California launching pilot program to charge drivers for miles driven

California is the nation’s biggest EV market by a wide margin, and the relatively high percentage of battery-powered cars is digging a hole in the state’s budget because it relies on revenue from its gasoline tax to fund road maintenance. Lawmakers want to replace the gasoline tax with a new mileage-based tax to offset the loss, and they plan to begin testing this system by launching a pilot program in August 2024.

Lauren Prehoda, a spokesperson for Caltrans, told news outlet ABC7 that maintaining California’s road network costs approximately $8.5 billion annually. “The vast majority” of this sum comes from the taxes that the state collects every time someone fills up their car’s tank. Put another way, California loses money when someone replaces a gasoline-powered car with an EV. Hybrids are eroding the budget as well. State officials estimate that there were about 1.1 million electric cars and 1.3 million hybrids on California roads in 2022.

“On average, Californians pay about $300 a year in state gas taxes. EVs have a $100 [annual] registration fee. That’s a $200-million-a-year-loss,” Prehoda said. Note that California plans to ban the sale of gasoline-powered cars by 2035, so its gas tax revenues will fall to zero.

Caltrans is proposing a solution called the California Road Charge which would record the number of miles driven annually and tax motorists accordingly. The rate hasn’t been set because the Road Charge remains at the prototype stage; it’s not a law yet. However, a cost simulator on the program’s website lists three options: $.02, $.03, and $.04 per mile. It also argues that this system could allow some motorists to save money. For example, if you drive a 2023 Honda Pilot 1,000 miles per month your monthly Road Charge bill would check in at $20, $30, or $40 depending on which of the three hypothetical rates apply to you. The site claims the same driver currently pays $27.57 in monthly fuel taxes. It’s EV drivers that will end up spending more: they’d pay the same monthly Road Charge but they currently don’t pay a gas tax.

In theory, drivers would be able to choose how the state tracks their mileage. They could hook up an electronic device to their car, use the car’s built-in tracking system or send Caltrans a picture of the odometer. “Everyone has different levels of comfort when we’re managing our data between efficiency and privacy, and that’s why it’s really important to have options from low tech to high tech,” Prehoda told ABC7.

Drivers who are interested in participating in the pilot program can sign up on the California Road Charge website. State officials will select an unspecified number of applicants in July 2024. These motorists will be asked to make monthly Road Charge payments between August 2024 and January 2025, and they’ll need to fill out two surveys about their experience. The state will refund their gasoline tax or their EV registration fee at the end of the program. To make the project more enticing, Caltrans will give participants up to $400 in gift cards.

The data gathered during the program will help lawmakers determine whether the Road Charge should replace the state’s gasoline tax.