Collaboration in Civic Spheres

WA Mileage Charge To Replace Gas Tax Gaining Speed ?

by Matt Rosenberg January 27th, 2014

A special state advisory group issued a new report this month to lawmakers and Governor Jay Inslee that there is a viable business case for a road user charge in Washington to replace the failing by-the-gallon state gas tax. Consultants and members of the steering body January 23rd gave an update to the legislature’s House Transportation Committee on the findings, and are now seeking almost $1 million more before the current session ends so they can refine operational concepts, policy particulars, a pilot program and transition strategies.

The state Road Usage Charge Steering Committee’s latest report says that if rates were held constant until 2040 the road user charge – a more sweeping approach than current piecemeal electronic tolling in the Seattle region – would yield $2 billion to $3 billion more in net revenue than the gas tax for surface transportation needs in the state. The report says any of the three user charge methods considered would help ensure “everyone pays more of their fair share for using the roads.”

Now, ever-more fuel efficient internal combustion engine vehicles and their electric and hybrid counterparts pay a lower share of upkeep for the road system because they use less gas while still adding to wear and tear. State reports in recent years have projected that the current gas tax would produce $5 billion less by 2023 than earlier forecasted due to better average mileage and the gradual rise of electrics and hybrids; and that the purchasing power of Washington’s gas tax revenues have been cut by half between 2001 and 2011 from a 77 percent jump in the Construction Cost Index.

Time Permit, Odometer Charge, or GPS-based Automated Distance Charge
Narrowed down from eight earlier options, three approaches to a new road usage charge were analyzed in the latest report. They were: a “time permit” for unlimited miles per month, quarter or year; an odometer charge based on annual driver mileage estimates and reconciliation; and a mileage-based “automated distance charge” drawn from an in-vehicle device. If ultimately approved by Washington lawmakers a road usage charge would apply to regular gas-powered, electric and hybrid vehicles, but under current study assumptions diesel vehicles would be exempt and continue to pay their own special fuel tax at the pump. That could change by the time any final rules are adopted.

Endorsement of User Charge Concept From ASCE
Among those now indicating support for some sort of road user charge to replace the gas tax are the American Society of Civil Engineers’ Seattle Section, and a prominent local elected official from suburban King County, Sammamish City Council member and former Mayor Don Gerend, a member of the state steering committee, and immediate past president of the influential Association of Washington Cities.

D+ Grade For WA’s Roads and Transit
The state’s transportation landscape is studded with worn roads, deteriorating bridges, underfunded transit systems and other problems. Only 8 cents of 37.5 cents per gallon in gas tax revenues can be used for general purpose maintenance, operations and debt of state roads and ferries, and though much of the rest goes to counties and cities, the tax hasn’t been raised since 2005, isn’t indexed to inflation, and its flow remains weak.

The Washington State Transportation Plan 2030, published in 2010, estimated a whopping $175 to $200 billion in surface transportation needs across all jurisdictions and modes (p. 1) and also identified state system needs alone of $63.8 billion by 2030 (p. 6) including $5.1 billion for state contributions to transit infrastructure; and $35 billion for repairs, maintenance and replacements of state roads and bridges. Previous estimates by the state have put the unfunded overall transportation needs within Washington, across all jurisdictions, at about 56 percent of the total.

Don Gerend favors replacing the state gas tax with a road user charge. Photo Source: City of Sammamish

Emphasizing poor funding for upkeep, the ASCE in its 2013 Washington Infrastructure Report Card gave an overall grade of C including a D+ for roads and another D+ for transit. A January 15 presentation by ASCE’s Seattle Section to the House transportation panel included highlights of the state report card and specifically recommended a “transition to road-usage charging” to help the state better secure “sustained revenue sources.”

Setting the Course
With such challenges in mind, outgoing Governor Christine Gregoire and legislators in 2012 directed the Washington State Transportation Commission to assess whether a road usage charge, sometimes referred to as a vehicle mileage tax, was feasible to replace the state gas tax. The steering committee appointed by the commission found that year that it was, and in 2013 with additional study funding from lawmakers, dived deeper.

Details on “Time Permit”
The new report states that under Concept A, a ‘time permit” would be issued to most drivers for a set rate at the same time as vehicle registration and would include unlimited miles for a set period, usually a year but in some cases less. Compliance could be signaled through tickets on vehicles or noted in a database. If out-of-state drivers were charged they could pay at border kiosks or via agents at gas stations and convenience stores. The report says advantages of this approach are that it is transparent, simple and easy to enforce, with no likely privacy objections. But there would be no connection between amount of road usage by a vehicle, and what it is charged. Details of rate setting for all options are yet to be determined. This and others could include discounts for type of vehicle, such as electric or hybrid.

Public Data Ferret’s Washington State+Transportation archive

More on Odometer Charge
In Concept B, drivers would pay an odometer charge based on their expected mileage over a specified period, with stickers to show compliance and payment adjustments later based on actual miles travelled. Advantages of this approach are that it is tied to actual mileage, and privacy concerns would likely be slight. On the downside, it doesn’t discern between miles driven inside the state versus outside the state, potentially a problem.

How About An In-Vehicle Tracker? Are There Upsides?
Concept C, or the “automated distance charge,” would use a GPS-like device in each vehicle to charge drivers and could distinguish whether they were on public roads, private roads, whether they were driving in state or out-of-state, and in what state the vehicles were registered. The in-car devices would convey data to a billing center run either by the state or a contractor, and the data could complement other mileage-driven or location-based offerings such as pay-by-the-mile car insurance, and navigation and concierge services. Downsides according to the report could be the “perception of privacy infringement” and possible compliance challenges. But this option does the best job of detailing usage, and combined mileage and real-time location data could enable policymakers to bake in discounts for travel at off-peak times and on less-congested routes.

Rep. Judy Clibborn says gas tax replacement can't yield a spending free-for-all. Photo Source: Washington State Legislature

Rating the Options
Overall, Option C in the new report from the steering committee gets the highest score on a stand-alone basis, of 25 versus 24 for the other two and 21 for the gas tax. The ratings are based on transparency, policy coherence, four equity variables, simplicity, enforcement, and perception of privacy. Using the same measures applied to four different combinations of the three road user charge options, the one scored highest in the new report was A grouped with C. The report’s appendix includes economic and cost assumptions used in modeling.

The report also said that in the next several years, increasing the state gas tax is a viable funding strategy “but the issue of declining gas tax revenue over time would remain,” with the state’s plight like that of a frog in a comfortably warm pot of water that gets hotter gradually and boils him to death with scant warning. A range of stakeholder groups continue to pressure the state legislature to this year pass a transportation funding package, likely based on a gas tax hike, after last year’s efforts derailed late in the session.

Testifying to the House panel on the 23rd, road user charge steering committee member Gerend of the Sammamish City Council, a retired Boeing rocket scientist, said, “If something isn’t working we’re going to be flexible and change it….We have to stay ahead of the game.” Gerend added that as the make-up of the statewide fleet transitions to “high mileage vehicles” and “electric cars…we see the gas tax revenues going down, so we need a better method,” and some form of a mileage charge “is it.”

In an interview after his testimony, Gerend conceded that the $2 billion to $3 billion more in net revenues by 2040 from a road user charge versus the gas tax as currently structured doesn’t amount to that much against the tens of billions of dollars in state-estimated upkeep and project needs. But he stressed that’s because of current study assumptions the user charge wouldn’t be raised before 2040, which while necessary for comparative purposes in the new report, don’t reflect the reality that revenues have to be increased over coming decades whatever main funding source is used. Either way, he said, “it’s up to the public” and resistance means “their roads go to gravel” so he argues we should opt for the fairer and more efficient approach of a road user charge. Gerend prefers the in-vehicle GPS option and believes the three West Coast U.S. states and British Columbia should coordinate road user charge policies.

However another approach, not discussed in the current report, but raised in a recent Tolling Division Operational Review by the Washington State Department of Transportation (p. 32) is to emulate Virginia. It replaced its per-gallon gas tax at the pump with a wholesale tax (of 3.5 percent) on gasoline purchases, supplemented by a 6 percent tax on diesel, increased vehicle registration fees, a $100 annual fee for electric and hybrid vehicles and a .3 percent general sales for transportation.

During the January 23 work session on the road user charge (TVW video above), House Transportation Committee Chair Judy Clibborn (D-41st/Mercer Island) called the state gas tax “a failing revenue stream” but also cautioned that whether system-wide tolling in metro regions, a road usage charge, or some other replacement is implemented, state legislators will guard against turning it into “a general free-for-all so that we just have a whole bunch of money to spend.”

Although the new report for modeling purposes assumed an implementation date of 2015, Clibborn and steering committee consultants who testified last week indicated it won’t happen that soon. Plans for a new pilot project could begin to unfold by 2015, though, and one possibility the state has noted is an I-5 corridor test of the user charge extending from Washington through Oregon and California. Oregon is one of some 20 U.S. states that have either studied a road user charge or conducted a pilot program. Oregon’s latest pilot project stems from state legislation approved last year. It will allow permanent enrollment by up to 5,000 vehicles that will be charged either by a simple device plugged in to measure miles only, or a GPS device to report in- and out-of-state travel mileage.


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