Report predicts billions in motor fuel tax revenue losses if state meets EV goals

Report predicts billions in motor fuel tax revenue losses if state meets EV goals

By NIKA SCHOONOVER
Capitol News Illinois
nschoonover@capitolnewsillinois.com

SPRINGFIELD – Despite Illinois’ efforts to smoothly integrate electric vehicles into the state’s economy, a new report from the Illinois Economic Policy Institute is warning of a potential steep decline in transportation revenue as the process of electrification accelerates.

The primary issue is motor fuel taxes, which will see a significant drop as more electric vehicles make their way to the road and fewer people fill their cars with gas.

Since motor fuel taxes make up the backbone of state funding for road and bridge projects, ILEPI, which has strong ties to organized labor, warned in its report that new revenue sources will have to be identified to ensure the state’s 10-year capital improvements plan remains on track.

“There’s absolutely a benefit to having EVs but it will ultimately have a strong impact on transportation funding,” Mary Tyler, the author of the report, said in an interview. “It’s something that I don’t think is talked about enough.”

Motor fuel tax is the state’s leading source of transportation funding and makes up 52 percent of Illinois’ total transportation revenue and 82 percent of its contributions to the federal highway trust fund.

The report’s main policy recommendation is implementing a vehicle miles traveled, or VMT, fee which would replace the existing motor fuel tax with a fee determined by the number of miles a car travels on Illinois roads. 

The idea has been floated in the past, including by Gov. JB Pritzker in an interview with The Arlington Heights Daily Herald during his initial gubernatorial campaign in 2018.

“In some states (such as Oregon), they have done tests recently for a VMT tax because we have more and more electric cars on the road, more and more hybrids, and because gas mileage is rising,” then-candidate Pritzker told the outlet. “It’s only fair if you’re on a road and traveling on that road that you should pay your fair share.”

In his four years as governor, however, Pritzker has not made a serious legislative push for a VMT.

It’s an issue that ILEPI says will become more pressing as the state moves toward its goal of putting 1 million electric vehicles on state roads by the end of the decade – a goal written into law with the passage of the Climate and Equitable Jobs Act in 2021.

Even before this promise was made, Illinois was seeing a yearly increase in electric vehicles. From 2017 to 2021, electric vehicle registrations have increased from 8,255 to 36,482. The most recent data from the Illinois Secretary of State’s office shows that, as of December 2022, there are 57,311 electric vehicle registrations.

“Looking at the growth we’re seeing, we’re seeing it grow at a faster rate than what we ever have before,” Tyler said.

According to Tyler’s estimate, Illinois would have to add 119,000 electric vehicles every year in order to meet their goal of one million by 2030. If that came to fruition, the state would lose $765 million in combined sales and motor fuel tax when accounting for added EV fees. Counting federal revenues, that figure would jump up to $1.1 billion.

Electric vehicles aside, Tyler said fuel-efficient vehicles pose an additional threat to the state’s transportation revenue. Roughly 10 percent of registered vehicles in Illinois are electric, while the rest of the 11 million are increasingly becoming more fuel-efficient.

“If you take a look at the picture of all the vehicles on the road, as newer vehicles come out that are more fuel-efficient, that means we’re just having overall, on average, a more fuel-efficient fleet,” Tyler said.

Tyler calculated that the total state and federal revenue loss over the next decade would be about $4.3 billion.

That loss would be especially threatening to the back half of Pritzker’s historic 10-year, $45 billion capital infrastructure plan known as Rebuild Illinois.

The roads-and-bridges portion of the 2019 program was made possible in large part by doubling the state’s motor fuel tax, which hadn’t seen an increase since 1990, then tying it to inflation in subsequent years.. The infrastructure plan also increased Illinois’ annual electric vehicle registration fee by $100 annually.

Tyler said while the fee hike helped replace some of the lost revenue, it won’t go far enough.

“As soon as the change can be made, the better,” Tyler said. “Even to this day, there are EVs on the road that are not paying as much as they would be on motor fuel tax. So there is an impact, it’s just right now the impact isn’t as big as what it will be in the future.”

Other policy areas to explore, Tyler suggests, include increasing existing registration fees even further, implementing a separate hybrid vehicle fee and creating an electric vehicle-specific kilowatt-per-hour fee.

 

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to more than 400 newspapers statewide, as well as hundreds of radio and TV stations. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.

1 Comment

  1. Bob Watson on January 15, 2023 at 9:28 pm

    You might have mentioned that electric vehicles pay a higher annual registration fee and included this in your calculation.

Leave a Comment





Local News

Teehan's Tavern will hold an Irish Wake on Saturday in preparation for the end of an era on Sunday. (Supplied photo)

Final days for Teehan’s Tavern — for now

Spread the love

Spread the loveBy Bob Bong Teehan’s Tavern in Tinley Park will be closing at the end of the day on Sunday, March 3. The 171-year-old building that has been home to the iconic tavern for more than 100 years will be razed in March to make way for the village’s Harmony Square development. The plan…

Flock Safety camera on pole

Hickory Hills considers buying license-plate readers

Spread the love

Spread the loveBy Nuha Abdesallam Hickory Hills city officials are considering acquiring license plate reading cameras after a presentation by police at last week’s city council meeting. Flock Safety cameras are already in use by over 150 agencies in Illinois, helping to restrict crime by providing data about where and when vehicles have been tagged…

reporter ridgefest logo

Chicago Ridge may bring RidgeFest back at a later date

Spread the love

Spread the loveVillage eyes Labor Day or Oktoberfest dates By Dermot Connolly Discussions are underway in Chicago Ridge about the future of RidgeFest, the annual village festival dating back to 1989, which was canceled last year due to security concerns. About 20 people, mainly representing local non-profit organizations, attended a workshop led by village trustees…

Orland Park Mayor Keither Pekau (left) and Police Chief Eric Rossi (right) take part in the police awards ceremony on Feb. 19. (Photo by Jeff Vorva)

Orland Park honors police performances

Spread the love

Spread the loveBy Jeff Vorva The Orland Park Police Department honored several officers and a civilian at the Orland Park board meeting on Feb. 19 as a part of its biannual awards ceremony. Investigator John Folliard was named Officer of the Year for 2023. John Zurek was named the department’s Civilian of the Year. Nathan…

As Curriculum Director for English Ronell Whitaker (standing) talks with a candidate, his colleagues conduct interviews at the SD218 Educator Career Fair on February 24. (Supplied photos)

SD218 hosts career fair for educators

Spread the love

Spread the loveBy Kelly White Community High School District 218 is keeping its faculty informed on available positions in the educational world. District 218 and its partner districts hosted an Educator Career Fair on February 24 at the Administrative Center, 10701 S. Kilpatrick Avenue in Oak Lawn. “This was a great opportunity for educators to…

St. Patrick's Day Parade queen Bea Keenan is crowned by deputy city clerk Liz Cordova Wednesday night. (Photos by Steve Metsch)

‘So cool’ says newly crowned queen of Countryside’s St. Patrick’s Day Parade

Spread the love

Spread the loveBy Steve Metsch Bea Keenan said it’s “so cool, such an honor” having been selected queen of Countryside’s St. Patrick’s Day Parade at the Countryside City Council meeting Wednesday night. The parade, with a record 68 entries, steps off at 1 p.m. Saturday. Bea will ride on a float with her royal court…

Steve Palmer, chairman of the Brew Moon Festival; Susanna Decker of Community Support Services; and McCook Mayor Terrance Carr pose with the oversized check donated from the festival. (Photos by Steve Metsch) 

Brew Moon raises $33,000 for two charitable organizations

Spread the love

Spread the loveBy Steve Metsch Two local charitable organizations will benefit from the 12th annual Brew Moon Beer & Band Festival held in October at the MAX in McCook. The Kelli Joy O’Laughlin Memorial Foundation, based in Indian Head Park, and Community Support Services, based in Brookfield, each received $16,500. Checks were presented to representatives…

Mario DePasquale

Ex-McCook police chief sentenced to 27 months in extortion plot

Spread the love

Spread the loveBy Bob Bong Mario DePasquale, the former police chief of McCook, was sentenced last week to more than two years in federal prison after pleading guilty last year to conspiring with the village’s former mayor to extort two businessmen out of tens of thousands of dollars. DePasquale, 50, was sentenced February 21 to…

stealing Mail

Palos Heights police bust mail theft ring

Spread the love

Spread the love3 arrested for allegedly stealing mail in Palos Heights, Palos Park By Jeff Vorva The good news is that lost mail involving residents of Palos Park and Palos Heights has been found. The bad news is that it may be a while before they get that mail back. Three people were arrested for…

Shepard High School junior, Anastasia Kladis, has raised nearly $2,000 for Special Olympics Illinois and hopes to keep the amount growing before she takes the plunge at Shepard High School on March 7. (Supplied photos)

Shepard student to take the Polar Plunge for Special Olympics

Spread the love

Spread the loveBy Kelly White One Shepard High School student has been excelling in raising funds for this year’s Polar Plunge. Anastasia Kladis, a junior from Palos Heights, has raised nearly $2,000 for Special Olympics Illinois and hopes to keep the amount growing before she takes the plunge at school on March 7. “I have…

Neighbors

Teehan's Tavern will hold an Irish Wake on Saturday in preparation for the end of an era on Sunday. (Supplied photo)

Final days for Teehan’s Tavern — for now

Spread the love

Spread the loveBy Bob Bong Teehan’s Tavern in Tinley Park will be closing at the end of the day on Sunday, March 3. The 171-year-old building that has been home to the iconic tavern for more than 100 years will be razed in March to make way for the village’s Harmony Square development. The plan…

Flock Safety camera on pole

Hickory Hills considers buying license-plate readers

Spread the love

Spread the loveBy Nuha Abdesallam Hickory Hills city officials are considering acquiring license plate reading cameras after a presentation by police at last week’s city council meeting. Flock Safety cameras are already in use by over 150 agencies in Illinois, helping to restrict crime by providing data about where and when vehicles have been tagged…

reporter ridgefest logo

Chicago Ridge may bring RidgeFest back at a later date

Spread the love

Spread the loveVillage eyes Labor Day or Oktoberfest dates By Dermot Connolly Discussions are underway in Chicago Ridge about the future of RidgeFest, the annual village festival dating back to 1989, which was canceled last year due to security concerns. About 20 people, mainly representing local non-profit organizations, attended a workshop led by village trustees…

Orland Park Mayor Keither Pekau (left) and Police Chief Eric Rossi (right) take part in the police awards ceremony on Feb. 19. (Photo by Jeff Vorva)

Orland Park honors police performances

Spread the love

Spread the loveBy Jeff Vorva The Orland Park Police Department honored several officers and a civilian at the Orland Park board meeting on Feb. 19 as a part of its biannual awards ceremony. Investigator John Folliard was named Officer of the Year for 2023. John Zurek was named the department’s Civilian of the Year. Nathan…

As Curriculum Director for English Ronell Whitaker (standing) talks with a candidate, his colleagues conduct interviews at the SD218 Educator Career Fair on February 24. (Supplied photos)

SD218 hosts career fair for educators

Spread the love

Spread the loveBy Kelly White Community High School District 218 is keeping its faculty informed on available positions in the educational world. District 218 and its partner districts hosted an Educator Career Fair on February 24 at the Administrative Center, 10701 S. Kilpatrick Avenue in Oak Lawn. “This was a great opportunity for educators to…

St. Patrick's Day Parade queen Bea Keenan is crowned by deputy city clerk Liz Cordova Wednesday night. (Photos by Steve Metsch)

‘So cool’ says newly crowned queen of Countryside’s St. Patrick’s Day Parade

Spread the love

Spread the loveBy Steve Metsch Bea Keenan said it’s “so cool, such an honor” having been selected queen of Countryside’s St. Patrick’s Day Parade at the Countryside City Council meeting Wednesday night. The parade, with a record 68 entries, steps off at 1 p.m. Saturday. Bea will ride on a float with her royal court…

Steve Palmer, chairman of the Brew Moon Festival; Susanna Decker of Community Support Services; and McCook Mayor Terrance Carr pose with the oversized check donated from the festival. (Photos by Steve Metsch) 

Brew Moon raises $33,000 for two charitable organizations

Spread the love

Spread the loveBy Steve Metsch Two local charitable organizations will benefit from the 12th annual Brew Moon Beer & Band Festival held in October at the MAX in McCook. The Kelli Joy O’Laughlin Memorial Foundation, based in Indian Head Park, and Community Support Services, based in Brookfield, each received $16,500. Checks were presented to representatives…

Mario DePasquale

Ex-McCook police chief sentenced to 27 months in extortion plot

Spread the love

Spread the loveBy Bob Bong Mario DePasquale, the former police chief of McCook, was sentenced last week to more than two years in federal prison after pleading guilty last year to conspiring with the village’s former mayor to extort two businessmen out of tens of thousands of dollars. DePasquale, 50, was sentenced February 21 to…

stealing Mail

Palos Heights police bust mail theft ring

Spread the love

Spread the love3 arrested for allegedly stealing mail in Palos Heights, Palos Park By Jeff Vorva The good news is that lost mail involving residents of Palos Park and Palos Heights has been found. The bad news is that it may be a while before they get that mail back. Three people were arrested for…

Shepard High School junior, Anastasia Kladis, has raised nearly $2,000 for Special Olympics Illinois and hopes to keep the amount growing before she takes the plunge at Shepard High School on March 7. (Supplied photos)

Shepard student to take the Polar Plunge for Special Olympics

Spread the love

Spread the loveBy Kelly White One Shepard High School student has been excelling in raising funds for this year’s Polar Plunge. Anastasia Kladis, a junior from Palos Heights, has raised nearly $2,000 for Special Olympics Illinois and hopes to keep the amount growing before she takes the plunge at school on March 7. “I have…