise. The other two principal sources of funding road construction are motor vehicle sales and registration taxes.

But electric vehicle owners would be asked to pitch in more under HF189. It would:

• double the surcharge on the purchase of all-electric vehicles;
• direct annual transfers from the General Fund to the Highway User Tax Distribution Fund based on vehicle registration counts; and
• establish indexing of the surcharges and transfers, based upon changes in the tax rate on gasoline.

On Monday, the House Transportation Finance and Policy Committee laid the bill over for possible omnibus bill inclusion. An amendment that would have altered the surcharges and channeled them to a different account was rejected on a party-line vote.

“Right now, while we’re moving to the EV model across the state and the country, our roads and bridges are funded by the gas tax,” Zeleznikar said. “So we’re not going to have funds going into the roads and bridges like we have historically.”

The current surcharge from the state when purchasing an all-electric vehicle is $75, but that would double to $150. The bill also includes new surcharges for other classes of electric vehicles that would be imposed annually as part of motor vehicle registration, including:

• $75 for plug-in hybrid electric vehicles;
• $30 for all-electric motorcycles; and
• $15 for plug-in hybrid electric motorcycles.

Speaking against the bill was Nick Haeg, senior associate of electric vehicles for renewable energy advocacy organization Fresh Energy.

“According to the Minnesota Department of Transportation’s November 2024 report on options to address the highway user tax distribution funding gap, electric vehicles already contribute sufficient tax revenue through higher sales tax and tab fees to offset the lost gasoline tax revenues from internal combustion vehicles they replace,” he said.