Oregon’s much-anticipated per-mile driving fee, called OReGO, launches today. Instead of paying the normal gas tax embedded in the price of fuel, OReGO drivers will pay 1.5 cents for every mile on the road. The initial public rollout is limited to 5,000 vehicles, but the implications of the program are vast: if all goes well, state and federal leaders might have an answer to the transportation funding crisis that’s hampered American infrastructure for years.
Here’s 18 reasons the whole country should give per-mile fees a chance.
1. The Highway Trust Fund keeps running out of money
The federal Highway Trust Fund that pays for America’s roads (and to a lesser extent rails) is expected to run out of money at the end of July. We’ve seen this movie before, so we know that Congress will find a way to keep the fund afloat—even if that involves the legally dubious maneuver of transferring money from the general taxpayer treasury. But the past trends and future projections of the Highway Trust Fund make clear that it’s a badly bent spending model that’s routinely on the cusp of badly breaking.
2. Yet Congress and some states refuse to raise the gas tax
The federal gas tax hasn’t been raised since 1993. (And the last President to truly achieve that task was Ronald Reagan.) Some states have raised it recently out of desperation, though others remain desperately opposed; New Jersey’s gas tax is about half what it was in 1927. Elected officials on both sides of the aisle generally refuse to touch the issue for fear of political damage, despite polls showing that many voters would accept a hike.
3. The truth is the gas tax is totally busted anyway
4. For one thing, cars are much more fuel-efficient
The gas tax is a decent proxy for car travel: for the most part, the more you spend at the pump, the more you drive on the road. But that relationship has become weaker and weaker as American vehicles have gotten more fuel-efficient. That means on the average tank of gas, a car does a lot more damage to roads today than it’s done in the past.
5. Also construction costs are soaring
Transportation funding aside, better fuel-efficiency is a great thing, and should be encouraged. So an arguably bigger problem with the gas tax is soaring construction costs. The Institute on Taxation and Economic Policy has estimated that these costs have increased 335 percent since 1972, contributing to much more of the decline in the purchasing power of the gas tax than new fuel-efficiency standards.
6. Plus, people aren’t driving as much as they used to
MPG and construction costs aside, Americans just aren’t driving as much as they once did. Per-capita vehicle mileage is well off its peak in the mid-2000s—a new normal of driving that suggests we can’t think about funding (or building) highways the same way we did in the past.
7. A per-mile fee is a true “user” fee
Ideally every driver would cover their own individual costs of using the road—a true “user” fee that seems only fair. Practically that’s never been the case. Driver fees like the gas tax once accounted for about 70 percent of road costs, but that link declined over the decades for many of the reasons mentioned above. The result is that not only are road costs distributed unequally among drivers, they’re distributed among non-drivers, too. A per-mile driving fee would be a return to this “user pay” ideal.
8. Better still, it’s not a hidden fee
Unlike the gas tax, a per-mile fee isn’t hidden away in the larger cost of fuel. Right now many drivers think they pay much more in gas taxes than they truly do—a disconnect that contributes to their frustration over rising fuel prices, despite the fact that Americans pay relatively little at the pump. With a per-mile fee, drivers could see exactly what they spend on the road each month, just as they do on their cable or phone bill, and change their behavior accordingly.
9. It would raise a gargantuan amount of money
The American Association of State Highway and Transportation Officials has estimated that a mileage-based road fee would produce an astonishing $246.31 billion by 2020. That’s enough to cover the Highway Trust Fund shortfall many times over, and that’s assuming just a penny per mile—below the per-mile OReGO rate of 1.5 cents. The windfall stands to get weaker over time as people drive less, but if and when that’s the case local government won’t have as much road maintenance or expansion to do, either.
10. It can be adjusted to reduce traffic and promote transit
A per-mile fee is also remarkably flexible. Heavily congested metro areas can add a surcharge during rush-hour (which would incentivize transit use, telecommuting, or new work patterns) or within a certain boundary (similar to the congestion pricing zones in London, Singapore, and Stockholm). They can also shift some of that money toward transit improvements in particularly crowded corridors—giving the per-mile fee an equity basis as well.
11. And adjusted to cover truck damage
One of the big arguments against any flat transportation tax is that not all vehicles rough up the road the same way. Fair enough. A per-mile fee is far easier than the gas tax to adjust for the size of a vehicle, from 18-wheelers to Smart cars.
12. And adjusted to discourage pollution
Electric vehicle owners often oppose a per-mile fee because they say it offers a disincentive to go green. That’s a fair if tenuous argument: EVs still save money at the pump, they still damage the road, and if they draw from a coal-based energy grid they can even create more pollution than gas cars. Still a per-mile fee is flexible enough to slap gas-guzzling clunkers with a surcharge and squeaky clean EVs with a discount as local governments see fit.
13. Look, it’s just really adjustable, okay?
Touché. In theory, a per-mile fee is elegant and nimble enough to capture more or less every social cost of driving. It’s the Baryshnikov of transportation funding.
14. Millennials dig it
In a new public opinion poll for the Mineta Transportation Institute, Asha Weinstein Agrawal and Hilary Nixon report that 59 percent of respondents age 18 to 24 “strongly” or “somewhat” supported a mileage tax (provided it was adjusted for vehicle pollution). So Millennials seem more on board with the idea than older age groups. And we should listen, because according to them, they’ve never been wrong.
15. It doesn’t actually invade your privacy
The single biggest concern voiced about a per-mile driving fee is privacy. But there’s no need to worry. Oregon has developed several tiers of mileage tracking, from low-tech options (such as an annual fee or odometer reading) to higher-tech ones (e.g. cell tower dings or full GPS). In other words, there’s a tracking program to suit everyone’s comfort level. Even libertarians aren’t concerned about per-mile privacy. In recent Congressional testimony supporting a mileage fee, Bob Poole of the Reason Foundation said “privacy need not be a serious obstacle” to its adoption.
16. It’s been tested—with success
Oregon has been developing and testing and improving the concept for years now. And it’s not alone. Other pilots around the country have been a success. An Iowa trial found that vehicle trackers can capture the vast majority of actual miles traveled (92 percent). Simulations in Sacramento and Washington, D.C., as well as real-world trials in Atlanta and Seattle, have shown that per-mile taxes can lead to reduced car travel. A Portland study showed it works best when it includes a rush-hour surcharge.
Best of all, people like it more as they try it. In the Iowa trial, for instance, about 41 percent of participants had “very” or “somewhat” positive feelings toward the trial beforehand, rising to 70 percent afterward.
17. Lots of states have shown an interest
Though Oregon is the only state to launch a per-mile program so far, many others are keeping a close eye on the concept. California recently authorized a pilot program of its own; in late 2013, Florida’s transportation secretary predicted the state could shift to a mileage-based fee within 10 to 15 years; and several Western states have joined a consortium to monitor road-usage charges. A recent report from the Council of State Governments lists 26 states that have dipped their toe in the waters of per-mile pricing in some form or another.
18. Oregon has been been down this Trail before
Yes, we just did that. (It’s been a long list, all right?) But it’s also the truth. Back in 1919, Oregon became the first state to implement a gas tax. The state’s funding vision has served American roads well for this long. Why not follow it in a new direction?