You asked (1) what recent legislation has been enacted to encourage the purchase and use of hybrid vehicles, (2) if the state provides tax credits or other incentives to people who buy hybrid vehicles, (3) if the state provides aid to towns that convert their municipal fleets to hybrid or “green” vehicles, and (4) for the average cost of a hybrid vehicle.

SUMMARY

The legislature has exempted hybrid passenger cars from the sales tax since 2004, and will allow towns to exempt certain hybrid vehicles from the property tax starting January 1, 2008. Other legislation adopted this year seeks to expand the number of hybrid vehicles in the state fleet. The state does not help towns convert their vehicles to hybrid or “green” vehicles.

It is difficult to provide an average hybrid vehicle price because, as with other cars, the price of a particular vehicle depends on its type (i. e. , whether it is a compact car, luxury sedan, or an SUV). A sampling of 2006 models finds hybrid vehicles cost between $ 4,000 and $ 9,000 more than their conventional counterparts. According to the Department of Motor Vehicles, 11,986 of the 2,986,435 vehicles registered in Connecticut as of August 6, 2007 were hybrids. Most of the hybrids were registered as passenger vehicles, of which there were 2,177,209 registered as of that date.

RECENT LEGISLATION AFFECTING HYBRID VEHICLES

Sales Tax Exemption

PA 04-231, codified as CGS § 12-412 (115), exempted the purchase of passenger cars using hybrid technology from the states sales tax from October 1, 2004 until October 1, 2008, provided they achieved a U. S. Environmental Protection Agency estimated highway gasoline mileage rating of at least 40 miles per gallon (mpg). PA 06-161 replaced the phrase “passenger car utilizing hybrid technology” with the phrase “hybrid passenger car” and specifically defined hybrid passenger car for the purposes of the sales tax exemption.

PA 07-242 creates a sales tax exemption from January 1, 2008 until July 1, 2010, for all passenger cars with city or highway fuel efficiencies of at least 40 mpg (PA 07-242, § 20). This provision would apply to hybrid cars that attain 40 mpg on the highway, thereby extending the existing sales tax exemption to such cars purchased between October 1, 2008 and July 1, 2010. PA 07-4 (§ 72), June Special Session, extends the sales tax exemption to all passenger motor vehicles (not just cars) attaining 40 mpg.

Municipal Property Tax Exemption

PA 07-242 allows municipalities, starting January 1, 2008, to provide a property tax exemption for hybrid and other passenger cars with fuel efficiencies of at least 40 mpg (PA 07-242, § 19). According to the Office of Fiscal Analysis, municipalities electing to exempt these vehicles from the property tax would experience a loss to their net grand list and would likely necessitate an increase in a municipality's mill rate or a modification to their budget to offset the loss of taxable property (Fiscal Note for HB 7432, as amended by House “A” (LCO 8629)).

State Motor Vehicle Fleet

PA 07-4, June Special Session, modifies fuel efficiency requirements for state fleet vehicles. Under federal law, at least 75% of vehicles bought by the state (with certain exceptions) must be alternative fuel (these include electric vehicles and vehicles capable of operating on ethanol, among others, but not gasoline-electric hybrids).

The act requires, by August 1, 2007, the Department of Environmental Protection (DEP) commissioner, in consultation with the Administrative Services (DAS) commissioner, to try to determine if (1) the state qualifies for a waiver from the federal alternative fuel acquisition requirements, and (2) it is in the state's best interest to apply for such a waiver. The DAS commissioner must immediately apply for a waiver if the DEP commissioner, in good faith, finds the state qualifies and that it is in the state's best interest to apply.

It requires, starting January 1, 2008, that:

1. at least half the cars the state purchases or leases be alternative-fueled, hybrid electric or plug-in electric vehicles;

2. all alternative fueled vehicles purchased or leased be certified to the California Air Resources Board (CARB) Low Emission Vehicle (LEV) II Ultra Low Emission Vehicle standard; and

3. all gasoline-powered light duty and hybrid vehicles purchased or leased must be certified, at least to the CARB's LEV II Ultra Low Emission Vehicle standard.

It requires that all state cars and light duty trucks be alternative-fueled, hybrid electric or plug in electric vehicles starting July 1, 2012. If the DAS commissioner determines that such vehicles are not available for purchase or lease, he must include an explanation of that determination in the annual reports the bill requires him to file with the Government Administration and Elections, Environment, and Energy and Technology committees (PA 07-4, June Special Session, §§ 34 and 35).

HYBRID COSTS

It is difficult to calculate the average cost of a hybrid car because of the rapidly changing number of makes and models, and the range of prices among them. However, we are able to compare hybrid models to similar conventional gas models.

Table 1, below lists the prices of hybrids, their all-gas counterparts, and the price difference, rounded to the nearest $ 100.

Table 1: Comparison of Hybrid and Conventional Vehicle Costs

Source: Consumer Reports (April 2006)

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