What could possibly be a downside of shifting our mode of transportation from gas-powered cars and trucks to electric and hybrid vehicles? With any major technological shift, there will be hurdles that few even see coming. One of those might be massive state budget deficits.
Take the example of Washington state. A recent report compiled for the Legislature’s Joint Transportation Committee found that by 2025 — only 15 years from now — the adoption of electric and hybrid vehicles will lead to a decline in the average per-capita gasoline consumption from 500 gallons to 425 gallons or less. Washington finances its road projects largely through a gas tax of 37.5 cents per gallon, and the projected shortfall in state coffers is expected to reach $3.8 billion by 2025.
Washington is not unique, though. Every state makes a good chunk of revenue by taxing gas. Alaska has the lowest at 8 cents per gallon, and New York levies 44.5 cents per gallon. On average, states collect 18.4 cents per gallon. They use this money mostly to pay for highway projects and maintain infrastructure. As gas consumption falls over the next two decades and beyond — as surely everyone wants it to, whether you’re worried about climate change or foreign oil interests — states will have to figure out how to make up the gap in revenue.
Moreover, the federal government charges a gas tax of 18.4 cents per gallon, which also goes toward funding road projects across the country. As this revenue declines, the government will have to figure out how to keep infrastructure from falling into decay. Lower taxes in one sphere usually means higher taxes in another, but proposing a tax hike of any kind is a political headache.
It will be interesting to see how notoriously cash-strapped states like California — primed to be an early adopter of electric vehicles — and Illinois handle this new budget challenge, let alone our consistently gridlocked national legislature.
