As Washington Drags Its Feet, States Take the Lead on Mileage Fees

Oregon, true to its history as the first state to implement a gas tax, was also the first state to consider getting rid of it — in exchange for adopting a mileage-based system for highway funding. And the Beaver state isn’t alone: A number of other states have done studies and introduced legislation to charge drivers for the distance they travel instead of the gasoline they consume.

A new generation of fuel-efficient automobiles will compromise the gas tax as a method to fund infrastructure. Enter the VMT fee? Photo: ##http://www.ecobusinesslinks.com/fuel_efficient_vehicles.htm##Eco-Business Links##

To date, none of the states have passed legislation to enact a vehicle miles traveled (VMT) fee. But with an increase in the federal gas tax seemingly impossible in an election year and federal funding increasingly uncertain, states may well be left with little alternative but to reconsider an idea many experts agree makes sense.

With Americans driving less and opting for more fuel-efficient cars, revenues from state gas taxes have been on the decline. Data from the Federal Highway Administration show that between 2007 and 2008, 30 of 50 states experienced declines in their gas tax receipts, dropping by an average of two percent. If electric cars one day replace America’s internal combustion fleet entirely, revenues based on gas taxes could dry up altogether.

For many states, VMT fees may be just what the doctor ordered. While the prospect of a mileage-based system has led some to argue that the GPS technology needed to make it work optimally is an invasion of privacy, there is a growing consensus that it is a much more sustainable option for transportation funding. Earlier this year, the Congressional Budget Office issued a report stating that the VMT fee system is a feasible transportation funding option and would result in a more efficient use of the highway system. This follows several earlier reports, including from two federal transportation financing commissions, recommending that the federal gas tax be gradually replaced with VMT fees [PDF].

In the past decade, about two dozen states have examined the feasibility of such a system. Here are some of the more noteworthy initiatives:

Oregon: Having learned valuable lessons from its original VMT pilot program in 2007, Oregon transportation officials redesigned the ways that vehicle mileage is recorded and fees are collected in a Phase II pilot program this year. Instead of a pay-at-the-pump concept, the state’s Road User Fee Task Force proposed legislation (HB 2328) based on an “open technology” platform applied only to drivers of electric and plug-in hybrid vehicles.

The original pilot program exposed design shortcomings and significant public opposition to the mandatory use of GPS technology to track vehicle miles traveled, so the new proposal would give Oregon’s DOT the flexibility to establish multiple methods for reporting VMT. An “opt-in” feature would allow drivers to choose the method by which they report their mileage and pay their fees. The revised concept also envisions a larger role for the private sector in the data collection and management of accounts.

Colorado: In 2007, a blue-ribbon commission exploring alternatives to the gas tax recommended that a pilot program be established to test the feasibility of implementing VMT fees, and that pilot is now underway. Some legislators are also considering introducing bills to require that only electric cars pay the fee, at least in the beginning. A final report is due in May 2012.

Minnesota: In May of this year, Minnesota began a pilot program in which a group of 500 drivers from two counties are asked to test VMT collection technology. The participants will use smart phones and GPS technology to submit information that MNDOT will use to evaluate whether travel data is being recorded and conveyed accurately and reliably. The test will also examine whether other applications — such as real-time traffic alerts on construction zones, crashes, congestion and road hazards — are effective in communicating safety messages to motorists. Three different groups of volunteers will test the devices for six months each.

Nevada: Last year, Nevada also completed a feasibility study, which noted that it could take a decade or more to fully phase in a VMT fee program and that public acceptance will be critical to its success. Nevada hopes to eventually replace the gas tax as a funding source for surface transportation.

Idaho: A transportation task force, appointed by the governor to address a growing gap between the state’s transportation system needs and available revenues, proposed a list of options including mileage-based user fees. The formula used to allocate funds to local jurisdictions would be adjusted consistent with user-pay principles.

Texas: Research on VMT fees has been ongoing in Texas since 2007. This year, state legislators introduced a bill (HB 1669) that would have developed a pilot program in response to a state-authorized Texas Transportation Institute study [PDF] calling for a mileage-based system. Although the bill failed to make it out of the House Transportation Committee, there is a strong possibility that it will come up again in the future.

Hawaii: A bill, SB 819, was introduced this year but failed to pass. It would have established a pilot program in the state and authorized refunds of motor vehicle fuel taxes paid to participants.

Massachusetts: A bill similar to Hawaii’s (HB 2660) is pending, which would create a pilot program to study the challenges of adopting a VMT fee.

Multi-state: Perhaps the most intriguing of all the state trials is the federally-funded, multi-state VMT field test by the University of Iowa. Six sites were chosen: Austin, Texas; Baltimore, Maryland; Boise, Idaho; Eastern Iowa; and the Research Triangle, North Carolina. While the final report is currently being reviewed by the U.S. Department of Transportation and its findings have not yet been made public, it’s the most geographically broad test to date and could be the most significant in showing whether the system would work on a nationwide scale.

  • A VMT that is not based on the weight of the vehicle involved is grossly unfair.  A vehicle does damage to a road in proportion to the fourth power of its weight (divided by the number of axles.)  Right now a gas tax somewhat captures at least a bit of this because in general the heavier the car the worse the gas mileage, so the more tax per mile heavy cars/trucks generally pay. (Not nearly at the appropriate ratio, however.)  If all cars and trucks, no matter how heavy and how much damage they do to the road, pay the same amount per mile, we are subsidizing heavy vehicles at the expense of lighter ones and provide no incentive for people to make choices based on true economics.

    Also, a fair VMT would allocate the proceeds of tax collected for driving on a given road/highway/street to whichever entity is responsible for repairing/maintaining said surface.  For instance, the bulk of my driving is on city streets. Those are the streets my car does damage to, and those are the streets that need the proceeds from my VMT to pay for repair for that damage. The same should hold true for county roads and federal highways. If some low use roads do not generate enough VMT to pay for their maintenance the VMT could be adjusted to have variable rates for different kinds of roads. Or we could seriously look at whether some very low use roads should be returned to low-maintenance gravel. Otherwise, we are having people who live in more energy-efficient, high density areas pay to subsidize people in less energy-efficient, low density areas, and again we mask the true economics of the situation. This is how we end up with sprawl, fringe suburbs, and long commutes rather than walkable communities and transit-oriented development.

  • Dan Allison

    A well thought out comment. Thank you.

  • Anonymous

    @KarenLynnAllen:disqus I agree that it should (also) be about weight. But you get into trouble with that because of the truckers and their unions who would fight that tooth and nail. For the sake or argument, a tractor-trailer weighs 40,000 lbs (I’m being conservative) versus a personal auto at 4,000 lbs. That’s 10 times more. That means a single tractor-trailer causes as much damage to a road as about 10^4 = 10,000 cars. The largest component of wear and tear on roads like freeways is therefore due to tractor-trailers. In fact, on such roads, the damage caused by cars is in fact considered negligible. But I fully agree that the truckers should be charged accordingly because it’s not fair that the damage they cause is externalized. But we all need to realize that we will *all* pay for this with the resulting increased costs of shipping (and it should also make us realize that we should be shipping cross-country with rail and only using tractor-trailers for local delivery).

    I think we need a system that calculates the total fee based on *both* weight and miles traveled. I don’t think it needs to be done in such a way to invade privacy that you have a GPS device constantly monitoring exactly what roads you are on and for how long a distance. Instead, each year, you take your car to an official shop that is certified to officially read your mileage (like a smog check) and that number is reported to the federal government and you pay taxes on that multiplied by some factor based on your weight. Then, the states and cities decide how much money they get and how to divy it up over different roads based simply on road usage statistics which they already do without having to use GPS and invade people’s privacy.

  • Realist

    I think it should be a flat VMT tax.  Who do you think puts clothing on your back, food on your table and furniture in your home??  all delivered by a truck, thank you very much.  I’m sick of people always bashing trucks.  Sure, they can add extra impacts to roads, but unless Americans are willing to step up and pay more for food, clothing and furniture, the they will have to deal with less than perfect foads. 

  • Anonymous

    @16d2c68e584624cfc5d796e453d60e38:disqus As I said in my comments below: 1) we over-use trucks (ie, we shouldn’t be using them to ship cross-country and should be using rail instead) and certainly don’t need them to get goods across the country, just for local delivery, 2) yes, we all will have to pay more to have stuff shipped. Why should it be any other way? How is it fair to externalize that cost of the damage caused to our roads by trucks? You may not want to pay for it, but that’s too bad. It really is damaging our roads and hence costing billions to sustain shipping stuff all across the country, and so you have to pay for that. Externalizing that cost distorts reality and hence causes poor decisions to made (for example, using trucks to ship across country, or using personal autos driven mostly solo to get around on a day-to-day basis for work and errands). One of the greatest dangers of our culture is externalized costs; *never* does anyone make the right decision when their viewpoint is skewed by only internalizing certain costs. It’s time for Americans to step up, as you say, and realize the true costs of our unsustainable culture of consumption.

  • Alan Tobey

    To make this truly balanced and beneficial — using the same GPS technology — we just need an offsetting credit for BMT, Bicycle Miles Traveled.  Where do I sign up?

  • Peter Mye

    It is important to note that Oregon has a wight mile tax for heavy vehicles because of their exponentially greater impact on roads and consequently road maintenance costs.  It would be great to see something like this implemented at the state level here in California.

  • If trucks were charged the full cost of their damage to our expensive roads, we would see a very quick change back to rail freight which is a far more energy efficient mode of shipping (and requires far less maintenance costs.) It is only because we provide free and highly subsidized roads (and subsidized fuel via oil, corn, and ethanol subsidies) that trucking is so cost-effective.

    Again, subsidies mask true economics. For instance, as it stands, the people who don’t consume lots of heavy bottled/canned beverages subsidize those who do. (Personally, if I have to subsidize anything, I would rather subsidize something with nutrition such as milk rather than soda pop or beer. Your mileage may vary.) It makes people who shop at thrift stores subsidize people who shop at big box stores. And it makes those frugal souls who don’t shop much at all subsidize everyone else’s consumption, no matter how frivolous and unnecessary the goods. Making roads free subsidizes everything without discrimination, makes goods cheaper than they truly are, and we are all forced to pay for it through greater taxes, whatever our consumption choices. (Or worse, we don’t pay for it at all and expect our children and grandchildren to pay for it.)

    jd_X, remember the weight needs to be divided by the number of axles, so the trucking situation is a little better than you’ve written. (An 18 wheeler would have 9 axles, no?) However, as Peak Oil sets in, I think trucking will go away whether truckers like it or not.  The real question is how much we will waste in the meantime throwing good money after bad on subsidies and malinvestment that we clearly know harm us, put us in debt, and are flatly unsustainable. I completely agree that putting a GPS unit in every car would be very invasive and expensive, and on the whole I don’t recommend it. But if they are going to do it, then they might as well keep track of VMT collected per road and pay out accordingly. 

    In the end, given how few electric cars are presently on the road and the fact that we all benefit environmentally, health-wise, and economically the less gasoline burned, now is not really the time for a VMT anyway. The easiest, simplest, cheapest way of generating funds for our roads is to raise the gas tax 3 cents each month for the next 60 months and be glad that this encourages better fuel mileage cars for the time being. (Perhaps switch over to a VMT when electric cars hit 20% of the current fleet.) I think the fixation on changing from a gasoline tax to VMT lies mostly in the strange belief that Americans will tolerate a VMT better than higher gasoline taxes. It seems sketchy to me, but, heck, maybe they’ve done market research and polling to assure themselves this is the case.

    Bicycle Miles Traveled credits!  Actually, it would be great if entire communities got awarded $ or a financial bonus of some sort for bicycle miles traveled in their region. Then car drivers would perceive an immediate financial benefit to sharing the road.

  • Anonymous

    Why not just do a state gas tax?  Heavier vehicles burn more fuel so will pay more per mile.  No administrative or privacy issues.  I don’t know why this needs to be overcomplicated with mileage monitoring, vehicle weight, etc… just raise the damn gas taxes!

  • Anonymous

    I completely agree with dch99.  Gas taxes are currently very low compared to the externalized costs of driving ( reference ). The incompetence of this administration has caused me to lose all faith in the federal government to take any positive action for either transportation or the environment.

  • Whoa whoa whoa…
    “While the prospect of a mileage-based system has led some to argue that
    the GPS technology needed to make it work optimally is an invasion of
    privacy,”

    Just gloss over that why don’t you?!?? This is NOT a minor concern.

    I will never support all cars basically being required to have tracking devices.

  • Reluctantpopstar

    How about yearly vehicle inspections like they have in New Jersey and some other states?  They could just write down the mileage and calculate the fee based on that.  Done.  (Yes, some people could tamper with the odometers, but that is already illegal and there are ways to figure out if it was tampered with…)

  • Anonymous

    @djconnel:disqus I agree with you, except the part about blaming the federal government. We citizens are the ones who you should be frustrated with. The politicians could easily be voted out by us citizens if we wanted to, but the reality is, most people clearly (regardless of what they say) are happy with them staying in power as their voting records shows. I wish it was easy as blaming the federal government, but the problem is much deeper, in that we have an entire country and culture which has externalized most of the costs of its consumption. To change that will require big changes in the way we live, and most people are simply afraid of that (even though it will make our lives much better in the long term).

  • Milan

    The Driver’s Privacy Protection Act of 1994 should be cited first so that uninformed opponents to VMT don’t start with baseless privacy concerns. Also, most states have similar statutes that conform to the DPPA. That said, when properly administered, VMT does not infringe on a motorist’s Fourth Amendment Rights.

    If any advocate of VMT is unable to hold that line he/she should not be part of oublic debate. Likewise, any opponent to VMT who states the gps technology is an invasion of privacy should be required to articulate, specifically, how Fourth Amendment infringement or invasion of privacy occurs. Chances are, they won’t be able to if they stay focused on designed applications of VMT.

  • Rw Rynerson

    I worked at Oregon DOT when the issues cited here first came up as a result of the 1973-74 Energy Crisis.  At the time, methods of collecting data were much more primitive, as would have been any safeguards.  We went through agony in trying to cut our operating and capital costs in response to the dip in gas tax revenues.  Every cut was opposed by leading community figures.  In the process we discovered things like free snow-plowing for ski resorts that had been done for years by ODOT plows.  Even that was defended as rational by the recipients of this subsidy.  And, of course, the trucking industry — really the heavy trucking industry that competes with rail and barge lines — kept up a drumbeat about how user cost responsibility was some kind of socialism.  That ranged from personal attacks on ODOT economists to fancy dinners for legislators at the Riverside, Salem’s best dining.

    It does take about a generation for radical common sense to catch on.  Now, almost four decades have passed since we learned how unstable gas tax revenue can be.  When it was instituted in 1919, editorialists like my grandfather saw it as a tax on the handful of  auto hobbyists, building routes like the Columbia Gorge Scenic Highway (old US30).  It was never conceived as a critical function of the overall economy.  

  • Anonymous

    It’s amazing that none of the “transportation funding” discussion dares mention that global petroleum extraction has permanently peaked. Perhaps with Obama and Rmoney telling sweet lies about “energy independence” and “100 years of natural gas” and “drill baby drill” it’s hard to notice that the cheap, easy to get oil is being replaced by expensive, difficult to get oil.

    The rise in the price of oil lowered traffic levels a little bit. As we head down “Hubbert’s Curve” — the downslope of Peak Oil – look for traffic levels to decline further. 

    The idea of vehicle mileage taxes sounds appealing unless you look closer. It would charge inefficient cars and efficient cars the same price per mile, which would encourage SUVs over more efficient vehicles. Driving the speed limit is also more efficient than speeding above the limit. These are reasons a simple gas tax makes more sense than giving a subsidy to speeding SUV drivers. In addition, the only legal way states could charge a mileage tax would be to install GPS based tracking devices in each car, since State A could not charge for miles driven in State B. The civil liberties and surveillance implications are enormous.

    http://www.peaktraffic.org
    Peak Traffic and Transportation Triage:
    cancel trillion dollar highway expansion plans
    prepare for post peak travel

  • Anonymous

    “Now they’ve got the whole country sectioned off and you can’t move without a form.”?– Harry Tuttle, from the film BRAZIL (1985)

    Given the tremendous surveillance potential of this system, perhaps it could be called the J. Edgar Hoover Memorial Highway.

    Meanwhile, most of the environmental groups are silent on plans to spend about another trillion dollars on more superhighways.  High Priority Corridors.  Countless bypasses and highway widenings.  Appalachian “Corridors.”  NAFTA superhighways.  

    It’s nice to push for more transit funding but without calling attention to the highway expansions planned for the rest of the oil era it’s a bit short sighted.

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