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Monday, 03 August 2009 00:00

Oregon hopes to expand test on mileage tax after pilot shows promise for infrastructure revenue

Taxing drivers by the number of miles they travel instead of the amount of fuel they buy has become a popular alternative for lawmakers as they look for ways to pay for the highway infrastructure of the future.

The need for a new revenue source is apparent as the Highway Trust Fund again teeters on the edge of bankruptcy, and as highway infrastructure, especially around major markets, can appear to be a pockmarked parking lot.

Although fuel taxes have kept the trust fund solvent for a half-century, cars are using less fuel today, and the recession has kept drivers off the roads. Now the government is looking to Congress for a billiondollar cash infusion for the second consecutive year.

Enter the vehicle miles traveled tax. Supporters say technology makes it feasible to track a car or truck’s mileage and assess a fee for each mile driven.

The VMT has had few practical applications, and even many proponents say it may be five to 10 years before it can be widely used. But the Oregon Department of Transportation started testing the VMT concept with 300 volunteers in 2006 and 2007. The results were encouraging, they say.

“Ninety-one percent of the volunteers said they’d be willing to keep the devices in their cars if the system were extended to every service station statewide,” said James M. Whitty, director of the VMT project.

Now the state is applying to the U.S. Department of Transportation for an $11 million grant to launch a larger pilot, with 5,000 drivers. The VMT also has congressional support. Rep. Earl Blumenauer, D-Ore., introduced a bill July 23 to provide up to $150 million in grants to develop mileage-based revenue programs in all states. 

“We want to extend the pilot project to every state in the union, so people will feel comfortable with it. They’ll understand how it works, and they will benefit from it,” Blumenauer told a House Ways and Means subcommittee.

Whitty said the Oregon pilot was eight years in the making. It is based on an in car recorder that uses satellite data to compute the number of miles a car travels. Whenever the driver buys gas, the box is to transmit the mileage to a receiver at the gas pump, where the mileage fee is determined, added to the bill and deducted from the state fuel tax.

The rate of 1.2 cents per mile was calculated to be about equal to what a driver would pay in fuel taxes. “This was designed not to raise additional revenue, or any less,” Whitty said. It was a pilot test and we promised the Legislature we’d be at zero on revenue.”

Using passive satellite technology addressed the question of privacy, one major concern, Whitty said. Because the vehicle transmitted no location data to the satellite, there was no way the government could track where the driver was going.

“Depending on the age of the motorist, their attitudes are different,” Whitty said. “The younger the motorist, generally they don’t understand what the privacy issue is all about.”

For the next test, the ODOT hopes to develop an open system where drivers may choose a variety of recorders with different features. “People are nervous about government-imposed technology. If they can choose the vendor who sells it to them, and the capabilities of the device, that might be something that’s more acceptable.”

There were two exceptions to drivers’ absolute privacy. A driver going out of state was not charged the VMT. If the driver was in rush-hour traffic in a zone around Portland, congestion pricing kicked in. For rush hours, the system charged 10 cents per mile.

Trucks were not included in the pilot, but the Oregon Trucking Associations is watching the results, President Bob Russell said. Truckers today pay Oregon taxes based on weight and mileage in lieu of fuel taxes.

“We’re looking at all of the options that can help reduce traffic congestion and keep traffic flowing more smoothly,” Russell said. “If this is something that can accomplish that goal, we would support it. I don’t think we support it today.”

But the national American Trucking Associations calls the VMT “an elegant, expensive solution in search of a problem.”

“There is nothing a VMT could do that the fuel tax does not do now, and the fuel tax does it for about 30 cents on the dollar less than a VMT,” ATA spokesman Clayton Boyce said.

Russell said. “It’s a long-term solution, and I don’t know what ‘long term’ means.”

Journal of Commerce, 8/3/2009