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Vehicle Climate Fee

Vehicle Climate Fee

Proposed Vehicle Climate Fee

Background

Our community cares about climate, which is why it was the first place in the nation where residents taxed themselves to reduce greenhouse gas (GHG) emissions, with the Climate Action Plan (CAP) tax in 2007. However, the CAP Tax only applies to electricity and there is currently no climate tax or fee on natural gas or petroleum consumption.
 
Transportation (vehicles driving around Boulder) is currently responsible for 28% of the city’s total greenhouse gas (GHG) emissions. As the electricity supply becomes cleaner and cleaner, transportation will become the largest contributor to Boulder’s emissions. In 2030, transportation is predicted to make up over 50% of total emissions.

These tailpipe emissions are even more harmful for Boulder residents because they are emitted where people live, work and play. Recent ground-breaking, scientifically-proven reports show that there is still a narrow window to prevent catastrophic climate change. Boulder must reduce its transportation emissions by about 50% by 2030 to do this. 

While the CAP Tax has been successful and has avoided ~250,000-750,000 cumulative metrics tons (MT) of GHG emissions since 2007 (see our CAP Tax page for more information, including progress), the rates were established nine years before the city adopted its current climate commitment goals. The revenue is insufficient to achieve these ambitious targets. Additional funding raised through the vehicle fee will help the city support additional climate action.
 
Staff has evaluated a number of revenue options. Based on that evaluation, on Oct. 23, 2018, council directed staff to pursue the development of a proposed Vehicle Climate Fee. Staff will continue analysis on this option, including gathering community feedback on the fee structure and uses. There will be study session with council in May 2019 to discuss the fee rate, exemptions, etc. to inform what staff brings back to council in late 2019 for a possible vote. Please refer to the Oct, 23, 2018 council memo pdf for more information, including the evaluation of options.
 
 

Goals of the Proposed Vehicle Climate Fee

  • Encourage sustainable behavior and purchasing choices and discourage use of petroleum
  • Tax all major sources of carbon emissions (electricity, natural gas, vehicles) equitably
  • Apply climate taxes or fees equitably across sectors (residential, commerical etc.), and ensure low-income residents are not unfairly burdened
  • Provide a long-term revenue stream to mitigate the climate impacts from on-road transportation
  • Provide funding for mitigation at the local level to supplement state, national and international efforts

 

How the Proposed Vehicle Climate Fee Would Work

The city is proposing adding a fee to cover the costs necessary to reduce transportation-related GHG emissions and encourage widespread adoption of electric vehicles (EVs) and alternate modes of mobility. This fee would be collected via the annual vehicle registration process for all Class B and C vehicles registered within the City of Boulder (other than trailers and mass transit buses, which are exempt).  This Boulder-specific fee would be reflected as a separate line item in the total registration fee annually. The Boulder-specific amount would be remitted to the city at the same time the state-specific amount is remitted to the state by the county.

 

Revenue and Uses

The city will set the fee at a rate that balances the urgency of reducing our emissions with the economic burden to residents.  Staff is currently planning to present city council with options for an average fee of $15/vehicle-year and one for $40/vehicle-year. The exact amount paid by vehicle owners would be based on the MPG of the vehicle. Based on early estimates, the vehicle climate fee could collect somewhere between one and three million dollars per year. 

Possible Annual Vehicle Climate Fees Based on MPG

   2019 Toyota Camry Hybrid (49 MPG) 

 2012 Nissan Rogue AWD (23 MPG) 

 2010 Ford F150 FWD (16 MPG) 
$15 average fee    $5    $14    $24

$40 average fee

   $13    $37    $61

 

There are a variety of programs that could be funded by the city to help reduce vehicle emissions:

     
     

Widespread adoption of electric vehicles (EVs)
 
Multi-modal transportation

Reducing emissions from commercial vehicles
 

 

  • Accessible and affordable charging stations;
  • Electrification of buses and ride share fleets; and
  • Rebates and bulk purchase programs for EVs.
  • Bike and pedestraian saftey programs;
  • Rebates and bulk purchasing programs for electric bikes;
  • Encouraging employer commute programs;
  • Restoring transit service levels; and
  • Rebates for transit passes

 

  • Subsidizing shared facilitates for alternative fueling and maintenance;
  • Rebates for emission reduction technologies (e.g. anti-idling devices).

 

There will be opportunities as part of the engagment process for the community to participate in helping the city to decide how some of the revenue should be spent.

 

What's coming up and how to get involved 

Share your perspectives, ideas, and questions on BeHeardBoulder.org/vehicle-climate-fee


 

 

Preferred Fee Structure

For Class B and C vehicles : The fee amount would be determined by the miles per gallon (MPG) of the vehicle – the more efficient vehicles would pay a lower fee.

Electric vehicles would either be exempt or pay a flat fee lower than the most efficient fossil fuel (e.g. gasoline- or diesel-powered) vehicle

Motorcycles  would be assigned a percentage rate based on average motorcycle MPG, and therefore pay a much lower fee than a standard vehicle.

Large Class B and C vehicles without a rated mpg  would be assigned a flat fee based on the heaviest vehicle that does have a rated mpg.

Class A, D, and F, and all trailers and buses (regardless of class), would be exempt.  This includes heavy trucks (registered at the state level) and special equipment.

Impact to Commercial Fleets

The city recognizes that commercial fleets will experience larger impacts from these fees than residential vehicles, both because of the number of vehicles in a fleet and because of the value of these vehicle. AllClass B and C vehicles (except trailers) will be subject to this fee, including those owned by the City of Boulder government, the University of Colorado Boulder, Western Disposal and Via Mobility.

Staff will propose a lag time (6 months to one year for implementation) so commercial fleets can budget for this expense. For context, for the city fleet of ~500 vehicles, the total annual fee would be ~$7,000-20,000 depending on the results of the study.

The study will determine the fee, but we anticipate the following:

  • Class B and C vehicles will be based on the MPG, age and original MSRP of the vehicle, but the average fee will be ~$10-50 per vehicle per year.
  • Large Class B and C vehicles without a rated mpg would be assigned a flat fee based on the heaviest vehicle that does have a rated mpg (~$50-100 per vehicle per year).

The revenue collected from this fee will be used to help commercial vehicles reduce their emissions – possible ideas include renewable diesel pilots, idling reduction technologies, and a share fueling and/or maintenance hub for electric and alternative fuel vehicles.

City staff will be scheduling a meeting in early February 2019 with impacted commercial fleets to discuss concerns and hear ideas for how to use the revenues most effectively.

How is the city addressing equity concerns with this fee? 

Staff is investigating several options to address equity including:

  •  tying the amount of the fee to the value of the car
  • rebates for people with low-income (using the same income threshold as the food tax rebate);
  • rebates for service workers who rely on specific vehicles; and
  • rebates for residents whocan prove a very low mileage per year.

Staff is partnering with three community groups that represent populations with low-income and underrepresented people to help ensure equity concerns are addressed. These groups will help determine an equitable fee and rebate structure and gather feedback from a diverse group of community members about how the funds can be best used to benefit underrepresented populations. Staff will also be piloting a Participatory Budgeting process to allow community members to determine how a portion of the revenue from the fee will be used.  

Aren’t electric vehicles already charged a $50 fee to fund charging stations? Why does the city need to collect more? 

A few years ago, the state added a $50 fee for electric vehicles, which is collected annually at the time of registration. The policy reason pdf for these fees is that plug-in electric vehicles aren’t buying gas, so they also aren’t paying the gas tax. And because the tax charged for gasoline helps fund road and bridge construction and maintenance, people with plug-in electric vehicles aren’t paying their fair share.

In Colorado, $30 of the fee goes to the Highway Users Tax Fund pdf to fund this critical infrastructure. The other $20 goes to the Electric Vehicle Grant Fund pdf, which pays for things like charging stations. While the Grant Fund intends to support a network of publicly available charging stations, the funds collected are insufficient to support what is ultimately needed for Boulder’s transportation need. Most of the funds are used for installing charging stations along major state transit corridors. Additionally, much like EV owners paying their fair share for road maintenance, Boulder’s vehicle fee is intended to have non-EV owners pay their fair share for reducing the GHG emissions from our transportation fleet.