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Madeline Melby

Abstract

The emergence of electric vehicles and increased fuel efficiency within traditional, internal combustion automobiles is an important step in combating climate change. Many state and federal officials have proposed different resolutions to encourage these types of cars and reduce carbon emissions. However, based on the growing number of electric vehicles, hybrids, and overall, more-fuel efficient vehicles, drivers are no longer purchasing fuel at historic levels, and this is effectively curbing the tax revenue once collected at the gas pump on both a state and federal level. Although these vehicles still contribute to the wear and tear associated with driving on roads, bridges, and highways, by not paying any motor fuel tax (MFT), their drivers effectively avoid contribution of funds necessary to maintain, repair, and replace effected infrastructure. Motor fuel taxes are the primary source of funding both on state and federal levels. The federal government uses these funds to grant state and local municipalities money to maintain the country's highways and mass transit. Prior to 2008, MFT revenue directed at the highway trust fund (HTF) was sufficient to finance the fund's economic outlay. In recent years, however, the trust fund has needed major transfers from the Treasury's general fund to remain solvent. The Congressional Budget Office currently estimates that by 2030, the federal trust will be $195 billion short if tax funding continues at its current rate. Consumers are affected by a burden placed unequally on drivers who have not yet conformed to an expensive, shifting trend towards electric vehicles. Although raising the motor fuel tax rate may be an easy solution to provide highway funding, it would be neither effective nor equitable. With the emergence of electric vehicles that use the same roads as traditional vehicles, it is only fair to expect these electric drivers to contribute to the highway fund in some capacity. This article will first discuss the current funding structure for maintenance and improvement of the nation's roadways and emphasize the importance of the Highway Trust Fund in transportation funding. Part II will identify funding shortages due to diminishing motor fuel tax revenue as a result of rising electric vehicle registrations and increased fuel efficiency. Part III will provide a brief comparison of this problem in the United States to its European counterparts who are further along in the transition to EVs and are beginning to realize diminishing revenue from motor fuel taxes. Part IV will identify potential resolutions to ensure stable transportation funding.

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