Ten Questions (and Answers) About Oregon’s New VMT Charge

This summer, Oregon’s legislature passed a bill creating a vehicle-miles-traveled fee. For those who recognize the shortcomings of the gas tax for charging for road use, it was a big victory. But the program authorized by the state is a modest one, creating a voluntary program for just 5,000 drivers of high-efficiency vehicles.

Jim Whitty reads a mileage transponder in Oregon. Photo: ##http://www.npr.org/templates/story/story.php?storyId=101388732##NPR##

ODOT’s Jim Whitty, the architect of the program, has been on a whirlwind tour, responding to requests from states for more information about what they’re doing in Oregon and how they’re pulling it off. Last week he came to Washington, DC, to speak with members of Congress, key Senate committee aides, White House staff — and this reporter. I got answers to these 10 questions I had about the new plan.

How did Oregon get past privacy concerns? They bagged the idea of requiring any kind of GPS tracker. “You can’t mandate GPS and get this done,” Whitty said. “You’ve got to give people options that don’t involve GPS.” Though a GPS tracker isn’t really more of a violation of privacy than your cell phone or E-ZPass, the issue has been an obstacle to rational discussion about the pros and cons of a VMT system. In Oregon’s first pilot VMT program, they gave out trackers, but people didn’t like having government surveillance devices in their cars. For the second pilot, this past winter, people could pick their own device from the marketplace, and they found that more comfortable. Plus, there’s an option to just report mileage from the odometer.

Was it hard to convince the ACLU? Actually, “the negotiations were really easy,” Whitty said. With just a few meetings, they worked out a way to meet the privacy requirements of the ACLU and the operability requirements of ODOT. What they came up with became Section 9 of the bill, which limits who has access to the data and requires those who have access — including private sector vendors — to protect it. And then the data is destroyed 30 days after it’s required for payment processing or dispute resolution.

Is this another pilot? Technically, no — it’s a permanent program. But it’s a severely curtailed one. Aside from the limitations inherent in a system that doesn’t mandate GPS tracking, it’s also designed as a voluntary program for just 5,000 users. That’s not how permanent programs are designed. If this works, it will only make sense for it to someday be universal — at least for some vehicle types.

Will gas guzzlers ever be part of a VMT pricing scheme? Probably not. It would be a net revenue loser for the state, since those vehicles pay more in fuel taxes than they ever would in VMT fees. And drivers of fuel-efficient vehicles bristle at the idea that people who pollute more would get a better deal. The fact is, what sold the Oregon legislature on the VMT fee was the idea that it promotes fairness and requires all drivers — even those with electric cars — to pay for the infrastructure they use.

Does a tax on fuel-efficient vehicles punish people doing the right thing? Most Oregon legislators — and the public — get that it’s no punishment to pay $150 for 10,000 miles of driving in a year. (The VMT rate was set at 1.5 cents per mile to roughly match the cost of Oregon’s 30-cents-a-gallon gas tax.) “You don’t buy a highly fuel-efficient vehicle to save $150,” he said. “You get it to save on fuel costs,” which can amount to hundreds or even thousands of dollars a year in savings. Besides, making the great choice to buy a less polluting vehicle doesn’t make it a great choice to let the road system crumble, says Whitty.

Why not just raise the gas tax? Oregon was the biggest adapter of hybrid cars and is probably high on the list of electric car buyers too. The widespread use of these vehicles was what prompted the legislature to act, not the need for increased revenues. Still, revenues will increase because drivers of fuel-efficient or alternative-fuel vehicles, who were previously paying nothing or almost nothing, will now pay in. (At least, those who volunteer for the program.)

Will a VMT charge better match the needs of the system than the gas tax? Mostly, yes. Fuel consumption used to be a reasonably good proxy for road use, but it isn’t anymore. Charging people directly for their use of the roads makes more sense. If revenues go down, it will be because people are driving less, and therefore creating less wear and tear on the roads, as well as less demand for system expansion. It’s not perfect, though: Lightly used roads will still get beaten up by severe weather, and plants will still show up in the cracks.

Without GPS, how will Oregon translate the VMT collection into congestion pricing? They won’t. Whitty said over and over that he honestly doesn’t care whether people opt to use a GPS device or not to pay their mileage bill, and in part it’s because the VMT system Oregon’s using is a lot less sophisticated than it could be. With GPS tracking, different states could differentiate between mileage within their borders and in other states, and could even implement variable pricing, where drivers pay more to use the roads during rush hour, or to drive into the city’s core. But the Oregon legislature wasn’t interested in these possibilities — even though rush hour traffic in Portland is getting worse.

Will collection be expensive for the state? Whitty says they’ll drive down system costs by letting wireless companies be tax processers. ODOT eventually wants to see the mileage costs bundled with other utilities. “You’ll have telematics in every car, at some point,” Whitty said. “Motorists will say, ‘I want the data to go here, to this tax process that I just chose.’” So you can bundle it with your home phone bill or your electric bill or all of it together, if you want. But Whitty said he probably wouldn’t opt for that, himself. He’d do an automatic funds transfer from his bank account, which will also be an option. All of this drives down the cost of processing the payments.

Why would anyone choose to participate in the program? That’s a question Whitty couldn’t really answer yet. People whose vehicles currently get less than 17 miles per gallon will have an incentive to sign up, since the VMT fee will probably be less than the gas tax rebate they’ll be getting. But the program will only accept 1,500 people with such low mileage out of 5,000 volunteers. For people who will end up paying more under this system, the state will need to find some other incentive. One option they’ve considered is waiving the requirement for those volunteers to take their vehicle in for emissions testing. Eventually, the legislature envisions the mileage fee becoming a mandatory system, though it’s unclear exactly which types of vehicles would fall under the mandate.

  • Richard Mlynarik

    Everything about this is totally bat-shit insane.

    Carbon taxes are a perfect pigovian solution.

    VMT simply doesn’t matter, to pretty much anything, to the first two or three orders of magnitude. Talk about missing the forest for the trees!

    Q; “Why would anyone choose to participate in the program?

    A: Either because they’re bat-shit insane or they’re on the take from the rent-seeking IT conglomerates who will seek to implement this disaster.

    Why does Streetsblog keep reporting on this nutcase irrelevancy with a straight face? It’s a scam.

  • Nathanael

    I would take the odometer option.

    If you’re trying to tax road damage, then measuring VMT makes sense.

    A carbon tax would be better (sigh), but, well, sigh.

  • Anonymous

    Minor clarification to first paragraph stating that the Ore. law is “a voluntary program for just 5,000 drivers of high-efficiency vehicles.” As Whitty notes in the answer to the last question, “Why would anyone choose to participate in the program?”, up to 1,500 vehicles need not be “high-efficiency”. Indeed, the program works best, from a consumer perspective of saving $, for guzzlers to sign-up for the VMT fee and have their state gas taxes reimbursed. I think it’s possible that they could even be “paid to drive by the state” if they guzzle a lot!

    In looking at the law, it’s important to recognize that this was not the desired bill. Rather, “a more stringent, mileage-based user fee bill, HB 2453…would have required ‘drivers with a vehicle getting at least 55 miles per gallon or the equivalent to pay 1.55 cents per mile after 2015 or $542.50 annually was referred back to committee.” [Planetizen, July 10, 2013].

    Regardless – it’s a first – like the Model T – and look how far we’ve come since then! Ah, maybe that’s not the best analogy 🙁

  • Mike Hicks

    So they aren’t including the weight of vehicles in this calculation at all? That seems like a major shortcoming.

  • Eric

    What about the biggest burden on road use and wear of all, semis?

  • Eric

    Must not have any WalMarts or truck traffic, lol.

  • fred

    Bad idea – punishing people who use less fuel
    Just a money grab from HWY lobby

  • Dan

    Managing a budget on a fixed-income is difficult for anyone. After retirement, my wife and I chose to purchase an energy-efficient vehicle that provides us 40 mpg or better. I’d rather see a slight increase to the state gas tax of .30/gal as opposed to the 1.5 cents/ mile. The later would double our cost (.60 cents/gal) to travel to see our grandchildren. If the reduction in income is due to more energy-efficient cars, i.e. hybrids, and electric then they should possibly pick up the difference, not everybody else. The other issue of fairness is who gets road repairs anyway? We live in SE Oregon and road repair is superficial at best.

  • The Model T was a first?

    And I suppose Henry Ford manufactured it too?

    And, I suppose, as they say, when the legend is bigger than the truth – print the legend.

  • Patrick Engel

    Bravo Mr. Hicks. You hit the nail on the head! California has, for many years (at least when I lived there) used vehicle weight to assess registration fees. Registration fees could easily set aside for road maintenance. Technology is not the solution to funding road maintenance needs.

  • I__AM__GOD

    Political suicide.

  • TDI

    This is absurd: penalize those who drive efficient vehicles. The gas tax should be raised to pay for whatever is needed, let those who drive monster trucks pay up and reward those who drive vehicles with lower consumption. Whether you care about the environment or not lowering oil use improves the economy (through lower oil prices) and enhances national security. This concept is so backwards it hurts.

  • mdw

    Trucks already pay a hefty mileage tax plus a fuel tax and the biggest damage to roads are from studded tires on cars. I know I drive dump truck for a paving co.

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