The Mileage Fee Might Have Legs

August 16, 2008

Our roads are jammed; Congress may shepherd deliverance.

Jim Whitty, an architect of the mileage fee concept (and Oregon DOT's Manager of the Office of Innovative Partnerships and Alternative Funding), told me he briefed Congress recently on ODOT's experience with the mileage fee, as Congress considers implementing the system nation-wide. As someone who's been with the mileage fee concept from its inception over six years ago, Jim sees Congress as newly interested in approaches like this.

A lot is in flux in the world of transportation management, and the way we gather money to maintain roads may be ready to be fluxed as well. Here are some of the change agents shaking up old thinking on the Hill:

• the prospect of decreasing gas tax revenues as vehicles become more efficient
• the need to create sufficient funds to address our crumbling transportation infrastructure
• climate change
• increasing traffic congestion in urban areas that are physically constrained and can't just add more roads

The mileage fee idea happened when the Oregon legislature stumbled upon this realization, as they contemplated hybrids and electric vehicles becoming a bigger part of the transportation mix: "Cars that use less gas will DECREASE gas tax revenues." Tasked to explore this concern, Jim's group "let the solution emerge from the problem statement." Where they landed was the mileage fee, and what followed was a six year effort to develop and test the plan.

What follows next, if the mileage fee is to be implemented nationally, is yet another six year trial period. Opportunities to introduce programs like the mileage fee happen with Reauthorization of the Transportation Equity Act for the 21st Century (which last happened, a couple of years tardy, in 2005). The trick is to get the mileage fee program in next year's reauthorization run. With a good showing in Oregon under its belt, the mileage fee has some chance of making it out the other side of the testing period ready for national implementation.

New challenges beget new thinking like Jim's mileage fee. Remove the wool from our eyes, and we might retool transportation funding to better fix roads and traffic jams. Bully.

Photo: Juaco Martinez on flickr

(By the way, Jim seconded my impressions of US Transportation Secretary Mary Peters as innovator. Here's hoping she survives the administration change, or continues to have a meaningful role in developing transportation options).

Comments

[stomv]

OK, so here's an obvious question:

If the problem is climate change, then doesn't charging for the amount of gasoline burned make more sense than the miles? Hint: yes.

If the problem is infrastructure repair, then doesn't charging for miles times the weight of the vehicle cubed make more sense, since that's the proportionality of the damage to the infrastructure? Hint: yes. Followup: since heavier vehicles tend to get less gas mileage, does the curve for gas tax more closely match the damage to the roads than the miles traveled? Hint: yes.

When compared to using a gasoline tax, this miles-traveled tax is far more desirable to vehicles which get low MPG and which are heavier. Public policy ought to be encouraging high MPG vehicles and smaller vehicles, and this tax policy erodes them both.

If the problem is eroding tax revenue, the simple answer is to simply raise the gas tax or, better yet, tie it's rate to the price of gas. Taxing based on miles driven is a gimmick.

[James M. Whitty]

We at the Oregon DOT have faced these questions often. There are many inaccurate assumptions about the nature of mileage fees underlying the conclusions reached. One such assumption is that the mileage fee rate must be flat. That is not the case. The mileage fee rate can be variable according to vehicle characteristics identified by a state legislature to accomplish desired policy goals. For example, the Oregon mileage fee system could have a multiplier assigned to each vehicle type according to its fuel efficiency. That multiplier would then be applied to the base rate to determine the charge owed. Thus, a Prius might have a multiplier of 1.0 and a Hummer might have a multiplier of 6.0 (or higher). Thus, the Hummer would pay six times the mileage charge as the Prius. This assigned multiplier could take into account not only fuel efficiency but weight as well. Trucks that weigh over 100,000 lbs. definitely cause more damage than small passenger cars and the system can reflect that. It may sound complicated but it is not because it's all based on computing formulas applying simple arithmetic.

The lowest multiplier would have to be no lower than 1.0 to ensure the road system revenues do not decline to levels that are non-sustainable for the existing road system. After all, we expect to see ever more fuel efficient vehicles in the future in response to changing consumer demand and perhaps new public policies to respond to climate change.

As for simply raising the gas tax, transportation policy makers of all stripes across the USA understand that the gas tax is failing and cannot keep up with the vehicle changes coming. The problem is not raising the gas tax once but continually raising it as the traveling public undertakes a continuing search for ever more fuel efficient vehicles. With the price of gas expected to continue to rise over time (not withstanding the recent temporary decline), the public cannot be expected to voluntarily agree to raising the cost of purchasing gas by consenting to regular gas tax increases. That's simply against human nature. The nation therefore must move off taxing by the gallon and move to taxing by the mile.

Most of this is explained in the Oregon DOT Final Report Chapter Nine which can be found at http://www.oregon.gov/ODOT/HWY/OIPP/ruftf.shtml.

[Chris]

If the the mileage fee makes you the least bit curious, I recommend browsing Oregon's report ( http://www.oregon.gov/ODOT/HWY/RUFPP/docs/RUFPP_finalreport.pdf ). It's an easy read that reveals an impressive depth and breadth of thinking about fresh, sensible ways to shape traffic policy.