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As Michigan debates road funding, Oregon tries pay-per-mile tax

Posted at 6:21 AM, May 21, 2015
and last updated 2015-05-21 06:21:21-04

SALEM, Oregon — Oregon is set to become the first state in the nation to implement a pay-per-mile tax. The measure is currently voluntary, starts in July, and will only be open to 5,000 drivers.

Participating drivers will have their mileage recorded and be charged 1.5 cents per mile. They’ll get credit to offset the fuel tax at the pump.

It’s an interesting experiment by the state as an attempt to offset the dropping revenue from the fuel tax. This is a problem across the United States as more drivers opt for fuel efficient vehicles. Good for the environment, Oregon policy makers say, but bad for roads and bridges.

Money collected from the fuel tax goes towards repairing and maintaining that infrastructure in Oregon, and the state frames this new program as “a new way to fund roads and bridges for all Oregonians.”

But the reality is that for some Oregonians, especially those who drive fully electric vehicles, opting into OReGO, as the program is called, would mean forking out lots more money.

The question for policymakers is how to convince Oregonians to opt-in for a new tax.

Michelle Godfrey with the state’s Department of Transportation is not naive about that challenge. “No one wants a new tax and this is what it is,” said Godfrey. “It’s an alternative to an existing tax, but most people are not aware of what they are paying in gas taxes, so they have to be educated.”

The state put out a comparison for drivers and a calculator on a website to see how it would actually work in practice.

Here’s where the math comes in:

  • The state calculates that the average Oregonian drives 12,962 miles a year.
  • Oregon compared what drivers of two cars — A 2014 Toyota Prius and a 2014 Ford F-150 — would pay driving that distance. Under the fuel tax model the F-150 pays more into the state coffers by way of the fuel tax, $216.03 to the Prius’ $77.77.
  • But if both opted into OReGO, they’d both end up paying the same amount into the state’s highway fund — $116.66 — but under this plan the F-150 saves money. Not a lot, but after the state offsets the fuel tax with the usage fee, the F-150 driver would save a little over $20 a year. The Prius driver by comparison would fork out almost $200 more a year.

“It might be a bit of a shock at first to see the actual amount they are paying, but I believe it is empowering to drivers,” said Godfrey. “It will help them to determine how they drive and if certain trips are necessary.”

The state has a whole section on its website devoted to answering the question of just why would someone decide to voluntarily give the state more money. The answer: we all need good infrastructure: bad roads do damage to all cars — especially lighter ones. And drivers of electric vehicles and fuel efficient cars who were polled said they wanted to pay more for etter roads.

So far 1,600 drivers have signed up, Godfrey says. The real number could be higher, because account managers have partnered with her agency to help get people on board.

Oregon’s program isn’t permanent, but state officials are betting that other states will be watching. They say 18 other states are looking into similar options.

Thus far bikes and motorcycles will not be eligible, and drivers with GPS systems won’t get dinged when they drive out of state.