Last week I wrote of the release of a study discussing how a mileage fee could in theory replace the gasoline tax, to finance the maintenance and improvement of the state’s transportation system.
This notion is embryonic in the realm of public policy. Oregon and Washington are toying with replacing their fuel taxes with mileage fees. In California, legislation sponsored by the chairman of the Senate Transportation Committee would order up a study of the feasibility of this approach in California. The bill is awaiting action in the Assembly.
These developments are promising, given the stakes. California continues to fall behind in investing in its roads and highways. Our financing sources are exhausted or lose value, while the infrastructure wears and tears, and users increase their demand, year after year.
State and federal policies require more efficient consumption of fuel, which further erodes the value of the fuel tax. A much-celebrated aspect of improved efficiency is the proliferation of vehicles that consume no or almost no gasoline at all, but nonetheless use the transportation system. This must be what they mean by “free rider.”
What is undoubtedly a success for fuel diversity and environmental protection is a looming threat to the integrity of our highway system.
Just last year, Californians registered more than 42,000 electric or plug-in hybrid vehicles. The annual fuel tax revenues foregone from that single year’s introduction of non-gasoline vehicles? Using the formula develop by the USC Price School study: more than $11 million.
As part of his vision for a carbon-stingy California, Governor Brown has laid out an ambitious goal to deploy 1.5 million zero-emission vehicles in California by 2025. This would be equivalent, in today’s dollars, of losing more than $400 million dollars a year in road and highway funds.
Zero-gasoline vehicles are but one threat to transportation finance. But since their deployment is a priority for state public policy, combined with the manifest lack of fairness to other users, perhaps a pilot project for a mileage-based fee should start with this new generation of gasoline-free vehicles.
There are several advantages to such an approach.
- The category of selected vehicles is easily identifiable, and purchasers of these vehicles would be well-aware of the new fee that would accompany use of the car.
- The cars are adequately distributed between northern and southern California (if not between the coast and inland).
- The new cars are already equipped with the latest technology, which would likely include communications software that would enable some type of mileage reporting protocol.
- Purchasers of these vehicles would skew slightly better off economically than the average car buyer. In addition to free road use, purchasers of electric or plug-in hybrid vehicles are eligible for state and federal tax credits and other benefits. The public subsidy of these vehicles would provides some recompense for participation in a pilot project.
- Purchasers of electric and plug-in hybrid vehicles are well aware of their place in the driving ecosystem, and would likely be more open to technological approaches to offsetting the costs they place on the system.
As noted in the study, a key concern of drivers is that any system for reporting mileage use the least invasive technology that does not track location. There may be any number of ways to accomplish this goal technically, but this new approach to road finance will never get off the ground unless elected leaders and transportation officials engage the public and develop the trust to overcome the appearance of inviting Big Brother on a ride-along.
Clearly, we need to rethink transportation finance. California faces a yawning chasm between our maintenance, rehab and facility needs, and the money to pay for them. In the short term this is a crisis that needs addressing separately from a wholesale redesign of transportation finance. But for the long term, state leaders should entertain an overhaul of infrastructure finance.