Oregon leads the way in addressing transportation funding challenges

By Chris Spahr

It is not news that the Highway Trust Fund will run out of money by the end of August unless Congress takes action. The main problem is that the gas tax that feeds the Trust Fund is no longer an effective form of revenue. The reasons are numerous: There has been no increase in the tax since 1993 despite inflation; vehicle miles traveled has flattened out; there has been a massive spike in construction costs; and fuel efficiency has increased. Many states are facing the same challenges as the federal government, with decreasing buying power from gas tax collections and little political support for raising the tax.

Oregon has decided to take steps to circumvent the transportation funding cliff by implementing a pay-per-mile program that will launch in July 2015. A new report by ODOT describes Oregon’s evolving pay-per-mile fee. It highlights an innovative Road Usage Charge Pilot Program, conducted from November 2012 to March 2013, with 44 volunteers from Oregon, 21volunteers from Washington, and 23 volunteers from Nevada. To address privacy concerns, the RUCPP offered five levels of mileage-based payment options: a basic plan that based fees on all miles driven; an advanced plan that used a GPS device and based fees on miles driven on Oregon public roads; two plans that used smartphones in place of devices installed in vehicles and provided the same information as the basic and advanced plans; and a flat fee plan that charged $45 per month without tracking any mileage information.

Senate Bill 810 outlines the requirements for the Road Usage Charge Program that will be implemented starting July 1, 2015. The program will include 5,000 volunteers who drive light vehicles registered in Oregon. Of these vehicles, 40 percent must have a fuel efficiency rating of higher than 22 mpg and no more than 30 percent of the vehicles can have a fuel efficiency rating of less than 17 mpg. Road users will be charged 1.5 cents per mile and receive a refund/credit of Oregon fuels tax attributable to taxable miles charged and paid.

Devices to track vehicle driver behavior are not unique to public sector attempts to address transportation funding challenges. Usage-based insurance, currently used by Progressive in the U.S., allows insurance companies to monitor driving habits such as how fast you drive, how hard you brake, and how sharp you turn. Drivers willing to install these tracking devices in their vehicles have experienced average discounts on premiums of 10 percent to 15 percent.

As the ability of the gas tax to provide revenue for transportation infrastructure continues to dwindle, methods for tracking and charging drivers for their behaviors may become more common. Addressing privacy issues is the biggest challenge to this approach but Oregon is providing innovative options to make drivers feel more comfortable with road usage charges.

Chris Spahr is a Graduate Assistant with SSTI.