The transportation budget passed by the Ohio General Assembly and signed by Governor DeWine on April 3rd includes new road taxes on CNG (compressed natural gas) that will be phased in over the next five years. Users of CNG in Ohio have not previously been subject to fuel taxation. This was part of a larger $8.5 billion budget that included hikes on gasoline from 28.6 cents per gallon to 38.5 cents for gasoline and up to 47 cents per gallon on diesel.
Following a five-year phase-in, CNG will be taxed at a diesel gallon equivalent (DGE) rather than a gasoline gallon equivalent (GGE). The state’s rationale is that CNG tends to be used by heavy vehicles in place of diesel fuel. However, this means over time road taxes on CNG will rise to 47 cents per DGE.
“Clean Fuels Ohio is supportive of all road users paying their fair share and understand and support needs to raise road taxes across the board,” commented Jason Phillips, Policy Director for Clean Fuels Ohio. “We are extremely appreciative of the five-year phase-in on CNG, which will allow fleets and businesses to plan ahead for the new tax and will allow those considering entering the CNG market to factor the tax into their return on investment.”
The legislature made it a priority that all vehicles need to pay into the road fund. In testimony, Ohio Department of Transportation Director Jack Marchbanks stated that Ohio faces a significant shortfall in terms of funding for road and bridge maintenance. The revenue shortfall puts a significant number of road projects on hold and safety becomes a factor when repairs are not done. Ohio’s $0.28 per gallon tax has not been increased since 2005.
Many fleets questioned why road taxes on CNG would be at the diesel rate and not the gasoline rate.
“The industry as a whole has a concern regarding taxing CNG at the diesel rate instead of the gasoline rate,” Phillips said. “In Ohio, CNG is typically sold in gas gallon equivalents (GGE). I think it would have made more sense to levy the tax on that basis since we are still looking at a small but growing market that’s important to Ohio’s economy based on our plentiful supplies of conventional and renewable natural gas. Unfortunately, the tax on CNG isn’t going to generate enough revenue to come close to plugging that budget hole.”
Also included in the transportation budget was an amendment to allow trucks that operate on CNG to be able to carry an additional 2000 pounds to offset the weight of the tanks which would put the state in compliance with federal law. This has been a long-standing priority of Clean Fuels Ohio and industry partners.
“We applaud the Ohio General Assembly and Governor for addressing what has been a significant market barrier to operation of CNG-powered trucks in Ohio,” Phillips said.