As electric vehicles in Iowa increase, Iowa's Road Use Tax Fund decreases


    The Iowa Department of Transportation says there are more than 800,000 electric vehicles in Iowa as of 2018, which doubled from 2017.

    The Iowa Department of Transportation says state legislators called one them to look at the impact of electric vehicles on the Iowa Road Use Tax Fund. The report shows a more than $300,000 impact in 2018.

    Most times customers walk into the Cedar Rapids's McGrath Chevyland show room, Wyatt Snodgrass says those considering buying a electric vehicle usually ask one question.

    "How can I decrease how fast we're harming the environment?," explained Wyatt Snodgrass, who's the senior product consultant at the dealership.

    Snodgrass says it's the customer's desire to either better the environment or save money that usually leads them to buy an electric or hybrid vehicle.

    "The environment impact from the increase demand on electricity is significantly smaller than when you have everybody driving a gasoline car," said Snodgrass.

    When electric vehicles were first introduced years ago, Snodgrass recalls only seeing one sold every few months. Now he sees a few sold each month and it's an upward trend he believes will continue.

    "I really only see it getting better. I only see that factor increasing as technology gets better," said Snodgrass.

    It's for this very reason, Iowa legislators are worried about Iowa's Road Use Tax Fund. The money from the fund is used to pay for road construction projects throughout the state, using money from vehicle registration fees and the fuel tax. The largest portion of those funds come from the state fuel tax.

    "That means that fuel tax which generates 45% of all state road funding would be significantly impacted by electric vehicles," said Stuart Anderson, the director of the Iowa Department of Transportation's planning, programming and modal division.

    The Iowa DOT accounts for a $317,000 decrease from the fund in 2018. They predict that amount surpassing one million by 2025, which is why legislators asked the department to recommend ways to make up for losses. Two of those recommendations include charging a supplemental annual registration fee and to charge a per kilowatt hour fee at public charging stations.

    "It allows that collection of user fees from out of state vehicles that are passing through the state of Iowa," explained Anderson.

    Anderson says if approved, the recommendations would not add more than usual to the fund; they would set it back on track and could help make everything equal out. The proposals include an up to $130 per year registration fee for battery electric vehicles, $64 per year for plug-in hybrid electric vehicles, and $9 per year for electric motorcycles.

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