Study: How Road Usage Charging System Can Replace Motor Fuel Tax

Development of a multi-state pilot program is under way in 11 Western states, setting the stage for a major shift from using motor fuel taxes to maintain and improve U.S. roads.

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Last week, WSP USA began leading a feasibility study to determine if traditional fuel taxation can be replaced with a more equitable road usage charging (RUC) program, in which motorists would pay a per-mile charge to use the roadways, instead of a tax based on the amount of fuel they purchase. Under an RUC program, miles driven in a vehicle would be assessed and reported to determine a mileage-based user fee.

The study's sponsor, known as the RUC West Coalition, is a multi-state coalition of departments of transportation from Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, Oregon, Texa, Utah and Washington.

RUC would mark the most significant change in the way funds for roadways are generated, which have depended upon gasoline taxes for nearly a century.

“The rising cost of providing roadway capacity, particularly in urban areas, has outpaced the fuel tax's ability to provide necessary funding to develop and maintain an efficient system,” said David Ungemah, project manager for the RUC West program. “Roadway capital and operating and maintenance costs have risen with inflation, but the federal fuel tax has not changed since it was last raised in 1993.”

While the popularity of fuel-efficient vehicles provides environmental benefits and cost savings for motorists, it is also contributing to an expanding gap between needed funding and available funding for transportation infrastructure projects.

RUC West is exploring equitable ways to collect revenue that yield a better connection between road use and payment for the surface transportation system.

“WSP has been at the forefront of developing answers to these challenges,” Ungemah said. “We have assisted multiple state clients in analyzing concerns, providing solutions, and enabling legislative authority to pursue these concepts.”

Fair Share

One of the goals of the pilot program is to understand the concerns and objections that government officials and the public have about RUC, and develop a system that would allay those fears.

“Our objective is to determine what works, what doesn’t, and to incorporate the lessons we learn into our testing,” said Mike Warren, who recently joined WSP as a principal consultant and is now technical lead for the firm’s RUC efforts. “We are establishing the foundation of an RUC program and addressing policy and technological questions and concerns to set the stage for something larger. We hope that, like the movie Field of Dreams, ‘If we build it, they will come.’”

Currently, pilot program participants are all volunteers, using methods to report miles driven and simulate what their fees would be if this new system was in place. Volunteers have included RUC supporters and skeptics.

“We invited a legislator in Oregon who was vehemently opposed to the idea to participate,” Warren said.. “After seeing it in action she not only became a supporter, but two months later introduced legislation supporting RUC.”

Overall, volunteer reaction has been positive. The system has shown an average monthly cost of about $12 per vehicle – generating slightly less than fuel taxes for standard vehicles, and slightly more for fuel-efficient vehicles. Electric vehicles - which currently contribute little in the way of fuel taxes, would see the largest increase.

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The goal of the road usage charging program is to create a pay-per-mile system that is more equitable for the vehicles that are using the roadway. 

Privacy Concerns

Concerns have been raised about the methods of data collection used to record a vehicle's exact mileage.

Warren said the systems they are testing resemble technology already found in vehicles. The most common approach is a GPS system connected to the vehicle’s computer system, which can determine mileage and roads traveled (and can also determine out-of-state traveling.) Non-location solutions and even non-technology options are also available. A similar system using smart phones is another option.

But for people with privacy concerns, or those driving older vehicles with limited technological capabilities, a “manual” option is available, where an odometer reading at a qualified location could collect the miles traveled and establish the RUC fee.

“We are sensitive to privacy concerns,” Warren said. “Ultimately, we want people to understand that this is not about tracking a vehicle; it’s about getting motorists to pay their fair share of road usage.”

State Differences

Another challenge is preparing an RUC program that recognizes the differences in how states are permitted to generate tax revenue.

“Each state has legal limitations for taxation and collection,” said Nick Amrhein, director of developing markets. “For example, Oregon and Washington are both very active in their interest in RUC, but their tax environments are quite different. Oregon has no tolling or sales tax, while Washington permits tolling but has no income tax. We need to develop a RUC program that establishes a common platform that will work regardless of a state’s legal limitations.”

The expectation is that RUC would reduce or replace state fuel taxes, which average about 31 cents per gallon. RUC would not change federal fuel taxes, although a national change is a long-range goal.

Another benefit is that off-road or non-vehicle uses – from all-terrain vehicles to lawn mowers – would no longer be subject to paying state motor fuel taxes for roads they never use.

The study is also looking into the trucking industry, and what role it would play in an RUC system, if any.

“There is a feeling in the trucking industry that they are already paying more than their fair share of road taxes,” Warren said. “We are factoring its concerns into the study. Will trucks be a part of it? Will we just maintain a diesel fuel tax? Those are some of the many questions we are attempting to answer with this pilot program.”

Game Changer

While states like Oregon could implement an RUC program within five years, it would likely be another 15-20 years before it would be used nationwide. But the research conducted today is laying the groundwork for that possibility.

“The goal with RUC West is to collaborate with DOTs to create a program that can work within any political context,” Ungemah said. “This requires a lot of deliberation, coordination and one-on-one interaction with our clients. So far it has been working well.”

"I believe that a lot of people who are against it right now because of the privacy issues will eventually love it because it eliminates a tax that has different impacts across society," Amrhein added. “I see a lot of wins here for motorists and taxpayers.”

Warren called it a “game changer” that will have an added benefit of helping to reduce congestion, reduce greenhouse gas emissions, and improve roadway capacity.

“RUC is going to change how motorists pay for their roads, and how they use those roads,” he said. “We are at the forefront of changing the model.”

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