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Magazine

Oregon Test-Drives a New Way to Pay for Roads

The first state to institute a gas tax is now working on what to do when that revenue dries up.

Miles ahead: The Cape Sebastian State Scenic Corridor.(iStock)

photo of Fawn Johnson
February 20, 2014

In 1919, Oregon became the first state to institute a gas tax to help pay for its roads and transportation infrastructure.

Now the state is working on what to do when that revenue dries up.

The federal Highway Trust Fund is set to run out of money by the end of the year, in part because, as vehicles become more fuel efficient, revenue from gas taxes is diminishing. And with nearly a third of the nation's major roads in poor or mediocre condition, according to a 2013 report from the American Society of Civil Engineers, both the federal government and the states are looking for creative solutions to a problem that is only going to get worse. So last year, Oregon passed a pioneering law that allows state residents to pay a levy of one and a half cents per mile driven, instead of the state's gas tax, which is now at 30 cents a gallon. (Participants still have to pay 18.4 cents a gallon in federal gas taxes.)

 

The idea of a pay-per-mile system isn't new; transportation experts have long considered such fees the best option—really, the only option—for maintaining a decent revenue stream to finance the country's road and transit system down the line. The question was how to get the public on board with a plan that involved tracking their travels.

James Whitty, manager of the Oregon Transportation Department's Office of Innovative Partnerships and Alternative Funding, has been working on that problem since 2001. Before the state law was passed, Whitty ran two pilot programs that experimented with per-mile fees, and he found out early on that drivers would not tolerate any system that required them to log their miles with a GPS. It freaked them out to think the government might know where they were driving. And who cared where, really? The point was, how many miles did they travel?

Then Whitty learned something interesting: His beta testers were perfectly happy if they were given the option to switch between systems that use GPS (say, an iPhone app) and manual metering.

So Oregon's program, which will be operational in July 2015, will allow a driver to choose his or her preferred mileage-metering method—a smartphone app, an odometer sensor, or periodic mileage checks at DMV inspection sites. And drivers can even switch among types of measurements, depending on their preferences at the time. The law's early adopters will pay the per-mile road-usage fee for a designated period and receive a refund for what they paid in state gas taxes during that same time.

The state plans to remain agnostic about the mileage-metering methods so long as they meet the technical standards—not only to address the public's privacy concerns, but also to allow the program to respond to the market. Oregon is relying on the private sector to figure out the basic logistics of this formula and to add any bells and whistles that would be attractive to the public. Paper filing or Internet apps? Your choice. Extra convenience features, such as engine or oil-level monitors? You decide. "We want to turn over most of the tax collection and account management to the private sector," Whitty said. "This thing will not be set. It will be open. The market can evolve."

The possibilities are enticing. "It can be a seamless method of transportation payment," said Rep. Earl Blumenauer, D-Ore., who is sponsoring legislation to create federal grants for other states to develop road usage-fee pilot programs. "It can also be used to pay for road and bridge tolls, like a mega E-ZPass. It could be used to pay for transit and Amtrak. It can be used to pay for parking."

The beginning, however, is modest. Oregon's program is now limited to 5,000 volunteers—expected to be a mix of early adopter techies and drivers of heavier vehicles modern enough to support one of the available mileage-metering methods. Once the kinks are worked out, however, the next step will be to mandate the per-mile payment for vehicles rated at a certain level of fuel efficiency. In the interim, Whitty hopes that people will grow attached to the associated conveniences and realize that the payments are not onerous.

Other states are mulling their own pay-per-mile pilot programs, including Washington, which is exploring a partnership with Oregon for an interstate exchange.

A per-mile system for the whole country might not be far down the pike.

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