California, Oregon, Washington and other states have launched pilot programs to test the viability of a per-mile user fee as an alternative to declining gasoline-tax revenue - but some taxation analysts see the new proposals as premature and not ready for drive time.
California this month launched a pilot program involving about 5,000 volunteers who will record the miles they drive on the state’s public roads to help the state decide whether a per-mile charge could be a workable replacement to the current taxes paid at the pump. The volunteer drivers won’t actually pay by mile to use the roads, but they will receive statements on how much they would pay under a per-mile fee system.
Oregon bills itself as the first state to have adopted a per-mile system. Begun last summer, its pilot program tracks about 900 volunteers who pay 1.5 cents a mile and have the fuel taxes they pay at the pump credited back to their accounts. The number of drivers in the program, however, falls far short of the 5,000 the state had hoped would volunteer.
Transportation officials in California argue that the state’s gas tax has declined in purchasing power and hasn’t been raised since 1994. The effects of inflation, more fuel-efficient cars and zero-emission electric cars, as with those manufactured by Tesla, mean the tax no longer supports transportation infrastructure projects, they say.
Malcolm Dougherty, the director of the California Department of Transportation, reported last year that the state needs $8 billion annually for transportation infrastructure but only funds about $2.3 billion a year.
Dougherty added that Californians drive 327 billion vehicle miles a year, the highest amount of any state, and the state can no longer allow its transportation system to deteriorate. So a per-mile fee may offer a long-term funding solution, he said.
Carl Davis, research director at the Washington, D.C.-based Institution on Taxation and Economic Policy, told AMI Newswire that states may be jumping the gun by moving forward with a per-mile road charge, although the data collected by the pilot programs should be valuable.
“I think the idea of implementing it right now or even in the next few years as a meaningful source of income is premature,” Davis said.
He points out that zero-pollution electric vehicles account for less than 1 percent of new vehicle sales, so the vast majority of drivers continue to pay fuel taxes. Moreover, implementing the idea now seems impossible, both politically and in terms of administration, Davis said. “The idea is not polling terribly well right now.”
A more practical solution would be to adjust the gas tax rate so that it would rise in relation to advances in average fuel efficiency, Davis said. He explained in a recent blog post that Georgia has taken this path. Under that state’s new reform plan, its gas tax rate would rise 10 percent in the event that fuel efficiency improved by 10 percent.
Davis also points out that the existing gas tax is relatively simple to administer, unlike the roll-out of a per-mile travel tax. “You would need to install technology in millions of cars and enforce the tax,” he said. “It’s a heavy lift in getting this off the ground.”
And ultimately, either method of financing transportation infrastructure can fall short as road improvement costs are subject to basic inflation, Davis said.
Fact sheets on the California pilot program quote a 2012 Rand Corp. report that states, “Transportation funding shortfalls will grow even more acute in the coming years as improved vehicle fuel economy and the adoption of alternative-fuel vehicles will reduce federal and state fuel tax revenues by billions of dollars per year.”
California transportation officials emphasize that the implementation of any per-mile fee would replace the gas tax, as opposed to being an add-on. Others, however, are more skeptical of California officials’ motives and promises.
“California already has a high excise tax on gas which is poorly spent,” Jon Coupal, president of the Howard Jarvis Taxpayers Association in California, told AMI Newswire. “We’re generating sufficient revenues to cover transit if the money were spent more wisely.”
Coupal contends the billions of dollars being spent on high-speed rail in the state amount to a boondoggle and that transportation funds should go to more rational projects.
Although his association will be interested in the data the state collects through its pilot program, Coupal ticked off a series of unresolved questions, such as accounting for miles driven out of state, whether there should be variances based on vehicle weight and issues of privacy.
He added that many drivers could balk at being subject to GPS monitoring by state transportation officials. And he criticized the state for subsidizing electric zero-emission vehicles whose owners currently pay no gas tax and thus get a free ride.
Although the taxpayers association remains open to a per-mile fee in the future, Coupal predicted that for the next decade or two, the current tax system would generate adequate funds. He acknowledged that those funds could be supplemented with a fee on low-emission cars to reflect the wear and tear they cause on roads and highways.