State agencies nationwide are interested in shifting from traditional gasoline taxes to new user fee systems, like road usage charging. This would help address financial disparity in transportation revenues stemming from our increasing shift to electric vehicles.
As most vehicles become more fuel efficient, or don’t use gasoline at all, fewer drivers will pay their fair share for using our nation’s surface transportation system. This is the wake-up call we’re seeing in state and federal revenue projections, which is concerning because most gas taxes are used for highway infrastructure maintenance purposes as part of the Highway Trust Fund.
Some states are already charging an additional registration fee for electric vehicles to address this gap. However, while applying a fee on electric vehicle (EV) charging could help offset the loss of gas tax revenue, it may not be enough on its own to completely replace the revenue generated by gasoline taxes, or to fund infrastructure and mobility needs.
This is why policymakers need to consider a combination of measures and funding sources to ensure sustainable funding for transportation infrastructure and services as the vehicle energy landscape evolves.
As vehicles become more fuel efficient, or don’t use gasoline at all, fewer drivers will pay their fair share for using our nation’s surface transportation system.
Advocating for Congestion Solutions
I’ve long been an advocate for treating transportation infrastructure systems like user-based utilities. Think electricity, water, even your cable bill.
Whether it’s tolling or congestion-based pricing – which many U.S. areas already have – or basic pay-by-mile charging, or both, we need to find a fair way for everyone who uses these roads and bridges to contribute to highway upkeep.
While there may be more drivers on the roads today, the revenues being collected are not projected to cover the necessary roadway maintenance and modernization costs. Most gas taxes are a flat pennies-per-gallon rate and aren’t adjusted for inflation, so they’re not keeping up with maintaining, operating, and improving roadways and bridges.
It's an interesting Catch 22, because while these electric and fuel-efficient vehicles are good for the environment, we’re still facing a future of declining revenues. That’s why alternative user fee methods like road usage charging are necessary.
While there may be more drivers on the roads today, the revenues being collected are not projected to cover the necessary roadway maintenance and modernization costs.
Opportunities for Equity
What I like about the concept of treating road systems as utilities is that you can design a system that’s more equitable for low-income, disadvantaged communities, similar to programs that exist today for certain utilities.
The system we have today for vehicle tax collections is less fair because it depends on the fuel efficiency of the vehicle. Whether a pickup truck or a hybrid sedan, both drivers are using the same amount of road, but paying vastly different sums simply because one vehicle uses more gas per mile.
Additionally, since motor fuels taxes are set at the same rate for all consumers and not adjusted for variables such as household income or type of vehicle, it’s a highly regressive form of taxation. And regressive taxes hit some people much harder than others – another example of an unfair tax.
That’s why, to me, paying by the mile through a system like road usage charging is a much fairer approach for user fees.
Paula Hammond is WSP’s multimodal national market leader and a senior vice president for the firm. She is the immediate past chair of the American Road and Transportation Builders Association.
Learn more about RUC here: https://www.wsp.com/en-us/services/road-usage-charging
[To subscribe to Insights, contact the editorial staff at [email protected].]