Answers on the Nation's First VMT Fee Law

Snyder had the opportunity to question Jim Whitty, manager of "alternative funding" programs at the Oregon Department of Transportation (ODOT) during his appearance in Washington, DC, "to speak with members of Congress, key Senate committee aides, White House staff — and this reporter" about the VMT fee bill that the Oregon legislature passed last July and Gov. John Kitzhaber signed into law on August. 14. Four of the ten questions are discussed below.

1.  How did Oregon get past privacy concerns?

Undoubtedly, this is the most formidable challenge facing mileage fee advocates, though by no means not the only one.

"You can’t mandate GPS (Global Positioning System) and get this done,” Whitty said. “You’ve got to give people options that don’t involve GPS." 

Whitty explains that during the first pilot VMT program, they found that "people didn’t like having government surveillance devices in their cars.  For the second pilot, this past winter, people could pick their own device from the marketplace, and they found that more comfortable. Plus, there’s an option to just report mileage from the odometer", he stated.

Lesson 1: Before Oregon approved the nation's first mileage fee law, they went through two pilot programs!

2.  Why not just raise the gas tax?

Whitty answers that it was not the need for increased transportation revenue but the state's adoption of policies to promote electric and hybrid vehicles that prompted the legislature to act. In other words, if the state is going to incentivize programs that result in reduced transportation (gas tax) revenue, they have to consider the financial consequences of those policies.

3.  Will a VMT charge better match the needs of the system than the gas tax? 

This is a key question for the future of road funding - one where VMT fee advocates may have the edge. His response:

Mostly, yes. Fuel consumption used to be a reasonably good proxy for road use, but it isn’t anymore. Charging people directly for their use of the roads makes more sense. If revenues go down, it will be because people are driving less, and therefore creating less wear and tear on the roads, as well as less demand for system expansion. 

4.  Does a tax on fuel-efficient vehicles punish people doing the right thing?

Whitty remarks that "making the great choice to buy a less polluting vehicle doesn’t make it a great choice to let the road system crumble."

Clarification: The law is a voluntary program for 5,000 motorists; no more than 1,500 people can have low mileage vehicles because all participants have their state gas taxes refunded. As we noted in July, SB 810 (now law) was Plan B. Plan A, HB 2453 would have required "drivers with a vehicle getting at least 55 miles per gallon or the equivalent to pay 1.55 cents per mile after 2015 or $542.50 annually".

Lesson 2: Don't expect to see a VMT fee bill replace the gas tax for all vehicles. It may be far more likely that it will only apply to electric and super-efficient petroleum-fueled vehicles, creating a dual user fee system of gas tax or VMT fee. However, the alternative to an Oregon-style fee for these vehicles is a fixed fee, similar to a registration fee, that is already in place in ten states.

Finally, while no doubt policy makers and analysts in Washington had much to ask and learn about the Oregon experience, there does not appear to be much hope, at least in the short term, that those lessons will be applied to federal transportation funding as wrote Oct. 1 in describing the latest funding proposal, "Boxer Proposes Wholesale Oil Tax to Replace Fed. Gas Tax". However, we see no reason why Washington should not "Assist States in Implementing VMT Fees".