Mileage-based road funding

[cpzilliacus]

[Full disclosure: I know the author of this article.]

RESEARCHERS PREDICT A GRADUAL TRANSITION TO MILEAGE-BASED PRICING FOR ROADWAY FUNDING

There is agreement  in the transportation community that the way we pay for roads needs to change.

"The motor fuel tax has been the primary source of highway revenue since the 1920s and it has served us well over the years,"  says Ken Buckeye, program manager with the Minnesota Department of Transportation (MnDOT) Office of Financial Management. "However, with the advent of new sources of energy and the increase in fuel efficiency that is now federally mandated, the motor fuel tax alone is not likely to be adequate in the future. These trends are making it clear that we must begin to chart a path toward a fair and rational mileage-based fee system if we are going to meet our future needs."

[kalvado]

Fairly obvious idea - yet the big fat question: how to make it work? So that Big Brother doesn't have to watch each turn I make, but there is no easy way for me to evade such payment? So that I don't feel ripped off compared to that guy? 

[hotdogPi]

Fairly obvious idea - yet the big fat question: how to make it work? So that Big Brother doesn't have to watch each turn I make, but there is no easy way for me to evade such payment? So that I don't feel ripped off compared to that guy?

Odometer, and make it illegal for the current number and the previously checked value to have a difference of over 5000. (This would only be checked if a person was stopped for some other reason.)

[SidS1045]

make it illegal for the current number and the previously checked value to have a difference of over 5000. (This would only be checked if a person was stopped for some other reason.)

Huh?  What happens if you drive for a living and run up 10,000 or more miles a month, as many professional drivers do?

Obviously there has to be a means of reading a vehicle's odometer periodically.  In states with mandatory motor vehicle inspections, that's easy to do, but other than outfitting every car with a transponder (similar to the ones used for charging tolls), I don't see how else to do it.  And of course a transponder doesn't work on older vehicles with mechanical odometers.

[kalvado]

Fairly obvious idea - yet the big fat question: how to make it work? So that Big Brother doesn't have to watch each turn I make, but there is no easy way for me to evade such payment? So that I don't feel ripped off compared to that guy?

Odometer, and make it illegal for the current number and the previously checked value to have a difference of over 5000. (This would only be checked if a person was stopped for some other reason.)

And how is that bullet proof? two our cars had 3500 and 20000 miles respectively on the odometer over year. Any conclusions on which one is tweaked?

[SP Cook]

The author makes a lot of assumptions without data to support his supositions.  He states that "the cost of driving will double" but then goes down the voodoo economics hole of assuming other costs will go down, such as "health insurance" apparently because people would drive less and thus wreck less.  There is absoultly no data in the work to support this half-baked theory.   He also states that "local roads, by which he means city streets and what a called county road in most states) are supported by "property taxes" .   That is probably so in some states, but not universally, and there is plenty of evidence that governement would simply spend property taxes freed up by a new driving tax on something else, not return it to the people.

What would result, if (via this tax or any other method) in the cost of driving doubling, is people will be poorer and lead less full lives than they do now.  Driving will cost more, and, for the vast majority that have to make economic decisions based on limited resouces, people will drive less, and also do a lot of other things less in order to pay the high cost of driving.  Also, although not dealt with in the work, since businesses do not pay taxes, customers do, the increased costs of transportaion would simply be passed on to the ultimate purchaser of, well, everything transported, which is to say, everything.  Meaning, again, a poorer life for most everyone, unable to afford what they once could.

A poorer life.  Less freedom.  Less choice.  No thanks.

As to enforcement of a per-mile tax, that has been discussed before here.  Really pretty simple.  You force people (as most company owned fleet cars do now) to enter their mileage at the pump. 

[kalvado]

Obviously there has to be a means of reading a vehicle's odometer periodically.  In states with mandatory motor vehicle inspections, that's easy to do, but other than outfitting every car with a transponder (similar to the ones used for charging tolls), I don't see how else to do it.  And of course a transponder doesn't work on older vehicles with mechanical odometers.

No it doesn't work even with inspection. I do prepare car for inspection as I can - I check all light bulbs, tire threads (Sams tires are cheaper than those dealership has) etc. Law prevents anyone from tweaking odometer - but if incentive is large enough, some people would do that as well. Actually some people do that anyway to sell cars at higher price...

[jeffandnicole]

make it illegal for the current number and the previously checked value to have a difference of over 5000. (This would only be checked if a person was stopped for some other reason.)

Huh?  What happens if you drive for a living and run up 10,000 or more miles a month, as many professional drivers do?

Obviously there has to be a means of reading a vehicle's odometer periodically.  In states with mandatory motor vehicle inspections, that's easy to do, but other than outfitting every car with a transponder (similar to the ones used for charging tolls), I don't see how else to do it.  And of course a transponder doesn't work on older vehicles with mechanical odometers.

Not every state with mandatory inspections have inspections every year.  Using NJ as an example: New cars don't get inspected for 5 years, then it's every 2 years thereafter.  Cars in model years prior to 1996 don't get inspected anymore either.  When I was leasing vehicles, I went about 14 years between inspections, because the vehicles were never more than 5 years old (actually, 4 years was the rule at the time).  A yearly odometer reading at inspection won't work.

[PHLBOS]

the increase in fuel efficiency that is now federally mandated"

Dumping those mandates (CAFE standards) would solve some of the shortfall.     Real-world fuel economy averages are determined by the market and economic conditions.  High or inconsistent fuel prices = more sales of economical vehicles; lower/stable prices = increase of either larger and/or more powerful vehicles that consume more gas.  Such has been proven in the US for over 40 years.

And of course a transponder doesn't work on older vehicles with mechanical odometers.

All the more reason to hold onto an older vehicle.  IIRC, the last cars to offer old-school rotating odometers (though such were electrically/electronically driven) were the 2005 Ford Crown Victoria and Mercury Grand Marquis.

Personally, I am dead-set against the use of monitors and/or transponders to clock mileage.

One option would be, since you mentioned about checking odometer readings as part of an annual vehicle inspection (PA does such), to just simply add bill the annual mileage accumulation right then and there and payment can be made to the DMV/RMV/whatever by mail and/or monthly installments.  Such would be less intrusive.

Not every state with mandatory inspections have inspections every year.  Using NJ as an example: New cars don't get inspected for 5 years, then it's every 2 years thereafter.  Cars in model years prior to 1996 don't get inspected anymore either.  When I was leading vehicles, I went about 14 years between inspections, because the vehicles were never more than 5 years old (actually, 4 years was the rule at the time).  A yearly odometer reading at inspection won't work.

Wow, I didn't realize that NJ was that lax with inspection frequencies.  If I move to NJ; I must find a 1996 or older vehicle and use as a daily driver. 

[kalvado]

The author makes a lot of assumptions without data to support his supositions.  He states that "the cost of driving will double" but then goes down the voodoo economics

Very strange statement. Current taxation is about 2-3 cents per mile; gas is about 10 cents a mile, and IRS uses 60 cents a mile for vehicle use.
Are they really talking about 60 cents a mile tax or double of current rate to 5-6 cents? Usual statement is that current taxation needs to double - that means 5% increase of driving cost.
tf we're talking about 60 cents a mile * 200 million cars * 10 000 miles/year = $1.2 trillion, or 8% of GDP, or 30% of US federal budget in driving taxes. Seems a little bit too high

[SidS1045]

Current taxation is about 2-3 cents per mile; gas is about 10 cents a mile, and IRS uses 60 cents a mile for vehicle use.

Current taxation is, for gas, 18.4 cents per gallon, and the IRS standard rate for 2016 is 54 cents per mile.

[bandit957]

I've always said this was a terrible idea. It just encourages people to use gas guzzlers.

[kalvado]

Current taxation is about 2-3 cents per mile; gas is about 10 cents a mile, and IRS uses 60 cents a mile for vehicle use.

Current taxation is, for gas, 18.4 cents per gallon, and the IRS standard rate for 2016 is 54 cents per mile.

18.4 c/gallon is federal rate, and we end up with about 60 c/gallon in NY, and I assume you're close in MA. Most of state portion goes into bottomless general fund, but yet I prefer to think this is fair to consider that that road tax. with 23 MPG US average, that is pretty much 2.5 c/mile total.
I didn't follow IRS rates, last time I saw it was something like 59 cent.

I've always said this was a terrible idea. It just encourages people to use gas guzzlers.

and give or take 5 c/mile don't really change things a lot compared to ~50 cents/mile general cost. Tax is only a small portion of total car costs.

[cpzilliacus]

Obviously there has to be a means of reading a vehicle's odometer periodically.  In states with mandatory motor vehicle inspections, that's easy to do, but other than outfitting every car with a transponder (similar to the ones used for charging tolls), I don't see how else to do it.  And of course a transponder doesn't work on older vehicles with mechanical odometers.

No it doesn't work even with inspection. I do prepare car for inspection as I can - I check all light bulbs, tire threads (Sams tires are cheaper than those dealership has) etc. Law prevents anyone from tweaking odometer - but if incentive is large enough, some people would do that as well. Actually some people do that anyway to sell cars at higher price...

Some states do not have inspection - or only have an emission inspection process.

[cpzilliacus]

Personally, I am dead-set against the use of monitors and/or transponders to clock mileage.

One option would be, since you mentioned about checking odometer readings as part of an annual vehicle inspection (PA does such), to just simply add bill the annual mileage accumulation right then and there and payment can be made to the DMV/RMV/whatever by mail and/or monthly installments.  Such would be less intrusive.

Biggest problem is keeping such data confidential. Yes, the IRS and state taxing agencies have done a reasonably good job with same (but not perfect), but GPS tracking of every motor vehicle is several orders of magnitude bigger and more-complex - starting with the amount of data that would need to be collected and stored.

[cpzilliacus]

The author makes a lot of assumptions without data to support his supositions.  He states that "the cost of driving will double" but then goes down the voodoo economics hole of assuming other costs will go down, such as "health insurance" apparently because people would drive less and thus wreck less.  There is absoultly no data in the work to support this half-baked theory.   He also states that "local roads, by which he means city streets and what a called county road in most states) are supported by "property taxes" .   That is probably so in some states, but not universally, and there is plenty of evidence that governement would simply spend property taxes freed up by a new driving tax on something else, not return it to the people.

Agreed regarding source of funding for "local" (or, as Virginia calls them, secondary system) roads.  Bad to make those assumptions in a nation of 50 states and several state-like political subdivisions (D.C., Puerto Rico and others), with those states further subdivided into sometimes hundreds of counties and municipalities.

And there is the matter of interstate travel.  Yesterday, I crossed state lines not less than three times.  Unless GPS is used, it is not possible to apportion miles driven at even the state level.

What would result, if (via this tax or any other method) in the cost of driving doubling, is people will be poorer and lead less full lives than they do now.  Driving will cost more, and, for the vast majority that have to make economic decisions based on limited resouces, people will drive less, and also do a lot of other things less in order to pay the high cost of driving.  Also, although not dealt with in the work, since businesses do not pay taxes, customers do, the increased costs of transportaion would simply be passed on to the ultimate purchaser of, well, everything transported, which is to say, everything.  Meaning, again, a poorer life for most everyone, unable to afford what they once could.

Mileage-based user fees have the potential to manage congestion (mostly in urban areas, and some states have little or no congestion), but that can be done in other ways (such as with E-ZPass or similar transponders - and use of such devices is generally not mandated).

The bigger risk, IMO, is that municipal and other local governments will see this sort of revenue collection as a gold mine to shift the cost of operating their government onto people that live elsewhere (as the late U.S. Supreme Court Justice Louis D. Brandeis put it, Other People's Money).

Then there is the matter of transit.  Many elected officials are of the opinion that urban mass transit systems cannot survive today unless get a never-ending stream of revenue diverted from highway users - this is often rationalized by asserting that transit reduces traffic congestion, which is frequently false.

A poorer life.  Less freedom.  Less choice.  No thanks.

As to enforcement of a per-mile tax, that has been discussed before here.  Really pretty simple.  You force people (as most company owned fleet cars do now) to enter their mileage at the pump.

Keying in an odometer reading at the pump has the potential for abuse as well.  And this does nothing to deal with the issue of crossing state boundaries.

[jeffandnicole]

Not every state with mandatory inspections have inspections every year.  Using NJ as an example: New cars don't get inspected for 5 years, then it's every 2 years thereafter.  Cars in model years prior to 1996 don't get inspected anymore either.  When I was leading vehicles, I went about 14 years between inspections, because the vehicles were never more than 5 years old (actually, 4 years was the rule at the time).  A yearly odometer reading at inspection won't work.

Wow, I didn't realize that NJ was that lax with inspection frequencies.  If I move to NJ; I must find a 1996 or older vehicle and use as a daily driver. 

(Of course I meaning leasing, not leading!)

NJ tests emissions via the in-car data port.  The older tailpipe emissions equipment needed replacing.  Since not all cars in 1995 and prior have the data port, NJ decided it was easier and cheaper just to do away with testing those vehicles rather than requiring everyone to purchase new equipment.   

While it seems a little backwards - those older cars are probably the ones that would have emissions issues - there's so few cars on the road older than 20 years that the investment in the equipment wasn't worthwhile and cost effective.

[PHLBOS]

In Massachusetts, all vehicles are required to undergo a safety inspection annually.  However, only vehicles from the 2002 model year and newer are required to undergo an annual emissions test in addition to the above-safety inspection.

PA requires an annual safety inspection for all vehicles but only certain counties does it require an annual emission test for all gasoline-powered vehicles 1975 and newer.

[SP Cook]

And there is the matter of interstate travel.  Yesterday, I crossed state lines not less than three times.  Unless GPS is used, it is not possible to apportion miles driven at even the state level.

--

Mileage-based user fees have the potential to manage congestion (mostly in urban areas, and some states have little or no congestion), but that can be done in other ways (such as with E-ZPass or similar transponders - and use of such devices is generally not mandated).

--

The bigger risk, IMO, is that municipal and other local governments will see this sort of revenue collection as a gold mine to shift the cost of operating their government onto people that live elsewhere (as the late U.S. Supreme Court Justice Louis D. Brandeis put it, Other People's Money).
--

Then there is the matter of transit.  Many elected officials are of the opinion that urban mass transit systems cannot survive today unless get a never-ending stream of revenue diverted from highway users - this is often rationalized by asserting that transit reduces traffic congestion, which is frequently false.

--

Keying in an odometer reading at the pump has the potential for abuse as well.  And this does nothing to deal with the issue of crossing state boundaries.

All very good points. 

As to inter-state issues, obviously, if we assume that this is a replacement for (at least some of) the fuel excise tax, then it pretty much has to be either a federal tax, which obviously causes the issue of how the $$ get allocated to what states in what manner, or we just have to assume that 100% of the mileage entered is for the state it was entered in, or for the state the vehicle is registered in, either of which cause issues, especially for commercial trucks.  I, personally am 100% against GPS, because, first, it will be about 15 seconds before somebody figures out how to beat it, and second, I don't think the government needs to know that kind of info.

I agree on "managing congestion".  Really, the best way to manage congestion is to, well build more roads.  If there is more traffic than there is capacity, then, well, the J O B of government is to do what people want (increase capacity) rather than try to force people to not do what they want to do.  It is what government is for.  To use an analogy, if a state has 10K slots in its college system, and 11K people who want and can go to college, the answer is not to raise standards, nor to raise prices.  The answer is to build more colleges. 

The wasteful diversion of highway money to comunal transit is, as always, a huge issue.  It never was a good idea, and never will be. 

As to "other people's money", yep.  Another reason to oppose GPS.  Especial targets would be truckers or tourists.  Which is why, 100% any tax must be uniform, with locals paying the same.  And still you would have issues.  Some state, say Illinois for example is just "in the way" of people just passing through. 

As to keying in an odometer, I see it as the simplist way.  Previous entry was X, now you enter Y, which makes Z the number of miles driven.  So either this is added, at the pump, to the price of the fuel, or it gets sent to the enforcement agency for billing (or deduction from your checking account or charged to your credit card or whatever).  Whichever way the government sets it up.  As fleet cards already do this, algorythms already exist to catch liars (if Z means you are getting 100 MPG, then you obviously bought untaxed fuel somewhere and somebody audits you).  There are a couple of side complexities (Canada and Mexico, to name two) but its the simplist method.  A once every now and then exam of the odometer, also works, but that would have people oweing a year's worth of tax all at once, and what do you do if they cannot pay? 

In any event, ALL government gets to know if I just have to tell them what my odometer says is how many miles I drive, and ALL governement gets to say about it is that it costs me.  It does not get to know WHERE I drive, nor can it use variable pricing to make me conduct myself differently from my desires.  Which is, IMHO, far preferable.

[cpzilliacus]

And there is the matter of interstate travel.  Yesterday, I crossed state lines not less than three times.  Unless GPS is used, it is not possible to apportion miles driven at even the state level.

--

Mileage-based user fees have the potential to manage congestion (mostly in urban areas, and some states have little or no congestion), but that can be done in other ways (such as with E-ZPass or similar transponders - and use of such devices is generally not mandated).

--

The bigger risk, IMO, is that municipal and other local governments will see this sort of revenue collection as a gold mine to shift the cost of operating their government onto people that live elsewhere (as the late U.S. Supreme Court Justice Louis D. Brandeis put it, Other People's Money).
--

Then there is the matter of transit.  Many elected officials are of the opinion that urban mass transit systems cannot survive today unless get a never-ending stream of revenue diverted from highway users - this is often rationalized by asserting that transit reduces traffic congestion, which is frequently false.

--

Keying in an odometer reading at the pump has the potential for abuse as well.  And this does nothing to deal with the issue of crossing state boundaries.

All very good points.

Thank you. 

As to inter-state issues, obviously, if we assume that this is a replacement for (at least some of) the fuel excise tax, then it pretty much has to be either a federal tax, which obviously causes the issue of how the $$ get allocated to what states in what manner, or we just have to assume that 100% of the mileage entered is for the state it was entered in, or for the state the vehicle is registered in, either of which cause issues, especially for commercial trucks.  I, personally am 100% against GPS, because, first, it will be about 15 seconds before somebody figures out how to beat it, and second, I don't think the government needs to know that kind of info.

Also good points.  Unlike the current system of state and federal motor fuel taxes, I think a replacement for those taxes by a mileage-based user fee or tax must have have a GPS record component (this is especially critical in metropolitan areas where there is more than one state (examples include Boston, Providence, New York, Philadelphia, Baltimore, Washington,  Hampton Roads, Jacksonville, Cincinnati, Detroit, Chicago, Memphis, St. Louis, Kansas City and Portland, Oregon). 

Does that further raise the issue of the federal (and probably the state) governments knowing where you drive?  Yes.

I agree on "managing congestion".  Really, the best way to manage congestion is to, well build more roads.  If there is more traffic than there is capacity, then, well, the J O B of government is to do what people want (increase capacity) rather than try to force people to not do what they want to do.  It is what government is for.  To use an analogy, if a state has 10K slots in its college system, and 11K people who want and can go to college, the answer is not to raise standards, nor to raise prices.  The answer is to build more colleges.

Unfortunately, many parts of the United States (usually with influence in the Democratic party, though Virginia's Piedmont Environmental Council has tremendous influence with the Commonwealth's GOP) subscribe to the anti-highway doctrines of those groups ("we cannot build our way out of congestion" and "transit is the perfect substitute for building new highways") are not likely to build many new roads, and where new freeway-type roads are built, they are likely to be toll roads of some sort). 

Even though many people say they hate traffic congestion, seldom are elected officials punished on Election Day for not building roads, or for cancelling planned roads.

So I see pricing (especially in large and usually congested cities and suburbs) as a reasonable alternative (it shuts-off a favored anti-highway argument, the matter of "induced" demand for highway capacity, and also allows some very expensive highways that would otherwise probably not be affordable to get built).

The wasteful diversion of highway money to comunal transit is, as always, a huge issue.  It never was a good idea, and never will be.

It is usually justified with claims that transit provides some sort of highway congestion relief.  Not usually correct (in the U.S., with the sole exception of New York City and surrounding areas, there is precious little measurable congestion relief can be traced to transit ridership).  And there's the matter of most U.S. transit agencies being run by (now-defunct) rustbelt industries, including often billions of dollars worth of unfunded pension and retiree health care benefits.

As to "other people's money", yep.  Another reason to oppose GPS.  Especial targets would be truckers or tourists.  Which is why, 100% any tax must be uniform, with locals paying the same.  And still you would have issues.  Some state, say Illinois for example is just "in the way" of people just passing through.

My greater concern is with municipalities seeing mileage-based taxes within their corporate limits as a gold mine, much like speed traps in more than a few places in the United States.

As to keying in an odometer, I see it as the simplist way.  Previous entry was X, now you enter Y, which makes Z the number of miles driven.  So either this is added, at the pump, to the price of the fuel, or it gets sent to the enforcement agency for billing (or deduction from your checking account or charged to your credit card or whatever).  Whichever way the government sets it up.  As fleet cards already do this, algorythms already exist to catch liars (if Z means you are getting 100 MPG, then you obviously bought untaxed fuel somewhere and somebody audits you).  There are a couple of side complexities (Canada and Mexico, to name two) but its the simplist method.  A once every now and then exam of the odometer, also works, but that would have people oweing a year's worth of tax all at once, and what do you do if they cannot pay?

Though it does not work in terms of measuring what state a vehicle was driven in.

In any event, ALL government gets to know if I just have to tell them what my odometer says is how many miles I drive, and ALL governement gets to say about it is that it costs me.  It does not get to know WHERE I drive, nor can it use variable pricing to make me conduct myself differently from my desires.  Which is, IMHO, far preferable.

Yes, those are issues.  If there are to be fees imposed to manage highway traffic congestion, it should probably be done with a transponder like E-ZPass or FasTrax. 

[cpzilliacus]

Washington Monthly magazine: Is a Vehicle Mileage Tax the Future? - The old-fashioned tax at the gas pump doesn't make sense in an age of electric vehicles. Should Democrats embrace an intrusive alternative?

On MSNBC Wednesday night, after discussing infrastructure with Republican congressional leaders earlier in the day, President Joe Biden shared his legislative strategy. "I want to get a bipartisan deal...[and] that means roads, bridges, broadband, all infrastructure."  Regarding what they can't agree on–which presumably would include less traditional forms of infrastructure–Biden said he's prepared to "fight over what's left and see if I can get it done without Republicans, if need be."

Seems easy enough. Senate Minority Leader Mitch McConnell has already said he's willing to support upwards of $800 billion in physical infrastructure. While Democrats would like to spend more and include items not typically considered infrastructure, Biden and his congressional allies have no complaint about spending hundreds of billions on traditional infrastructure.

The two parties are not debating whether the government should play a major role when building traditional infrastructure. They're only haggling over cost.

So, what's the hold up? How to pay the cost. This debate is philosophical.