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.

Scenic coast of Oregon at Cape Sebastian with massive rocks and sandy beach.
National Journal
Feb. 20, 2014, 4 p.m.

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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