Electric vehicle fee proposed for Minnesota

State lawmakers may take back some of the money that Minnesota electric vehicle owners are saving by not having to pay a gasoline tax.

Bills in the House and Senate would impose an annual surcharge of $75 to $85 on vehicles that are all-electric and plug-in hybrids based on electric motors. Gasoline-electric hybrids would be exempt.

The move would bring Minnesota in line with state governments across the country that are increasingly seeking to slap fees on electric vehicles, some exceeding $150 per year.

The fee is aimed at making electric vehicle drivers pay their fair share of road maintenance costs, which are partly paid for by gasoline taxes, said Rep. Pat Garofalo, R-Farmington, the author of the House measure that would set a fee of $85 a year. A Senate bill proposes the same.

On Tuesday, House Republicans introduced an omnibus transportation bill that includes a $75 electric car fee, according to a news release.

"I have an electric car, so I understand the consequences of it," said Garofolo, a Tesla driver.

The fee would kick in on Jan. 1, 2018. The legislation, however, also would allow drivers of electric vehicles to use high-occupancy highway lanes without a charge.

The state's gasoline tax — currently 28.5 cents per gallon at the pump — is the largest funding source for highway and bridge maintenance, covering 45 percent of the budget, according to Dane McFarlane, a senior research analyst at the Great Plains Institute, a Minneapolis nonprofit energy research group.

The other main sources of road money are taxes on motor vehicle sales and annual fees on vehicle registrations.

Through those sales and registration taxes, electric vehicles already cover their fair share of state highway expenses, McFarlane said. That's because those taxes are based on a vehicle's retail value, which is generally much higher for electric vehicles than other cars. For example, the Nissan Leaf S, a small electric car, sells for $30,680; a Tesla S goes for $68,000.

Taxes paid by electric vehicle owners "more than makes up for any loss of government revenue from the lack of gasoline fill-ups," McFarlane wrote in a recent analysis. The proposed fee is a disincentive to drive cars that reduce greenhouse gases, he added.

Garofalo acknowledged that electric vehicles generate more sales and registration tax revenue per car. But he said electric car prices are expected to come down over time, which could mean an "explosion" in sales of electric vehicles.

A state fee will be harder to institute then, Garofalo said.

Minnesota is a relative laggard in the adoption of all-electric cars.

In 2016, excluding data for December, 967 all-electric and plug-in hybrid vehicles were sold in Minnesota, according to the Great Plains Institute. That's up significantly over 543 for all of 2015.

Minnesota does not rank in the top 15 states for cumulative electric vehicle sales since 2009.

Ten states have implemented annual fees on electric and electric-hybrid vehicles that vary from $50 to $300 per year, according to the Sierra Club, an environmental group. Since the start of 2017, six more states have proposed legislation that would require electric vehicle fees of up to $180.

Mike Hughlett • 612-673-7003