The Future of User Fees

The Oregon Department of Transportation (ODOT) is asking for 5,000 volunteers to test mileage-based user fees as a substitute for gas taxes. The Antiplanner had an op ed endorsing this idea in the Portland Tribune this week.

The email response suggests that many people still have questions about the program. The most frequent question is whether heavier cars will have to pay more than lighter ones. But, according to ODOT, a 2,500-pound Prius c has the same road impacts as a 6,500-pound Hummer. I suspect that road impacts are proportional to tire pressures, not vehicle weights, so heavy trucks have more impact–but Oregon already charges those trucks a weight-mile fee.

The second-most frequent question has to do with privacy. Oregon is giving volunteers three options, two of which involve smart phone apps that use the phone’s built-in GPS to keep track of charges. For the initial test, charges will be a flat 1-1/2 cents per mile, so all the GPS tracks is how many miles you drive, not where or when you drove. One app requires that you pre-pay, the other allows you to pay at the end of each month. The GPS won’t count miles driven out of state.

The third option is simply to put a mileage counter on your car that is checked quarterly; you pay for the miles you have driven at the end of each quarter. Since it doesn’t use a GPS, you would end up paying for miles you drive out of state.

A poll released last week found that 56 percent of Oregonians oppose the mileage-based fee while only 32 percent support it. Since the fee will be voluntary to begin with, that shouldn’t be a problem.
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Republicans were especially opposed, however, by a margin of 82 to 13. I’m always surprised when free-market advocates oppose this idea. I suspect they think that the devil you know is better than the one you don’t, but the current gas tax is a very poor user fee, and the only reason why we have it is that the technology for mileage-based fees wasn’t available in 1919 when Oregon became the first state to approve a gas tax.

Gas taxes have at least four flaws: they don’t account for inflation; they don’t account for increasingly fuel-efficient cars; they don’t pay for most local roads; and they don’t relieve congestion. Raising the gas tax might temporarily solve the first two flaws, but only mileage-based user fees will solve them all. They satisfy all of the criteria for markets: people would pay for only what they use; they won’t pay for what other people use; and eventually the revenues will go to the owners of whatever roads people drove on when they were charged the fee.

The last issue is key. When I drive to the airport, I use a private road, a Forest Service road, a county road, a state highway, and city streets. When I buy gasoline, the tax goes to the state. While it shares a portion with the county and city, they don’t get a big enough share to cover the full cost of their road programs. The Forest Service and private road owner get nothing. While Oregon’s initial experiment won’t fix this problem, eventually the system will pay all road owners.

Finally, a few people expressed the fear that revenues from mileage-based fees would be used to subsidize light-rail boondoggles. Oregon’s constitution limits the use of gas taxes to highways, roads, and streets, and I will support a similar constitutional restriction for mileage-based fees.

Oregon says anyone whose vehicle gets less than 20 miles per gallon will save money with the fee. Mine does much better than that, but I still have volunteered to be one of the first to try the system. If my application is accepted, I’ll be reporting my experiences here.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

23 Responses to The Future of User Fees

  1. Jardinero1 says:

    Me thinks that the anti-planner is mistaken about tire pressure. Tire pressure is a tiny mitigating factor regarding overall wear and tear on a road. Axle weight is the single overarching factor with regard to the vehicle. Google “load equivalency factor”. This has been a topic of research since the 1950’s.

    This page gives a quick explanation:

    http://www.pavementinteractive.org/article/equivalent-single-axle-load/

  2. Jardinero1 says:

    With regard to those who oppose programs like this, I believe much of it has to do with vernacular. Self named conservatives tend to have a knee jerk opposition to anything that says “tax” or “fee”. If they had presented this as a “market based approach” to road funding, conservatives would be all over it.

  3. C. P. Zilliacus says:

    The Antiplanner wrote:

    I suspect that road impacts are proportional to tire pressures, not vehicle weights, so heavy trucks have more impact–but Oregon already charges those trucks a weight-mile fee.

    The better term is axle loadings, often called ESALs or Equivalent Single Axle Loads. I see Jardinero1 linked to the same Web site above (great minds think alike?).

    Axle loadings on essentially all vehicles with exactly four wheels, be they a Mini-Cooper or Honda Civic or Toyota Prius or a Ford F350 crew-cab pickup truck, do relatively little damage to pavements and bridges.

    Money quote from the page linked above (with emphasis added):

    The relationship between axle weight and inflicted pavement damage is not linear but exponential.

  4. C. P. Zilliacus says:

    The Antiplanner wrote:

    Finally, a few people expressed the fear that revenues from mileage-based fees would be used to subsidize light-rail boondoggles. Oregon’s constitution limits the use of gas taxes to highways, roads, and streets, and I will support a similar constitutional restriction for mileage-based fees.

    That is indeed a concern. At least in the U.S., transit agencies and their friends have an near-infinite need to collect money from people that do not use their services, both to subsidize operations, as well as to pay 100% of all transit capital costs (for reasons not clear to me, transit patrons must never be asked to pay even one cent – ever – of the capital costs of the systems they ride out of the farebox).

  5. bennett says:

    I still don’t understand what apps and gps are necessary.

    I like “The third option is simply to put a mileage counter on your car that is checked quarterly.” You mean an odometer? I think every car already has one of those. I just saved OR a ton of money!!!

    Hooray for mileage based fees!

  6. JOHN1000 says:

    Are the user fees to be “in addition to” or a replacement for the current gas tax? If a pure replacement, that is good.

    It is hard to believe that any widely used tax (like the gas tax) will ever go away.

    Most likely, the gas tax will be reduced (at first) and then slowly increased because the user fees did not bring in enough revenue to cover all the govt. employees they hire to track the users.

  7. CapitalistRoader says:

    The third option is simply to put a mileage counter on your car that is checked quarterly; you pay for the miles you have driven at the end of each quarter. Since it doesn’t use a GPS, you would end up paying for miles you drive out of state.

    Overall I like this user fee program but the odometer one doesn’t work for me since most of my auto miles are out of state. I don’t see why a GPS solution has to be intrusive. Surely a GPS can be programmed to send only in-state and out-of-state mileage data but no other location identification data. And language could be included in the legislation banning government entities from using those data for anything other than user fees. I.e., law enforcement would be denied any access to the data, no matter what a sleazy judge says.

  8. ahwr says:

    In NYC the subway/bus fare payment system, MetroCard, has been used in criminal investigations. To support alibis

    http://mobile.nytimes.com/2008/11/19/nyregion/19metrocard.html?ref=nyregion&referrer=

    And to refute them

    http://m.nydailynews.com/archives/news/swipe-alibi-metrocard-records-ko-motorman-defense-slaying-article-1.908054

    http://capntransit.blogspot.com/2014/08/the-transportation-hypocrisy-of-civil.html?m=1

    Transit users lost privacy long ago. How many of you took a principled stand to support privacy when it wasn’t yours? I wonder if that explains the support for a fee only for hybrid and electric vehicles. Who cares about the privacy of others?

    And if you keep the VMT tax dumb and limit it to a flat fee, no matter the road or time of day you miss out on big potential gains – eliminating congestion, and eliminating road boondoggles that are paid for by other drivers.

  9. MJ says:

    Gas taxes have at least four flaws: they don’t account for inflation; they don’t account for increasingly fuel-efficient cars; they don’t pay for most local roads; and they don’t relieve congestion. Raising the gas tax might temporarily solve the first two flaws, but only mileage-based user fees will solve them all.

    I don’t agree with any of this. Gas taxes can be designed to have their rates adjust automatically to account for both inflation and changes in fleet fuel economy. They could also pay for local roads if some state gas tax funds were transferred to local governments according to some formula that approximates usage. Lastly, congestion is really a non-starter here, since the Oregon experiment is premised on a flat, per-mile fee that does not vary by time and location. It’s essentially a gas tax by another name, albeit one that is probably far more expensive to collect.

    They satisfy all of the criteria for markets…

    Not really. The supply side is unaffected and still under the direction of the state DOT. This is a revenue-raising exercise, rather than real reform of road provision.

  10. CapitalistRoader says:

    @ahwr: To give voters an impetus to change from a gas-tax based road funding system to a miles-traveled system using GPS tracking of in-state miles, the legislation could be written in a way that strictly prohibits any agency, public or private, from using the GPS locaqtion data for any purpose other tax collection. Especially now when people are very concerned (and rightfully so) about government agencies walking all over our Fourth Amendment rights, that might be the key to getting MT legislation passed.

    However I’m not so naive to think that 1) government agencies won’t break the law and access locational data anyway or 2) the first time an AMBER alert is issued and law enforcement are prohibited from using the MT GPS for finding the abducted child then politicians of all stripes will be screaming for GPS data to be turned over to authorities because, isn’t the reduction in privacy worth it if it saves EVEN ONE CHILD?

  11. Frank says:

    Come on. There is no privacy. Y’all know that.

    There are already tens of thousands of license plate readers in Amerika with hundreds of millions of “plate reads” in ever-growing databases, like the ones the CIA uses to track everything else about you.

  12. P.O.Native says:

    C.R., you are absolutly right. Particularly when you consider that now when government wants certain laws passed that they know the public would stop in it’s tracks if they knew the truth simply lie or concel the truth. Like “Obama Care” for one and right now the free trade treaty that they will pass with out letting the public know what’s in it. They don’t want us to know for a reason. Then the sheeples, who are more interested in Caitlin Jenner, which means nothing, than China attacking us with the biggist ciber attack ever, do nothing. Mean while the new republican ran house & senate do none of what got them the land slide and vote right along with the democrats. They even think they have to pass legislation to give them lesser treaty power than the constitution clearly gives them.

    Anyway, if they aren’t using the “Global Possitioning System” to tell where you are all the time how would they know when you’re out of state and who doesn’t get their car filled with gas before they drive to Seattle anyway?

  13. bennett says:

    Frank is right. We’ve tacitly pissed away the 4th Amendment a long time ago.

    Why do I feel like I’m the only one that knows cars have odometers? The state can spend all kinds of money hooking up apps and computer hardware/software to your car, or… They can look at the f’ing odometer!!!!!! I’m I going nuts or something? Odometer damn it! Every car has one! You look at it, calculate the difference from the last time you looked at it, wham bam thank you mam, you’re f’ing done. Let’s not outsmart ourselves.

  14. Frank says:

    “They can look at the f’ing odometer!!!!!!”

    Certainly there would be some odometer fraud. How much? Who knows. But a percentage will try to game the system.

    Then there are faulty odometers, likely to be a small percentage.

    But the biggest issue with odometers is the lack of location data. They’re essentially as general as a gas tax. Plus, if they are read only once a year during inspection time, would people have to pay their entire year of road fees at once? That would certainly price the poor out of driving real quick.

  15. ahwr says:

    Who’s checking the odometer bennett? How often? Do I have to make monthly trips to the DMV in your system? Quarterly trips? Some states (not Oregon) require annual inspections, do you want to piggyback off that? Just DOT facilities, or license garages to do it too? How much would be a reasonable charge to check it, on top of the per mile fee? If I go to the same garage every month/quarter/year, what keeps them from taking an extra $20 to chronically under report the mileage? Some people suck at budgeting. If they have to pay a variable charge, figure $100-300, once a year that will cause some trouble, but if you make people drive to _____ once a month that will juts be a big waste of time and labor. What sort of mechanism do you envision to enforce it? When someone gets pulled over do they have to have a little sticker on their window from the mileage check/inspection eight months earlier? Do you have parking enforcement agents checking cars to make sure they have that sticker (NYC gives out a lot of expired inspection tickets this way) At some point do I just get a letter in the mail saying I’ll be fined if I don’t bring my car into ____ and pay my mileage fee? What happens if I want to garage my car for a while, or if something is broken and I can’t afford to fix it right now? Do I get forced to bring it in anyway? If there’s a way to put that off and tell the state I’m not driving it right now, what keeps me from saying I’m not driving the car when I’m using it everyday? It seems like a more labor intensive system than plugging a little dongle into a port in the car that transmits the mileage data every so often. A lot of those problems would go away with a more automated system. Are you sure odometer checks would end up cheaper?

    And privacy shouldn’t be a concern. If there is a technical way for electronic voting to be done anonymously and at the same time validate eligible voters (there is), then why can’t there be a way to calculate and transmit the charge owed to the state/county/local road agencies without transmitting to them when and where any given driver travels?

  16. Jardinero1 says:

    ahwr,

    In Texas, which is where Bennett lives and also where I live. Gas stations, which perform inspections, do read and report odometer readings, to the state, with each inspection. There is very little graft involved with this. It would be no big deal for those same “registered stations” to read odometers and collect the mileage tax in the same way that they collect the inspection fee now. Most of them would gladly do it, if they were allowed to keep a certain amount as commission for providing the service. I wouldn’t have to be much of a commission, something on the order of one percent, would make it a highly desirable line of work.

  17. ahwr says:

    15k miles at 25 miles per gallon and a 20 cent state gas tax is $120 a year. A one percent commission is $1.20. Run a check quarterly and it’s just 30 cents. Sounds lucrative.

  18. Jardinero1 says:

    ahwr,

    How much do you think they make on a gallon of gas or an inspection?

  19. bennett says:

    It’s nice to see Frank and ahwr and Frank agree on something… That is bureaucracies can be big an onerous in the name of fraud prevention no matter how unlikely the fraud is. It’s probably the biggest double standard the right has (not lumping Frank or ahwr into the broad generalization).

    “Government is too big… We need to drug test everybody that gets a government subsidy. We need to make sure food stamp recipients only buy potatoes and carrots. We need to make sure all voters, particularly minority voters, have multiple forms of government issued i.d’s and registration cards.” The list goes on and on in the ways the right want to increase the size and scope of government bureaucracies.

  20. CapitalistRoader says:

    Government is too big… We need to drug test everybody that gets a government subsidy.

    Agreed. Let’s start monthly drug testing of all farmers receiving ethanol subsidies. That would include all employees of corporate-owned farms and their boards of directors. Ditto for all other crony capitalists. It would have been nice to see Soyndra’s CEO and VP’s traipse down to the clinic once a month to pee in a cup, that is before they went bankrupt. All of Boeing’s top exec’s too what with their Ex-Im Bank taxpayer largess. Elon Musk, crony capitalist extraordinaire: pee in the cup.

  21. MJ says:

    Are you sure odometer checks would end up cheaper?

    Yes. I don’t even see the need for a third party to do the reading.

    Right now, I can report a water meter reading online to my city utility. Like other ratepayers, I’m reporting the quantity of consumption based on the honor system, which incidentally is also used for many light rail systems. Some individuals may try to game the payment process, but a credible enforcement system including random inspections and sufficiently high fines for fraud should be able to keep this to a minimum.

  22. MJ says:

    “We need to make sure all voters, particularly minority voters, have multiple forms of government issued i.d’s and registration cards.”

    This just sounds like a straw man. I think drug testing welfare recipients is largely unncessary and mostly just a way to further stigmatize government dependency, but protecting the integrity of the voting system is not comparable, especially when there is plenty of evidence of organized voter fraud efforts. There is also no evidence that voter ID mandates disproportionately burden minorities.

  23. bennett says:

    “especially when there is plenty of evidence of organized voter fraud efforts. There is also no evidence that voter ID mandates disproportionately burden minorities.”

    I whole heatedly disagree.

    http://www.washingtonpost.com/blogs/wonkblog/wp/2014/08/06/a-comprehensive-investigation-of-voter-impersonation-finds-31-credible-incidents-out-of-one-billion-ballots-cast/

    http://www.theatlantic.com/politics/archive/2012/03/how-voter-id-laws-are-being-used-to-disenfranchise-minorities-and-the-poor/254572/

    http://www.pbs.org/wgbh/pages/frontline/government-elections-politics/why-voter-id-laws-arent-really-about-fraud/

    I’m not sure where you’re getting your information, but 31 cases out of 1,000,000,000 isn’t exactly raising any alarm bells for me.

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