Electric-car revolution spells (more) trouble for Minnesota's road funding

The Economist magazine's Aug. 12 cover was already stuck in my mind before Hurricane Harvey hit. It featured a sketch of a disembodied internal-combustion engine under the label "Roadkill."

"Its days are numbered," the featured article said of the engine that propelled both vehicles and much of the U.S. economy for the past 110 years. "Rapid gains in battery technology favour electric motors instead." (Spell it "favour" and a reader can almost hear the publication's British accent, eh, mate?)

What's that got to do with last week's epic flood in southeast Texas? Or with the usual focus of this column, Minnesota government? Let's connect some dots.

The damage Harvey has caused to the nation's petroleum industry is bound to lead to higher gasoline prices for some time to come. Higher prices at the pump are bound to inspire Minnesotans both to drive less (get ready, Metro Transit) and to seek more fuel efficiency when they buy their next vehicles.

More-efficient cars won't be difficult to find, the Economist reports. The cost of hybrid and electric cars is coming down, and the number of models offering those options is growing rapidly. A tipping point may be at hand. One locally popular automaker, Volvo, has already announced it will offer only hybrids and electric cars after 2019.

All those new non-guzzling cars will translate into (more) trouble for state highway budgets. As it's financed today, Minnesota highway construction depends a great deal on the selling and taxing of gasoline.

Eight-month-old official forecasts already show gas-tax receipts flatlining in coming years, even as more vehicles are sold and revenue from license tabs and motor vehicle sales taxes increases. Last year, the 28.5 cents per gallon Minnesotans pay at the pump provided 44 percent of the state fund earmarked for state, county and municipal road projects. By fiscal 2021, the gas tax's share of that fund's receipts is already forecast to slip to 40 percent.

The same goes for the federal gas tax, on which state highways also depend. It was set at 18.4 cents per gallon in 1993 and is also vulnerable to shrinkage due to inflation and changing vehicle technology.

To their credit, state government's transportation policy stewards have seen the end of the internal-combustion engine coming for at least a decade. They've even done a little something about it.

This year, the Legislature tacked a $75-per-year surcharge on the license-tab fees paid by all-electric cars. That fee-in-lieu-of-gas-tax is the selfless brainchild of state Rep. Pat Garofalo, R-Farmington — a proud owner of an all-electric Tesla for the past three years. "It mimics what the gas tax would be for a standard fuel-efficient vehicle," Garofalo explained last week.

Well, not quite. The average Minnesota vehicle owner pays $200 a year in state gas taxes, according to Margaret Donahoe of the Minnesota Transportation Alliance.

Still, that fee could be the start of something big. Garofalo said he sees an electric-car surcharge on annual license-tab fees as one of several possible substitutes for the gas tax. He also wants more existing sales-tax revenue diverted from the general fund to highways. And he's interested in exploring a surcharge on the electricity bills paid by electric-car owners.

And determining what portion of a homeowner's electric bill can be attributed to the car that's charging in the garage sounds too invasive of privacy to be politically acceptable.

Privacy objections have already stalled another gas-tax alternative — a tax based on how many miles a vehicle drives in Minnesota. The 2008 transportation bill authorized a study of a mileage-based tax that the Center for Transportation Studies at the University of Minnesota concluded in December 2011. The 25-member study group's recommendation: More study.

The political hurdle posed by the notion that government will monitor where and how much someone drives is prohibitively high, Garofalo said. "It's not going to happen. Minnesotans value their privacy on a bipartisan basis."

But Minnesotans also value fairness, especially where their money is concerned. My guess is that they'd concur with the mileage fee study's No. 1 recommendation: "Any future transportation funding method[s] must ensure that all drivers pay their fair share for building and maintaining the roadway transportation system they use."

If fairness is their guide, Minnesota lawmakers will have to find a way to get hybrid and electric cars to pay about as much for roads as the cars Garofalo calls "gasmobiles" do now. And if Hurricane Harvey is the eye-opener and behavior-changer that it ought to be, lawmakers won't be able to postpone those decisions much longer.