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Building the nation’s first per-mile road charging system

The implementation team for Oregon’s Road Usage Charge Program is now seeking private-sector companies to build and manage services for Oregon’s mileage charge collection system. “Our vision is to create a reliable, easy-to-use, low-cost, enforceable, and publicly acceptable ‘open’ system that replaces the fuel tax,” said Jim Whitty, Manager of ODOT’s Office of Innovative Partnerships and Alternative Funding. Prospective account managers will submit proposals in July. Selected account managers will be under contract in fall 2014 to launch the program July 1, 2015.
What is the Road Usage Charge Program?
Oregon’s Senate Bill 810 was the first legislation in the U.S. to establish a road usage charge system for state transportation funding. It authorized ODOT to set up a mileage collection system for volunteer motorists, assess a charge of 1.5 cents per mile for up to 5,000 cars and light commercial vehicles and issue a gas tax refund to those participants. The volunteer program will not be another pilot project but rather the start of an alternate method of generating sustainable revenue to pay for Oregon highways. (View the results of ODOT’s 2012-13 Road Usage Charge Pilot Project here.)
Motorists will choose road usage charge services from contracted companies that provide market-driven options that are efficient and cost-effective. ODOT is accepting proposals from prospective companies now.
Vehicles are becoming much more fuel efficient, purchasing fewer gallons of gas and paying less in gas taxes that go toward maintaining and building roads and highways. That’s good news for the environment and reducing dependence on fossil fuels, but it reduces funds available to maintain Oregon roads. More information about declining revenues and transportation funding is available on the ODOT website.
Shouldn’t we just raise the gas tax?
Oregon was the first state to adopt a gas tax in 1919 and has raised it numerous times since. The tax is prudent and fair as long as vehicles get about the same gas mileage. From 1987 to 2007, fuel economy averaged 19-20 mpg. But since then, new vehicles have become 25 percent more efficient. That trend will continue as federal policy demands new vehicles achieve 54.5 mpg by 2025.
Raising the fuel tax may help revenues keep pace with infrastructure needs in the short term, but it would make the fuel tax even more unfair than it is now. New fuel-efficient vehicles tend to have a high price tag and more affluent people buy them. Lower income motorists are more likely to drive older, less efficient vehicles; thus, they pay a large amount of gas tax for the road system while those with highly fuel-efficient vehicles pay very little (or none at all). Yet, all light (passenger) vehicles consume the public infrastructure in the same amount.
As older vehicles phase out and the entire fleet of vehicles becomes highly fuel efficient, the gas tax becomes obsolete. Oregon’s Road Usage Charge Program is a fair and sustainable funding model that will ensure our roads are maintained safely for every motorist well into the future.
How will the system work?
Oregon’s new road usage charge system will automatically collect mileage data from vehicles. A mileage reporting device chosen by the motorist will interface with the vehicle and be paired with software to send mileage totals to an account manager. ODOT will contract with companies to maintain customer accounts, calculate charges and credits, and submit charges to the Oregon Treasury.