States Consider Shifting from Fuel Taxes to Mileage-Based Charges

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Evan Burroughs, a survey analyst at Oregon’s transportation department, has been advocating for an Oregon pilot program that charges motorists based on the distance traveled rather than the fuel consumed. However, his own mother, Margaret Burroughs, remains unconvinced. She is not keen on installing a tracking device in her Nissan Murano to record her mileage, preferring the traditional method of paying at the pump.

Margaret’s hesitation reflects the challenges faced by U.S. states as they explore road usage charging programs as an alternative to declining motor fuel taxes. Factors such as increased fuel efficiency and the rise of electric vehicles have contributed to diminishing tax revenue. To address this issue, the federal government plans to launch its own program, funded by $125 million from President Biden’s infrastructure measure.

Currently, only three states—Oregon, Utah, and Virginia—generate revenue from road usage charges, with Hawaii soon to join them. Without action, the gap between gas tax proceeds and transportation budgets could reach $67 billion by 2050 due to fuel efficiency alone, as estimated by Boston-based CDM Smith.

While some states have implemented temporary solutions like additional taxes on electric vehicles or per-kilowatt-hour taxes at charging stations, the focus remains on road usage charges. These charges, also known as mileage-based user fees or vehicle-miles-traveled taxes, are receiving considerable attention, research funding, and legislative efforts.

Doug Shinkle, transportation program director at the nonpartisan National Conference of State Legislatures, predicts that after years of anticipation and pilot projects, states will eventually need to make road usage charging programs mandatory. The primary goal currently is not revenue collection but rather establishing effective systems, addressing challenges, and familiarizing the public with the concept.

The increasing popularity of electric cars further highlights the need for such programs. Electric car sales in the U.S. have risen from 0.1% in 2011 to 4.6% in 2021, with projections indicating that they could make up 40% of sales by 2030. Patricia Hendren, executive director of the Eastern Transportation Coalition, emphasizes the importance of accounting for multistate trips in the eastern U.S., where states are smaller and closer together.

However, transitioning from the longstanding gas tax system to road usage charges presents various obstacles. Informing the public about the diminishing returns of gas taxes, which have traditionally funded road projects, proves to be a major challenge. Changing a century-old payment system requires addressing the relationship between road users and funding methods.

Critics, such as Eric Paul Dennis from the Citizens Research Council of Michigan, raise doubts about the feasibility of implementing road usage charging programs at scale due to the absence of a widely accepted program design. Questions also arise about the collection of personal data and the environmental implications of replacing the gas tax.

Asha Weinstein Agrawal, director of the National Transportation Finance Center at San Jose State University’s Mineta Transportation Institute, emphasizes that states need to consider the social and environmental aspects of their plans. Surveys conducted by the institute have indicated growing support for mileage-based fees, special rates for low-income drivers, and rates tied to vehicle pollution.

Despite the challenges, some individuals, like Evan Burroughs, see value in participating in these pilot programs. Evan’s father, who drives an electric car, benefits from reduced vehicle registration fees by participating in Oregon’s program. Evan himself willingly pays a small additional fee for his Subaru Outback, believing it contributes to fair road funding.

In summary, as fuel taxes decline and pose budgetary challenges for transportation departments, U.S. states are exploring the possibility of implementing mileage-based charges. While these programs face hurdles and public acceptance remains a concern, they offer a potential solution to the decreasing revenue from fuel taxes caused by factors like fuel efficiency and the popularity of electric vehicles.

Frequently Asked Questions (FAQs) about road usage charges

More about road usage charges

• Oregon’s Road Usage Charge Program
• National Conference of State Legislatures: Road Usage Charges
• Infrastructure Funding and Road Usage Charges
• Eastern Transportation Coalition
• San Jose State University – Mineta Transportation Institute