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What's next for mileage-based user fees?
05/24/2012
For nearly a century the gas tax has been the main source of funding for Oregon’s roads. But with federal fuel efficiency standards increasing significantly over the next 13 years and growing numbers of alternative fuel vehicles on the road, in the long term the gas tax is not expected to be a sustainable funding source.

Recognizing these trends, more than a decade ago the Oregon Legislature created the Road User Fee Task Force (RUFTF) to develop an alternative road funding system. After reviewing 28 different road funding options, the RUFTF recommended a fee based on vehicle miles traveled as the most viable alternative. In 2006-2007, ODOT ran a pilot program to explore how such a system might work, which proved the viability of the system.

This pilot raised a number of issues.

The public expressed concern about privacy because the system used a GPS-based device, and many worried about complying with a new system as well as the potential for a large government bureaucracy to manage the new system. Experts noted the closed nature of the pay-at-the-pump model would hamper the new system because the technological aspect would not evolve as these systems do naturally.

ODOT took heed of the critiques and recommended changes to RUFTF. The new model that RUFTF has endorsed has no requirement for a GPS device for any car. Rather, participating motorists will choose the method they want for reporting miles driven and for paying their bill from among several options. Those who choose an electronic means will have options from among technologies they already use for other purposes. Some may choose reporting directly from their odometer, and others may use their own navigation unit or a factory-installed system like On Star. ODOT is developing a non-technology option as well that could involve buying miles ahead of use or paying a flat annual tax to avoid the reporting system altogether.

This new system will be “open” to ensure it can evolve along with changes in the marketplace, and ODOT will outsource most of the work, so the private sector will provide technologies, collect data and process tax payments. The role of ODOT would largely be reduced to auditing and enforcement.

The 2011 Legislative Assembly passed HB 2138 directing RUFTF to consider additional factors when proposing pilot programs to ODOT. Last fall, RUFTF adopted new policies directing ODOT to run a new three month pilot program beginning in September 2012 to demonstrate the rudiments of the new open system.

ODOT intends to have up to 50 volunteers for the Road User Charge Pilot Program. Volunteers will actually pay a charge for miles driven during the pilot at a rate of 1.56 cents per mile, a rate equivalent to what the average light vehicle driver pays in fuel taxes. Nevada and Washington will join Oregon’s pilot with their own volunteer participants.

Volunteers will be able to choose from a number of on-board units to have installed in their vehicle. One version will have no GPS technology and reports all miles driven. A second option will involve a device that will have the ability to wirelessly connect to an Android smart phone so the motorist can exclude miles driven out of state. Those with an Android smart phone will download an app and synchronize it to the on-board unit. A third option will involve a GPS unit that can perform other functions similar to a smart phone or in-vehicle systems. Motorists will also choose from two tax processors/account management providers.

Allowing volunteers choices will demonstrate the rudiments of a new mileage charging system that is built on an open marketplace.

For more information, visit the Road User Charge Pilot Program website.