At the end of April the Palm Coast City Council learned that the city is facing a $52 million bill over five years if it is to keep its streets from deteriorating further, or failing in a few cases.
The city doesn’t have that kind of money. It is hunting for new revenue. Two possibilities: a utility tax, or a franchise fee levied on utilities and passed down to customers. Or both. They would appear on residents’ power bills and raise millions. Twice in the last 11 years the council considered adding them, only to face fierce public opposition. The proposals are again on the table.
The council is looking for alternatives. Among them: taxing electric vehicles, just as combustion-engine vehicles are taxed at the gas pump. The council is also looking at fees on electric vehicles, though in the end it may come down to the same thing. And either way, the revenue generated from taxing electric vehicles would be minimal compared to the city’s needed revenue.
Two council members have been pushing the matter especially: Theresa Pontieri and Ed Danko, the latter surprisingly so because of his uncompromising stance on new taxes: he’s vowed to drink antifreeze rather than support budgets with higher taxes. But he doesn’t see a levy on electric vehicles as a new tax.
“I am not supporting a new tax or increase,” he said, “this tax already exists at the fuel pump for automobiles, all I am suggesting is finding some formula to include EV’s since they use our roads just like gas powered vehicles do. There should be no free ride for EV’s.”
Danko and Pontieri brought up the subject during a budget workshop late last month. Dank was exploring having Palm Coast impose its own local tax on electric vehicles.
“We’re talking six cents per gallon on gas,” Danko said, referring to the so-called local-option sales tax that Flagler County is authorized to impose, and does, keeping that revenue local. But the revenue is small, and it’s not growing, because vehicles are becoming more fuel efficient–or going hybrid and electric.
“I don’t know quite how we do it,” Danko said of collecting revenue from EVs. “Maybe it’s a mileage thing. You report your mileage annually or something and we figure out a formula that would be equal to that six cents per gallon. But we have roads that are really becoming a problem and we have a bunch of electrical vehicles that put wear and tear on those roads and we haven’t collected a penny on that. That’s something we might need to look at. Because no pun intended, but they shouldn’t get a free ride.”
In 2014, the local-option gas tax generated $2.3 million countywide, of which $1.7 million went to Palm Coast. The state is estimating that Flagler County will generate $2.8 million for this year, of which $2 million will go to Palm Coast.
It only looks like an increase over 2014. In fact, in inflation adjusted dollars, Flagler County would have had to generate $3 million this year just to keep up with inflation. In reality, both Flagler County and Palm Coast are losing purchasing power when it comes to gas tax revenue, which is why neither government can rely on that source alone. There are not enough electric vehicles on local roads to make a significant impact on new revenue, even if a funding mechanism were devised.
Those mechanisms are devised by the state, not by local governments. Thirty-one states have already taken steps to add taxes on electric vehicles. Those range from $50 a year in Colorado to $75 in Minnesota, Missouri and Nebraska to $100 in California, Illinois, Tennessee and Wisconsin to $200 a year in Georgia. Those are supplemental taxes to those already paid for regular licenses.
Currently Florida charges a licensing tax for every vehicle on the road. The tax does not make a distinction between electric and non-electric vehicles. As long as the vehicle is powered by something other than a person’s muscles, it is taxed. A bicycle is not taxed. A moped is. The difference in the licensing tax is determined by size. So a moped’s license tax is $5, a heavy truck is $1,322. The typical car’s license tax is $225.
Florida has no supplemental fee for electric vehicles. But the Florida Legislature has been trying.
Last spring Sen. Ed Hooper, the Palm Harbor (of Pinellas County) Republican, introduced Senate Bill 1070, calling for adding a $200 annual licensing tax for fully electric vehicles beginning this October, and rising to $250 starting in 2028. That would have placed Florida at the higher end of EV taxing.
The tax on hybrid vehicles would have been $50, rising to $100 in 2028. Low-speed electric vehicles like golf carts, which are popular in small towns like Flagler Beach and elderly pastures like The Villages, would have been required to register only every two years.
The Hooper bill was approved in three successive unanimous votes in Senate committees, and a 39-0 vote on the Senate floor on April 28, a rare feat of bi-partisanship. But it had no House companion. The bill died. It is very likely to be reintroduced next year, but Rep. Paul Renner, the House Speaker and Flagler County’s representative, would have to back it. He has not been an especially warm friend to green legislation.
“This would be a appropriate time to talk to both our our our speaker and our senator,” Palm Coast Mayor David Alfin said, referring to Renner and Sen. Travis Hutson, “because I know that Tallahassee is dealing with the issue. I do believe that the structure for the revenue sharing has to start from Tallahassee, and then we can massage it here locally.”
Though he might be more willing to back a bill purporting to generate revenue for infrastructure, the bill would have increased state revenue by only $37.1 million every year, and combined local revenue by $20.9 million every year, according to a legislative analysis. Flagler County’s share would have been in the tens of thousands of dollars, itself split between the county and its cities. It would not have been a substantial source of revenue.
Meanwhile, fuel taxes are levied on fuel consumption. The fewer miles cars travel, the less the revenue. The less gas cars consume, the less the revenue.
For every gallon of gas sold in Flagler, 34.25 cents is levied in state and local tax. Of that, just 6 cents is a local tax, and 73 percent of Flagler County’s share of gas tax money goes to Palm Coast.
The state establishes fuel and vehicle tax structures. But it does not control how a local government may generate revenue from utilities such as electricity. That’s where the utility tax or franchise fee come in. But those would be new taxes, even though their revenue would help defray the cost of maintaining palm Coast’s roads.
There may be other options, but not with the same kind of revenue potential. The city is considering adding a service charge at EV charging stations, and will likely do so at its own station at City Hall, currently a free service. On June 13 the chief sustainability and resiliency officer will make a presentation that will touch on that possibility. But the revenue would be more symbolic than substantial, absent a much vaster system of EV charging stations.
“Looking to the electric charging station may be an even broader approach to revenue because if we were to tax residents who drive electric vehicles, we would only capture our own folks,” Alfin said. “It would be good for those that are traversing through our area to catch them if they’re charging here as well.” He’s asked the city attorney to research surcharge possibilities. “Because I do know that there will be many more charging stations coming online.”
“But keep in mind a lot of people charge at home,” Danko said. In fact, most do, and by a wide margin, because the charging-station infrastructure beyond home is not readily built yet, and is not likely to mirror the path of gas stations: drivers of EVs can charge their car at work, at the mall, at restaurants, and of course at home, since charging stations may be built with less regulatory hassles than fossil-fuel stations.
“So I think we still need to account for the use on our roads,” Danko aid. “Because we need every penny we can get it this.”