by | July 15, 2013

Oregon to Charge Drivers by the Mile -- Not the Gallon

The legislation, which awaits the governor's signature, would mark a radical departure from the traditional gas tax to fund transportation infrastructure.

Oregon is poised to become the first state to charge drivers based on how many miles they drive -- as opposed to how many gallons of gas they purchase -- in a move that could foreshadow the future of how transportation infrastructure gets funded.

The bill, passed by the legislature and awaiting Gov. John Kitzhaber's signature, would allow up to 5,000 drivers to voluntarily enlist in a new program in which they'd pay a tax of 1.5 cents for every mile they drive in lieu of the 30 cents-per-gallon tax that drivers pay in the Beaver State.

The newly created program is the result of years of study by state lawmakers and officials at the Oregon Department of Transportation, who have viewed the gas tax as increasingly unsustainable for funding the state's transportation and transit needs.

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Indeed, the per-gallon gas tax -- the primary tool used by the state and federal government to fund transportation infrastructure -- is the victim of competing policy goals. Governments encourage the use and development of fuel-efficient vehicles for environmental reasons. Yet at the same time, the success of those efforts means that drivers are paying less for each mile they drive, even as their vehicles cause the same amount of congestion and wear-and-tear on roads.

The switch to a transportation tax based on miles driven, as opposed to gallons of gasoline consumed, is viewed as a way to more closely align the extent to which drivers use the road network with the amount of money they pay to maintain it.

"The bottom line is it's about fairness, and people who use the system ought to pay for the use of the system," Oregon state Sen. Bruce Starr told Governing last year.

The new, voluntary program came about after Oregon lawmakers unsuccessfully pursued a plan to require mileage-based fees for the state's most fuel-efficient vehicles.

James Whitty, manager of Oregon DOT's Office of Innovative Partnerships and Alternative Funding, says the new program is a milestone. For starters, unlike previous ODOT pilots, it's a permanent program that doesn't have an end date. It's also much larger than earlier pilots that explored the viability of miles-traveled fees. 

More importantly, the system the state is developing will ultimately be the same one it uses when, eventually, mileage-based fees become widespread. The new system is set to launch in 2015, and ODOT is expected to spend $2.8 million over two years implementing it.

Whitty says he expects the new program to provide more evidence and information to lawmakers that they'll be able to use to create broader miles-traveled fees.

Additionally, ODOT typically hasn't been permitted to do much in the way of drumming up publicity for the issue. That would change under the new program. "One of the cool things about the bill is that the expectation of strong communication with the public means that ODOT will be able to spend time and resources actually marketing the program and finding a way to move the needle on public acceptance," Whitty says.

Indeed, the idea of charging drivers based on miles instead of gallons has been controversial in some places, where the concept has been labeled a "driving tax." One of the biggest hurdles to changing public opinion about the concept are the privacy concerns that come with the state tracking driving.

ODOT recently conducted a study of different options for calculating drivers' mileage in anticipation of the day when a program like this might be created. They considered a range of technologies for tracking mileage -- including those with and without GPS.

Whitty says the department didn't want to pick a "best" option but instead explored several that motorists might one day be able to choose from.

Pilot participants can use a simple device that counts mileage but doesn't involve GPS. They can use a GPS if they want to avoid being charged for driving on private or out-of-state roads. They can use a smart-phone app that uses GPS -- but only when the app is turned on. Or they can opt out of any measurements at all and just pay a flat fee.

Oregon has long been a leader in the study of mileage-based fees. It first began looking at alternatives to the gas tax in 2001 and has conducted several pilot programs since then that have gained national attention in transportation circles. Many view the state as being on the cutting edge of transportation funding.

A Congressional Budget Office report published in 2011 suggested a miles-driven fee as a viable alternative to the gas tax, and many national transportation experts have endorsed the idea too.

Yet the issue hasn't gain traction at the federal level -- the White House famously shot down the idea when former Transportation Secretary Ray LaHood suggested it was worth considering -- and even pilot programs are rare outside of Oregon.

Richard Geddes, director of the Cornell Program in Infrastructure Policy, says the idea of a mileage tax shouldn't be that unusual to people, given that it mirrors the same principle used by utilities like water and energy providers: pay for what you use.

Geddes, who served on a federal commission that studied transportation revenue options, says the real promise of mileage-fees is that eventually, they could serve policy goals. If the fees were dynamic -- so motorists paid more to drive during peak hours -- they could become a useful tool to manage congestion.

Jack Schenendorf, a longtime staffer on the House's Committee on Transportation Infrastructure, agreed that mileage-fees are prudent. "The more states that innovate and experiment, the better," says Schenendorf, who served on the same panel as Geddes. Programs like Oregon's can help other states as well as the federal government learn effective ways to adopt policies for the "post gas-tax era."

Still, he says, it will be a while before systems like the one created in Oregon become widespread. "(A mileage fee), at least at this early stage, have a whole set of issues layered on top it: how it will work, whether it will be accurate, and privacy," says Schenendorf. "All those issues still have to be dealt with. That's what pilot projects are for."

But, he added, mileage-fees are a long-term solution and will take years to fully implement; in the meantime, shorter-term solutions are needed to address the need for infrastructure funds at both the state and federal levels.

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