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State exploring alternative to gas tax for funding roads

Replacing the state gas tax with a road usage charge would mean all drivers would pay the same rate per number of miles driven, regardless of what type of vehicle they drive. (Tim Kelly Photo)Driving vehicles that get better gas mileage — whether all-electric cars, hybrids, or regular sedans, pickups and SUVs manufactured to meet higher fuel-efficiency standards — seems obviously beneficial.

However, the positive formula of people buying less gas to drive the same number of miles has a consequence for the public roads system, which is funded and maintained by the per-gallon tax motorists pay at the gas pump. Rising fuel efficiency means declining gas tax revenue, which is why a change seems likely, possibly as soon as next year, in how Washington funds its road system.

A study completed by the Washington State Transportation Commission (WSTC) in 2013 determined that it would be feasible in the near future to replace the gas tax with a road usage charge, also known as a vehicle-mile tax. The summary of that report, submitted to Gov. Jay Inslee and the Legislature in January, explained that “As cars become more fuel-efficient and alternative fuel vehicles become more common, the long-term sustainability of the gas tax as a primary revenue source for transportation will steadily decline.”

While lawmakers wrangle in Olympia over a proposed increase in the current gas tax to fund a transportation package, the Transportation Commission’s 23-member steering committee is studying various options for assessing a road usage charge, and how and when a transition to such a funding system could be implemented.

The report to the Legislature contained these key findings:

  • The road usage charge systems we evaluated will cost more to collect than the gas tax, but should generate greater and more stable net revenue over 25 years;
  • Providing drivers choices as to how they pay a road usage charge will help improve public acceptance and mitigate privacy concerns;
  • Gas tax increases can raise more net revenue in the short term than the road usage charges we evaluated, but over the long term will continue to erode in value, thus requiring frequent increases; and
  • A road usage charge system with choice helps ensure everyone pays more of their fair share for using the roads, regardless of fuel source or miles per gallon.

“A key difference with the road usage charge is it levels the playing field,” said WSTC commissioner Tom Cowan, chair of the steering committee. All drivers, even those who bypass the gas pumps and “fuel” their cars at electric charging stations, would pay the same road tax rate based on how many miles they drive.

Options for assessing a road usage charge include charging a flat fee to drive a vehicle an unlimited number of miles for a period of time (a month or a year); a charge of perhaps 1.2 cents per mile measured by odometer readings; and an automated distance charge, which would be measured by in-vehicle technology that can distinguish between in-state and out-of-state travel with periodic billing.

The steering committee’s next step will be setting up a pilot program.

“We would like to come up with what that would look like in this next year,” Cowan said, “so that if the Legislature thinks it’s a good idea to do a pilot project, hopefully we’d be ready to do that in late 2015.”

Neil Strege of Washington Roundtable , who represents the business community on the steering committee, said there is “general acknowledgment among groups that work on transportation issues that the gas tax has some structural problems.”

He said the steering committee’s work has determined that switching to a road usage charge is feasible, “and there are a number of different options and technologies that make that idea feasible.”

Although resistance is likely to the concept of the state tracking people’s driving, Strege pointed out that some insurance companies already use telemetry devices installed on vehicles to monitor their operation and to reward safe driving.

However a road usage charge is designed and whenever it’s ready, a lot of public education will be required to get drivers to understand and trust a new, more complicated system.

“It’s never going happen unless the citizens of Washington state will accept it,” Cowan said.

He said the Legislature directed his steering committee to develop a road usage charge that would replace the current gas tax, not be an additional tax. However, the Legislature would make the final decision.

The price of a gallon of gas currently includes a state tax of 37.5 cents. Assuming the price of gas would drop by that amount if the gas tax is eliminated, drivers would have to calculate their savings at the pump and compare it with how much they would be charged for road usage under a new system.

“I think biggest challenge is just change itself,” Strege said. “Right now the gas tax is so easy (to collect); it’s not itemized on your receipt, and people barely notice they’re paying it.”

Cowan said even with the problems and issues of switching to a road usage charge, “I think this is going to be the best way.”

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