Senate bill would see motor fuels tax double, increase to electric vehicle registration

Sen. Click Bishop, R-Fairbanks, testifies before the Senate Finance Committee on a bill to double the motor fuels tax. (02/03/20)
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JUNEAU, Alaska (KTUU) - A bill before the Alaska Senate would see a doubling of the motor fuels tax and an increased cost to register an electric vehicle.

Senate Bill 115, introduced by Sen. Click Bishop, R-Fairbanks, would see the highway motor fuels tax double from 8 cents a gallon to 16 cents per gallon. The marine fuels tax would also be doubled from 5 cents to 10 cents per gallon.

Home heating fuel is currently exempt from the tax and would not see a tax rise.

The bill is currently estimated to raise around $30 million per year for state coffers.

For drivers, that is estimated to add an additional $57.52 in fuel taxes paid per year, adding up to roughly $115.04 paid per year by an average motorist.

Bishop intends for the additional revenue to go toward road and highway maintenance. He cited closures of road maintenance stations across Alaska as a critical need for increased spending.

The motor fuels tax has not been raised in Alaska since 1970, advocates of raising the tax say that when it was increased to 8 cents per gallon it attributed 6% of the annual state budget.

Currently, Alaska’s motor fuels tax is the lowest in the country, doubling it would still see the state have the country's second lowest motor fuels tax, according to data presented by Bishop.

To offset some of the costs for off-road users, the refund for those users would increase from 6 cents to 12 cents per gallon.

Darwin Peterson, an aide to Bishop, told the Senate Finance Committee on Monday that a committee substitute version of the bill would also increase fees to register electric vehicles and hybrids.

Around 28,000 Alaska vehicles are estimated to be electric and their owners currently pay no motor fuels tax. The number of electric cars in Alaska is also estimated to rise to 10% of the state’s total number of vehicles by 2025.

The concern is that as electric vehicle use increases motor fuels tax revenue would decline. At the same time, wear and tear on the state’s roads would stay the same.

Most Alaskans currently pay $100 per year to have their vehicles registered.

The committee substitute version of SB 115 would see electric vehicle owners pay an additional $50 per year in registration costs. Hybrid vehicle owners would pay an additional $25 per year.

Callers into the Senate Finance Committee expressed mixed feelings about the proposed bill.

Nils Andreassen, the executive director of the Alaska Municipal League, said that local government members across the state had voted in November to support the tax hike.

Joe Michel, the executive director of the Alaska Trucking Association, also called into support the bill, saying the additional revenue was needed to maintain Alaska’s roads which are “eaten up” by heavy traffic.

Meanwhile, Mike Coons, president of the Alaska Chapter of the Association of Mature American Citizens, called into oppose the tax rise, citing that Alaska residents already pay some of the highest gas prices across the United States.

On Friday, in an availability with reporters, the governor was non-committal on whether he could support raising Alaska’s motor fuel tax, saying he is much more interested in implementing a spending cap to create “sideboards” on the budget.

“But if it’s just we want revenue first, our history is that we’ll spend it and we will grow government,” he said.

SB 115 was set aside by committee chair Sen. Natasha von Imhof, R-Anchorage, and will be heard again at a later date.

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