Oregon Experiments with Mileage-Based Road User Fee Program

Published July 14, 2015

The State of Oregon is testing mileage-based user fees to pay for state road infrastructure construction and repairs, replacing the state’s gas tax with a “user pays” system.

The experimental program is the first of its kind in the nation, directly tying how much a taxpayer uses a toll road to how much is paid.

Experimental Idea

Adrian Moore, vice president of the Reason Foundation, says state-level experiments with gas-tax alternatives should be encouraged.

“This is an idea that is still in the trials and pilot project phase,” Moore said. “We don’t fully know if it will work. Things that need to be worked out are ensuring privacy and keeping costs down. If large-scale trials go as well as the small-scale ones have, this should be a big improvement over gas taxes.”

Moore says Oregon’s experiment protects consumer privacy.

“Existing mileage-based user fee systems are predicated on a number of approaches to protecting privacy,” Moore said. “Most important is consumer choice. No one is required to have a tracking device. You may choose a non-tech option like odometer reading or paying a flat fee.

 “Even if you choose a technology option, you can choose one in which only your computer knows where you have been, and only information about what you owe in payment is sent outside,” Moore said.

“At the same time, there are additional protections,” he said. “In Oregon, the state passed new laws governing the use of data from mileage charges and limiting how long it is kept and how it is used. They have private companies managing all of the technology options, not the state, so it is a private firm that has the data. You have contractual protections, just like you do with your phone, and recourse to the law if your privacy is violated.”

‘The Only Known Solution’

John Charles, president of the Cascade Policy Institute, says mileage-based user fees use free-market ideas to help solve traffic congestion.

“I think a bigger concern is traffic congestion in a few places, mostly in Portland, and the only known solution to that is congestion pricing, which is a real-time [vehicle mileage tracker] fees with variable rates tied to levels of congestion.”

Charles says the current gas tax system allows electric-vehicle drivers to avoid paying for using roads.

“It’s certainly true that a realistic road user charge would raise the cost of driving for people with electric vehicles or some hybrids, but that’s only because they are underpaying,” Charles said. “The fuel you use has nothing to do with road maintenance or your economic demand for expanded roads. If those people don’t pay their fair share, then everyone else will have to make up the difference.”

Jeff Reynolds ([email protected]) writes from Portland, Oregon.

Internet Info

Tracy C. Miller, Mercatus Center, “Improving the Efficiency and Equity Of Highway Funding And Management: The Role Of VMT Charges”: https://www.heartland.org/policy-documents/improving-efficiency-and-equity-highway-funding-and-management-role-vmt-charges/