Get Energy Smart! NOW!

Virginian Republican legislative initiatives have earned the Commonwealth unpleasant nation (and global) wide attention in recent years.  Whether the abuse of public resources to undermine Virginia’s academic reputation with anti-science legal shenanigans (2010 to present); the social, moral, and medical outrage of trying to require unnecessary ultrasounds on women seeking to execute their Constitutional right to control their own medical destinies (2012); or the anti-democratic efforts to redistrict (out-of-cycle) to manipulate the Commonwealth’s Senate districts and to shift the Electoral College votes from Virginia to skew away from voters’ intent, Virginia’s GOP has provided lots of substantive reasons for intensely outraged attention to their anti-science, anti-constitutional rights, and anti-democratic tendencies.

These flashpoint issues have masked other serious issue after issue.

While the threat to the Electoral College and the legislation to redistrict the Commonwealth’s Senate seats are capturing the majority of attention, Governor Bob McDonnell’s very troubling and damaging transportation proposal is receiving minimal (if any) national attention. And, this matters. For example, McDonnell’s (damaging, non-sensical, backwards moving, etc …) proposal to eliminate the Commonwealth’s tax on gasoline would make Virginia unique of the 50 states in not having a user tax on fuel to help pay for transportation costs. With polluter interests heavily behind this, it is not hard to imagine that having this become law in Virginia will quickly become leveraged for legislative action across the nation. We will have a shift from the lunacy of 2008’s discussion of a “gas tax holiday” to a nation-wide call by the “Drill, Baby, Drill” crowd for “No Gas Tax”. This bad policy, damaging on fiscal and environmental grounds, will resonate politically and must be snuffed out at its source before it becomes a conflagration flaring up in state after state.

Within McDonnell’s plan are a litany of problems such that discussing them takes more pages than the (long) proposal itself and thus they merit addressing one after another (after another after another after …) in separate discussions. This post thus turns to a one particular angle of consideration of one of the bad proposals in the bill: Bob’s punitive $100 fee on alternative fuel vehicles.  While the full section is after the fold, here are the key points:

While the governor’s plan will eliminate the Virginia gasoline tax, the federal gas tax of 18.5 cents will remain. The majority of federal gas tax revenues are returned to the states for transportation projects, and Virginia typically receives approximately $1 billion per year in federal gas tax revenue. And the more alternative fuel vehicles on the road, the less of a share Virginia will get of that federal tax.

Therefore, the governor’s plan proposes an additional $100 fee for alternative fuel vehicles to ensure that these drivers continue to contribute to Virginia’s transportation networks, which they use every day.

While there has been real outcries about this ridiculous fee on alternative fuel vehicles/hybrids — where there is a “user fee” imposed on hybrid drivers (that is unassociated with actual use) while removing the major user fee (gasoline taxes) — this fee is truly reminiscent of the “New Math” craze …

Let’s work through this …

• A hybrid vehicle is roughly 25% more efficient than its equivalent non-hybrid.
  • The Prius is 50 miles per gallon.
  • A ‘non-hybrid’ version might be about 40 miles per gallon.
  • Thus, the difference between a high-end hybrid and the equivalent non-hybrid, mile driven, is roughly 1/5th the level of tax.
• $100 fee against the 18.5 cent federal gas tax.
  • At 18.5 cents, it is 5.4 gallons per $1.00.
  • To achieve $100 requires buying 540 gallons of fuel.
    • At 40 mpg, this would translate to 21,600 miles of driving.
    • At 50 mpg, this would translate to 27,000 miles of driving
• Looking at differential in another angle, the difference is 1/5 of the gas tax
  • For having a hybrid car rather than non-hybrid, the Prius (or Ford Fusion C-Max or …) would have to drive five times as far to meet the $100 savings.
  • E.g., the Prius driver would have to drive 135,000 miles in order to meet the $100 difference between owning a hybrid and a non-hybrid vehicle
  • That 135,000 miles represents roughly 10 years of driving.

Governor McDonnell seeks to justify a punitive $100 fee on alternative-fueled vehicles due to the asserted loss of gasoline taxes. The “lost” gasoline taxes represent roughly the lost gas tax equivalent of 10 average driving — are you starting to feel like Governor McDonnell is lost within New Math?

And, the Governor’s “New Math” has yet another problem in its logic.  The Commonwealth of Virginia imposes a three percent sales and transfer tax on vehicles.  “Generally, a hybrid vehicle can be as much as 20 percent more expensive than its counterpart powered by a conventional gasoline engine.”  Thus, a new Prius might cost $24,000 when an equivalent quality, fuel-efficient non-hybrid would run perhaps $20,000.  Thus, the hybrid owner pays $120 in additional tax which, again, represents more than 10 years of lost gasoline taxes.

Governor McDonnell’s transportation has a section, beginning on page two, entitled: “Math Problem Background”.

As the example provided here shows, the reality is that Gov. McDonnell’s wrong-headed transportation concept is filled with problem math used to support problematic policy constructs.

Note, a group of hybrid drivers protested in Richmond yesterday:

“I invested in a hybrid car to do my part to make the air we breathe cleaner and our climate safer,” said Chester resident Laurel Snode, owner of a hybrid Honda Insight and a participant in the car parade. “We wouldn’t tax non-smokers to fund more public ash trays. Punishing Virginians who want to be part of the solution and pollute less makes absolutely no sense. It will only do more harm.”

Alternative Fuel Vehicles Fee

• The governor is a strong supporter of alternative fuel vehicles. He has directed that Virginia’s state fleet be converted to natural gas vehicles. And he knows that alternative fuel vehicles will only continue to grow in popularity and usage in the years ahead.
• In fact, over the past four years, as gas prices have grown from less than $2 per gallon to as high as $4, more and more Virginians have turned to alternative fuel vehicles.
• There are over 91,000 of these vehicles currently registered in Virginia. This is a great development for energy security and conservation. But it does present a challenge to how transportation funding has been derived in America for the past century. Drivers of alternative fuel vehicles fill up far less, or rarely at all. This means they pay little to no state or federal gas tax.
• These vehicles still have the same impact on Virginia’s roadways as conventional fuel vehicles.
• While the governor’s plan will eliminate the Virginia gasoline tax, the federal gas tax of 18.5 cents will remain. The majority of federal gas tax revenues are returned to the states for transportation projects, and Virginia typically receives approximately $1 billion per year in federal gas tax revenue. And the more alternative fuel vehicles on the road, the less of a share Virginia will get of that federal tax.
• Therefore, the governor’s plan proposes an additional $100 fee for alternative fuel vehicles to ensure that these drivers continue to contribute to Virginia’s transportation networks, which they use every day.
• Over the next five years, this fee will generate:

FY 2014    FY 2015     FY 2016     FY 2017   FY 2018       5-Year Total

$10.2         $11.4              $13.0         $15.0         $17.0              $66.6