Why we must transition to mileage-based user fees
Imagine a day when the average new car gets 50 miles per gallon—about the same as a Prius. While a high-fuel efficiency future would save consumers billions on gas, improve America’s energy security, and reduce air pollution and greenhouse gas emissions, it poses one notable challenge: providing adequate funding for the transportation system. Both Oregon and the federal government rely heavily on the gas tax to pay for roads, and the gas tax will simply not raise enough money to maintain the transportation system, much less improve it, in a world where vehicles get 50 miles per gallon.
Yet this future is not far off. New federal fuel efficiency standards that were recently put in place require that new vehicles will get an average of nearly 50 miles per gallon by 2025. We know that if we don’t find a new transportation funding source soon, we face the prospects of falling revenue that won’t begin to cover the needs of the transportation system.
Some have suggested that we should simply increase the gas tax continually to make up for the revenue lost due to fuel efficiency. But in a time of high gas prices, raising the gas tax repeatedly to cover a shrinking revenue base is just not realistic. Even if it were, this approach raises issues of basic fairness. Since most lower-income families can’t afford new vehicles, they rely on buying used vehicles in the secondary market. With the well-off buying highly-efficient new vehicles and lower-income people buying lower-efficiency used vehicles, the burden of escalating gas taxes would fall primarily on those who can afford it the least.
As with so many other areas, Oregon is leading the way in finding a new way to pay for roads. The Road User Fee Task Force (RUFTF), on which I serve, was established by the Legislature in 2001 to develop a new revenue collection system that ensures revenue sufficient to maintain and improve Oregon’s roads. After looking at dozens of ideas, RUFTF determined that a mileage-based user charge offers the greatest potential for replacing the gas tax. RUFTF wasn’t alone in coming to this conclusion: two blue ribbon commissions chartered by Congress to figure out the future of transportation finance came to the same conclusion, as have a myriad of other panels, think tanks, and studies.
A few years back ODOT tested a collection system for mileage-based charges that proved we could implement a mileage-based user charge. Based on experience from this test and direction from the 2011 Legislature, RUFTF has developed a plan for a new pilot based on an “open system” concept that will offer people the ability to choose from various options for counting, reporting, and paying for the miles they have driven.
Since many members of the public expressed privacy concerns about having to use a GPS-based system, the new plan will provide motorists options and not require the use of GPS. Some could use a smart phone app, while others may choose a flat annual fee or an odometer reporter used in the insurance industry that contains no GPS technology. Still others may choose a GPS-based navigation system that can tell when they’re not on public roads so they don’t have to pay Oregon taxes for those miles. The open system will be able to evolve along with changes in technology and the marketplace, and it will rely on the private sector to provide technology, collect data, and process payments.
Some have objected that a mileage-based charge would discourage people from buying more fuel efficient cars because they would have to pay more than the small amount of gas tax they’re paying now. But in a time of high gas prices, when fuel taxes are just a small part of the cost of a gallon of gas, that won’t be a major effect: driving a mile in a Prius will still be much cheaper than driving a mile in a Hummer, even with mileage charge that will probably be somewhere around a penny and a half to match the current gas tax. If providing incentives for fuel efficiency is a concern, a mileage-based user charge is flexible enough that rates could be adjusted to account for differences in emissions. And again, there’s basic fairness to consider: all users of the roads, whether they drive an all-electric LEAF or a pickup truck, need to contribute their fair share for using the roads.
There are still many details to work out, but it has become increasingly clear to me that these are not insurmountable details. It’s also become increasingly clear that we must make the transition to a mileage-based user charge—and that we must start that process now if we are to avoid a future where continually falling revenue leads to deteriorating roads that harm our economic competitiveness.