Road user charging - replacing the gas tax with a mileage based fee

Oregon Department of Transportation's James Whitty discusses his state's progress with VMT fee-based charging.

Back in 2001, the state of Oregon stole a lead on the rest of the US when it decided to address the need to do something about the gas tax and its decreasing ability to fund highway construction and upkeep. Recognising that a dwindling pot of money could only shrink further as vehicles became more fuelefficient, Oregon's Legislative Assembly passed laws which led to the setting up, by the state's governor, senate president and house speaker, of the Road User Fee Task Force (RUFTF) administered by the 5837 Oregon Department of Transportation (ODOT).

Effectively, says James Whitty, manager, Office of Innovative Partnerships and Alternative Funding, the legislation made it incumbent upon ODOT to "go figure something out and run some form of pilot".

And this it did; Oregon's Mileage Fee and Road User Fee Pilot Program, the first in the US to take a serious look at Vehicle Miles Travelled (VMT)-based pricing, submitted its final report at the end of 2007. The RUFTF's programme, in essence, set out to study the feasibility of: replacing the gas tax with a mileagebased fee based on miles driven in Oregon; and using this system to collect congestion charges. Some 285 volunteer vehicles, 299 motorists and two service stations in Portland showed that the mileage fee could be paid at the pump with minimal difference in process or administration costs for motorists compared to how they paid the gas tax.
Opening doors

"Our open system approach has been designed to allow technology to evolve as it will. If we look at popular technology development over the last 10-20 years, one of the biggest disappointments has been the inability to apply a government mandate for GPS - and yet most people already use GPS-based apps. Once I started to focus on that, solutions started to emerge.

"If we want mileage-based systems to emerge, we need open systems. We can wait for the 'big moment' but we've been doing that for years and nothing's happened yet.

"We should concentrate our efforts on the best ITS technologies; many of those are identifiable now. The market will then find its own level."

Turning success into... success

ODOT's efforts were the subject of a great deal of review and the study was declared a success. But, says Whitty, there were design flaws. Principally, the scheme suffered from having only one form of collection.

"It was felt that relying on only one technological method ran the risk of becoming stuck in time - which was absurd, given the pace of technological development," he explains.

When it came to redefining the user fee system, the public also supplied critique. For instance, GPS-based tracking was seen to be too much of an invasion of privacy; Whitty describes this as both relevant and irrational, in that many of those objecting to GPS's use for VMT-based charging are quite content to use GPSenabled personal navigation devices and smart phones.

Nevertheless, such objections were a consideration and the result has been the design of an open system in which GPS is optional (see Sidebar, 'Oregon's VMT solution').

A difficult bedfellow

"When it comes to VMT, it takes time to become comfortable with the subject matter.

"Thus far very few states have taken the concept forward. Minnesota is launching a VMT pilot later this year, and Nevada is also on the way. Colorado is also making strides while on the East Coast there is an ambitious multi-state - Pennsylvania, Delaware and Maryland - undertaking by the I-95 Corridor Coalition.

"Other states are investigating policy developments or pilots to varying degrees, and federal funding will probably go into the latter. But VMT is a political hot potato and the public can react very strongly, especially during times of economic difficulty. Unless there's legislative backing or a State Governor endorses the idea, it's very difficult for public agencies to develop VMT collection systems publicly."

Another development since the original trials were being mapped out back in 2003 is the emergence of Electric Vehicles (EVs); Oregon was one of five states identified by the federal government for building an electric vehicle charging network under a recent $99.5 million grant award.

As an aside, Whitty notes that having a bi-partisan Assembly, which is split 50:50, has actually helped matters as VMT has therefore failed to become a hostage of adversarial politics along party lines.

Oregon's original VMT study was 75 per cent funded by the FHWA, which took no more than an ex officio role. Whitty hopes that, with the introduction of new legislation, more FHWA funding will be forthcoming given the current economic climate and the scarcity of research dollars generally.

Electric dreams

As noted, EVs have a big role to play in Oregon's near-term strategy.

Whitty: "With our legislation, we're looking for a small entry into VMT-based charging, one which can build over time. Once we'd addressed the GPS issue by moving to wireless odometer transfer as the primary method, we went looking for that entry point. One thought was that voluntary adoption might be the key.

"We spoke to the 232 Texas Transportation Institute, which had been looking at attitudes to VMT with six focus groups which ranged from urbanised to highly ruralised individuals. That validated our concerns. All said 'no' to the introduction of VMT-based charging but when asked about its applications to EVs, five out of six focus groups said it might make sense; the sixth group, the highly rural one, said that it was unlikely that EV ownership would take off significantly where they lived.

"So that's what our new legislation does: it applies VMT-based charging to the class of electric and plug-in hybrid vehicles which is just emerging. Note that this does not include standard hybrids.

The logic was that such vehicles would then be on a comparable footing to those which are eligible for the gas tax - which is after all a user-based fee, even if it's not constructed properly.

"Significantly, we've seen no pushback. Some advocates of EVs have questioned whether VMT might be an obstruction to adoption but the legislation applies a very low introductory tax rate and defers application to the 2014 model year; the legislation would only charge the EVs what the most-fuel efficient 'standard' hybrid pays now."

Flat fee alternative

An alternative might have been to apply a flat rate fee to all EVs.

Interestingly, Whitty notes, the Seattle Electric Vehicle Association opposed a bill to do just that and instead sent a paper endorsing Oregon's approach to those responsible for drafting Washington State's legislation.

"A flat fee would be a disincentive to EV adoption among those who only drive small distances," Whitty explains. "While there are mixed views on the EV side over paying a fee, there is general recognition that something has to happen.

"Application of VMT-based charging to EVs will allow Oregon's citizens to see how the system works, rather than leaving them to make assumptions. Going forward, politicians can then decide how to apply VMT as other fuel-efficient classes of vehicle emerge.

"Oil prices are volatile and it's the policy of many countries including the US to make vehicles more fuel-efficient. We need a scheme like this. The point is to evolve over time, reviewing policy every few years to add new vehicle groupings."

Initial thoughts

"Response to the new approach has been the same as before: there has been a lot of 'wait and see'. The nation is still learning about VMT. There's lots of agreement among transportation professionals and enlightened politicians that something like this needs to emerge; we're just trying to find out how best to make that happen.

"ODOT hasn't conducted focus groups or surveys. When you're a government agency and you're dealing with a topic which suffers from a lot of ill will, it's hard to justify spending money to change opinions. However we know what people think from public meetings, the media, blogs and so on. That's why we designed the bill the way we did - we looked to resolve objections before they had a chance to arise. Starting small and building as we go also helps us address the absence of a big advertising campaign or a major policy push. We've had media coverage about the legislation but we've seen no opposition emerge organically from the public. That suggests that we may have hit the 'sweet spot'.

Oregon's VMT solution

The RUFTF is proposing an open (non-proprietary) solution that will allow collection of odometer readings with or without the use of GPS.

"There are two basic options for collecting odometer readings electronically," says Whitty. "The first involves plugging into the vehicle and taking a reading of the electronic odometer. The OBD2 port could be used for this, for instance. This solves the issues associated with manual solutions, such as having to keep a log or mis-keying of data, but it's 'clunky' in that a vehicle still has to be taken to a location for a reading to be carried out.

"The second involves wireless transfer of an odometer reading and needs some research. There are quite a number of ways of transferring data - DSRC, AVI or wide-area cellular among them. ODOT is ready to conduct testing but hasn't yet because legislation hasn't progressed to the point where the cost can be justified. However, there has been relevant research conducted elsewhere: Noblis reported on the various options in August 2009, in work done on behalf of the 324 US Department of Transportation's 321 Research and Innovative Technology Administration and the 831 Federal Highway Administration.

"It's not necessarily a matter of selecting the best solution, however. In line with the open systems approach, it's perhaps better to set a standard and then let the market decide what works best.

"A non-GPS solution will allow odometer data transfers without geographic differentiation. However those who drive out-of-state might prefer GPS as it'll allow differentiation of non-Oregon miles. Here again, use of a physical log would be cumbersome.

"How GPS will be incorporated still hasn't been looked at fully. It might be a plug-in solution for the vehicle or a handheld solution but we have to allow choice. We also have to accommodate people's more ready acceptance of other GPS-enabled devices and how that will develop in coming years. It may be that the use of GPS turns out not to be an issue at all but we have to allow its use to emerge, not require it."