By Nika Schoonover
In spite of Illinois efforts to smoothly integrate electric vehicles into State economy, a new report from the Illinois Economic Policy Institute (EPI) is warning of a potential steep decline in transportation revenue in 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 drivers will fill their cars with gas.
Because 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% 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 governor 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.
“Governor Pritzker never proposed a vehicle mileage tax and has no intention of doing so now,” Alex Gough said in a statement. “What he said is that other states are studying the issue and it would be worthwhile to look at the results of those studies.”
It’s an issue that ILEPI has said will become more pressing as the State moves toward its goal of putting one 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.
Earlier, Illinois was seeing a yearly increase in electric vehicles. From 2017 to 2021, electric vehicle registrations 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.
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 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 increased Illinois’ annual electric vehicle registration fee by $100 annually.
In response to questions about revenue declines, Gough, Pritzker’s spokesperson, said Rebuild Illinois “is a six-year plan that relies on a variety of revenue streams to ensure the State can continue investing in infrastructure once the plan is complete.”
Tyler said while the fee hike helped replace some of the lost revenue, it won’t go far enough.
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.
—Capitol News Illinois