Oregon Nears Completion of Latest VMT Pilot

Data gathered in Oregon and elsewhere could help open the door to a new way of paying for roads.
by | December 27, 2012
 

Oregon Democratic Rep. Earl Blumenauer earlier this month introduced legislation that orders the Treasury Department to study ways the federal government could tax motorists on a per-mile basis, as opposed to the current per-gallon gas tax.

The idea is that charging motorists based on how far they drive -- as opposed to how much gas they consume -- is a more financially sustainable model.

The Highway Trust Fund, largely funded by the 18.4 per-gallon federal gas tax -- will see its revenue decline by 21 percent by 2040, according to Blumenauer. Meanwhile, Congress has transferred $48 billion from the general fund to the Highway Trust Fund over the last four years to shore up its dwindling balances, a trend that could continue unless significant changes occur.

A vehicle-miles traveled fee (VMT) would help address a fundamental challenge facing both state and federal gas taxes: as vehicles become more fuel-efficient, the taxes generate less money for road construction and maintenance. While a vehicle that gets 50 miles-per-gallon might be better for the environment than a gas guzzler, it may be worse for transportation funding, since it contributes just as much to congestion and roadway wear-and-tear as any other passenger vehicles but contributes substantially less revenue.

"The bottom line is it's about fairness, and people who use the system ought to pay for the use of the system," says Oregon state Sen. Bruce Starr, one of the leading advocates for VMT in his state. He says his state legislature will consider a bill in next year's session that would institute a VMT fee for any vehicle rated at more than 55 miles-per-gallon.

Blumenauer's legislation faces a tough road with the the days left in this Congress dwindling. And President Barack Obama has never embraced the idea of a VMT either. But his bill has once again brought the idea of a VMT system to the forefront of the discussion about transportation policy. While it hasn't made much progress at the federal level, states are continuing to address the issue, albeit slowly.

The viability of VMT was examined in many states as part of University of Iowa study from 2007 to 2011. Today, a handful of states continue to examine it. Most prominently is Oregon, which has been looking at alternative funding mechanisms to the gas tax since 2001.

By 2006, the Oregon Department of Transportation began its first VMT pilot. That study involved using GPS devices to collect data on the number of miles traveled by each motorist, transferring the data to gas stations, and levying the appropriate fee when drivers filled their tanks.

The state's latest pilot focuses on analyzing different methods of collecting miles-traveled data in a way to mitigate privacy concerns that have long dogged VMT advocates.

The current pilot, which sees its first phase conclude next month, involves about 50 participants. A second round of the pilot -- which includes participation from Washington state and Nevada -- continues through February, says James Whitty, manager of Oregon DOT's Office of Innovative Partnerships and Alternative Funding

Those two states' pilots are "illustrative," meaning money doesn't actually change hands, but the one in Oregon is live. Drivers pay the state 1.6 cents per mile driven, and they're refunded the state taxes they pay on fuel.

The goal is to figure out what type of technology is the best fit for VMT, and if there are ways to implement a VMT so that the technology is produced and managed by the private sector.

Oregon wants to offer motorists a range of options for how VMT is collected so that nobody can accuse the system of being an invasion of privacy, Whitty says. Pilot participants can choose to 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.

In addition to having various types of technology on the car, the pilot also gives motorists the option of having the fees processed by the government directly or via a private company. Whitty says the latest pilot should be the last step policymakers need before actually being able to start creating legislation that would implement VMT fees.

Starr says he expects that states will continue to take the lead on VMT before the feds ever do, but eventually, the federal government will have to embrace. "Ultimately, in the long-term, it requires a federal solution," Starr says. "I anticipate at some point in time, after the states have developed a number of pilots... the federal government will have a lot of data. I think it will take a lot of the fear away."

Academics and even many policy makers acknowledge VMT may be the most viable way -- or possibly even the only viable way -- to deal with the financial unsustainable gas tax, which will continue to lose revenue the more automakers improve fuel efficiency.

Several federal commission tasked with addressing the country's transportation funding challenges have touted the benefits of VMT, with one calling it  "the consensus choice for the future." A Congressional Budget Office report published last year also suggested VMT as a viable alternative to the gas tax.

According to a National Conference of State Legislatures report, a 1 to 2 cent per-mile fee would be the equivalent of what states typically generate in gas taxes.

Still, the idea isn't entirely widespread at the state level either, despite experimentation in Oregon, Minnesota, Georgia, Washington, and elsewhere. According to an NCSL report published earlier this year, 11 states have considered 20 measures that would establish or study VMT fees since 2008. Just one - funding for a VMT study in Washington - has been enacted.

Still VMTs could face challenges, even if privacy concerns are allayed. Richard Baker, a VMT expert at the Texas A&M Transportation Institute, says there "hasn't been much interest" in his state's legislature on the topic. One challenge he's identified: taxpayers are so uninformed about the way we pay for roads that it's difficult to convince them that an alternative is needed.

It's also hard to say how deploying a nationwide VMT fee would work. If the after-market units are required, VMT fees could be implemented sooner, but the devices would be more expensive and they'd be subject to tampering. A mandate that automakers put VMT devices in cars could be less expensive but could also make for a slower transition.

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