News

Oklahoma Shelves Pay-Per-Mile Proposal Amid Declining Fuel Tax Revenue

Proposal for Voluntary Pay-Per-Mile Program in Oklahoma Gets Cold Reception

A proposal to implement a voluntary pay-per-mile program in Oklahoma appears to be all but forgotten, as the state’s lawmakers have opted for other measures to address the ongoing issue of declining motor fuel tax revenue. Despite early discussions and a legislative task force recommendation, the plan has failed to gain traction in the state’s political landscape.

Rep. Brian Hill (R-Mustang), one of the proponents of the original idea, acknowledged that he doesn’t foresee the program being adopted anytime soon. Hill pointed out that another piece of legislation passed in 2021—House Bill 1712—has made the pay-per-mile proposal unnecessary. The bill, which was signed by Governor Kevin Stitt, established the Oklahoma Road User Charge Program, along with a task force to explore alternatives to the dwindling fuel tax revenue.

While the idea of charging motorists based on the miles they drive was intended to compensate for lower fuel tax revenues, particularly as electric vehicles (EVs) and fuel-efficient cars grow in popularity, it has not gained the political momentum necessary to move forward. As Hill noted, “While there’s always room for improvement, I don’t believe it’s an urgent issue that requires immediate attention.”

oklahoma pay-per-mile proposal

The Declining Fuel Tax Revenue: A Growing Concern

Oklahoma’s motor fuel tax system, which has been in place for years, has faced mounting challenges as vehicles become more fuel-efficient and electric vehicles (EVs) increase in number. The state imposes a 19-cent tax on gasoline and diesel, a rate that has remained unchanged since 2018. In 2023, the state collected $583 million in fuel tax revenue. However, with more people choosing electric and hybrid vehicles, the tax revenue from gasoline and diesel has been steadily declining.

According to a report from the Oklahoma Road User Charge Task Force, which submitted its findings in December 2023, the state is projected to face a massive $7.86 billion shortfall in fuel tax revenue by 2050. The report predicted that electric vehicles, which accounted for only 1% of the state’s vehicle fleet in 2023, would make up as much as 50% of the fleet by 2050.

While the state had hoped the pay-per-mile program could help fill this gap, the task force’s recommendations suggested other options for tackling the funding shortfall, leaving the pay-per-mile idea on the back burner for now.

The DRIVE Act: A New Approach to Fund Electric Vehicles

In response to the decline in fuel tax revenues, Oklahoma lawmakers passed the DRIVE Act in 2021. This legislation imposed a 3-cent fee on each kilowatt-hour of electricity used at public EV charging stations. The move was designed to generate funds to offset the loss in revenue from gasoline taxes as more drivers switched to electric vehicles. Additionally, Oklahoma instituted registration fees for electric vehicles and plug-in hybrids, which helped bring in $1.3 million in revenue in 2023.

The DRIVE Act has been a key part of Oklahoma’s strategy to address the growing prevalence of electric vehicles, and it’s clear that lawmakers are confident it will be sufficient for the time being. Both Rep. Hill and Sen. John Haste (R-Broken Arrow), who served on the task force, expressed skepticism about the necessity of the pay-per-mile program. Haste, in particular, voiced concerns about mandating any kind of pay-per-mile system, pointing out that Oklahoma already has one of the lowest gasoline taxes in the nation.

“Eventually, I think we’ll do away with the gas tax altogether,” Haste said, suggesting that the state would likely transition to a more sustainable method of funding transportation infrastructure in the future.

The Road Ahead: What’s Next for Oklahoma’s Transportation Funding?

While the pay-per-mile program may have been sidelined, the issue of transportation funding remains a key topic for Oklahoma lawmakers. As electric vehicles continue to grow in popularity, state officials will need to find ways to ensure that transportation infrastructure is adequately funded. Rep. Hill’s comments suggest that he is not overly concerned with the immediate future, given the progress made with the DRIVE Act and other measures.

However, as the shift toward electric vehicles accelerates, the state will have to consider further changes to its tax structure to make up for the decline in fuel tax revenue. Though the pay-per-mile proposal may not have gained the political support it once hoped for, the broader issue of transportation funding will likely continue to shape policy discussions in the years to come.

Comments

Your email address will not be published. Required fields are marked *