The newspaper The Hill reports that the draft surface transportation reauthorization plan being floated on Capitol Hill by the Obama administration includes the creation within the Federal Highway Administration of a Surface Transportation Revenue Alternatives Office. This office would be responsible for creating a “study framework that defines the functionality of a mileage-based user fee system and other systems” and be funded by a total of $200 million through FY 2017 for the project. In other words, a Vehicle Miles Traveled or VMT user fee.
Initial reactions to this article range from concerns about privacy to taxes. However, the system being considered would simply track the number of miles traveled, not where someone has traveled (unlike cell phones), and payment of the VMT fee would be made at the gas pump each time someone fills up their vehicle. That is just as it is done now, except we are currently charged the user fee by the gallon instead of the mile. Both the existing gasoline and proposed VMT funding methods are the closest things to pure user fees and serve to keep the trust in the Highway Trust Fund.
Instituting a VMT user fee to replace the current per gallon-based user fee would be analogous to implementing a flat rate income tax, but in this case, everyone would be paying the same amount per mile. Vehicles that place the same amount of wear and tear on our roads should pay the same amount. Right now, hybrid and alternative fuel (electric / compressed natural gas / E85) vehicles are not pulling their weight because they do not use the same amount of gasoline (if any) that traditional vehicles use. As more people migrate to such vehicles, revenues to the Highway Trust Fund continue to decrease, increasing the burden to pay for our roads upon everyone else.
The current highway user fee is 18.4 cents per gallon of gasoline. Replacing it with, for example, a VMT user fee of 1 cent per mile would evenly distribute the cost of maintaining and improving our federal highway system among all highway users with negligible impact to most drivers. For someone whose vehicle gets 20 MPG, traveling 400 miles, their VMT user fee would be $4.00. Based upon using 20 gallons to travel those same 400 miles, their current user fee is $3.68 or $0.0092 per mile.
The current funding mechanism for the Highway Trust Fund is unsustainable given technological advances. We hope that the Administration and Congress can devise a workable funding source that adequately funds our nation’s surface transportation needs and addresses people’s concerns about privacy and taxes. We cannot wait any longer for this process to begin without it having a detrimental impact upon our nation’s highway system and untold consequences to our future economic growth.
