Statewide Distance-Based User Charge: Case of Oregon

Abstract

Concerned about the declining purchasing power of gas tax revenue due to inflation, public opposition to tax increases, and improved fuel efficiency of new vehicles, the 2001 Oregon Legislature created the Road User Fee Task Force (RUFTF) to make recommendations regarding a potential replacement for the gasoline tax. Partly funded by the Federal Highway Administration (FHWA) Value Pricing Program, the RUFTF commissioned a series of studies in the past five years exploring theoretical, technological, institutional, and practical issues involved in a vehicle miles traveled (VMT)-based revenue collection system. A pilot study is currently being conducted in the Portland region with state-wide implementation expected following the 2009 Oregon State Legislature. These past and on-going studies have examined a range of important issues associated with this innovative revenue mechanism, including its socio-economic, regional, energy-use, and environmental impacts, on-board VMT tracking and communication systems, data transmission options at fee collection centers, pilot study design, policy deployment and implementation, public relations, and institutional options. Estimates on the distributional impacts of a flat-rate VMT fee on Oregon households based on income and location suggest the VMT fee is slightly more regressive than the gasoline tax. However, much of the tax burden is shifted from rural to urban households. Alternative rate structures for the actual vehicle mileage fees have also been considered in Oregon, including revenue-neutral flat rate, graduated rates based on fuel efficiency, total mileage, level of congestion, location, time of day, income, and vehicle types. This paper summarizes findings of these previous studies in Oregon as there appears to be increased interests in mileage-based direct user charges from federal and other state transportation authorities, and in the research community. Since the general rationale and theory of this innovative financing option is well known, the discussion focuses on the political, technological, and practical hurdles and solutions with regard to vehicle mileage fees.

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