NCPA - National Center for Policy Analysis

Oregon Mileage-Based User Fee

August 13, 2013

For more than a decade, Oregon has been at the forefront of efforts to find a replacement for declining gas tax revenues. Earlier this month, the legislature passed a groundbreaking bill to begin charging volunteers based on how much they drive on state roads, instead of how many gallons of gas they buy in the state. The bill, passed by the legislature and awaiting the governor's signature, establishes a program that will test the feasibility of transitioning away from gas taxes toward mileage-based user fees (MBUFs), which charge travelers based on how many miles they drive, says Daniel Bier of the Reason Foundation.

  • This legislation, building on years of research and multiple demonstrations by the Oregon Department of Transportation, will provide 5,000 Oregonians with the option to pay 1.5 cents for each mile they travel on state roads, rather than paying the state's 30 cents per gallon gas tax.
  • Participants will be refunded their share of the gas tax each time they fill up, in exchange for paying the fee on miles traveled. Oregon recorded over 19.4 billion vehicle miles travelled in the state in 2011.

This is not only a more logical and fairer method of paying for state highway needs, it is also inevitable.

  • As far back as 2001, state officials began investigating ways to offset declining gas tax revenues with other methods of paying for roads.
  • Over the next few decades, federal fuel economy standards will increase average fleet-wide fuel efficiency, encouraging more driving while collecting less tax revenue for each mile traveled.
  • The rise of hybrids and electric cars has brought the issue to a head, as many citizens have noticed that electric car owners are literally free riding on the state's highways, which are still maintained in large part by gas taxes.

The key to securing passage for the mileage-based user fee (MBUF) was that it be a voluntary, opt-in program. Other important factors were ease of use, privacy protections and options for participants. The bill does not dictate which technology drivers have to use, but instead allows them a choice between a variety of payment methods.

In 1919, Oregon became the first state in the nation to institute a gas tax to help fund transportation infrastructure. Almost a hundred years later, it is leading the way from that model toward a fairer, more efficient and more responsible road payment method. This program will provide an ongoing model for policymakers around the country. Thanks to innovative policies such as MBUFs, Oregon will continue to be on the cutting edge of transportation funding in the 21st century.

Source: Daniel Bier, "Oregon Leading the Way with Mileage-Based User Fees," Reason Foundation, August 7, 2013.


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