Dr. Gregory Rowangould (Director, Transportation Research Center) joined the House Transportation Committee on Wednesday morning. He had been asked to address the issue of reduced revenues from declining gas consumption as more people use EVs and higher mileage ICE vehicles combined with increasing inflation that impacts the material costs for maintaining roads. The Transportation Fund is getting stretched.

Options being considered included raising the gas tax, index gas tax to inflation, raise registration and inspection fees, shift funding from other streams, distance-based charges, tolls, congestion charging, more efficient use of existing resources. However, Rowangould’s presentation focuses on mileage fees. 

The advantage of mileages fees is that it charges individual users on their usage, much like the gas tax. It offers longer term financial sustainability, and it is feasible to implement with odometer readings or in vehicle navigation units. The downsides include low public support, concerns about privacy, and uncertain admin costs. 

Their study has been looking at data from vehicle inspection records and registration records to determine how many miles an average Vermont household drives. It was noted that travel is reduced in more urban areas and generally occurs in more efficient vehicles. In rural areas, mileage is higher and typically happens with less efficient vehicles. This has equity implications for Vermont families. 

Currently, most households pay between $100 and $200 annually in gas tax. Moving to a revenue-neutral mileage fee will result in cost differences, on average of $23. A mileage fee would generally benefit rural households driving less fuel-efficient cars (as under the gas tax they use more gas to travel the same amount of miles). Both a mileage fee and gas tax are regressive, but mileage fee would be less regressive. 

There was a question about “social cost” associated via varying rates based on the efficiency of the vehicle. Rowangould responded that they hadn’t considered that. It could be done, but it would be complicated. 

Legislators also wondered if this would raise more revenue? Because that’s the goal. Rowangould noted that this study was based on revenue neutral projections so you can compare apples to apples. A mileage-based fee is more stable than the gas tax. But the Legislature would have to make adjustments to cover the current revenue shortfall. 

There was concern that with the gas tax there is an incentive to buy a more fuel-efficient vehicle. That doesn’t exist with mileage tax. Rowangould agreed that is not as much of a factor, but it does cost more to refuel a less efficient vehicle, gas tax or not.

They did a 2500-person national survey. People asked to vote on a “fake ballot” on what they would support.

• Odometer reading,
• Plug in device without GPS,
• Plug in device with GPS (less privacy, but driver not charged for out of state driving).

Initially support was pretty even, but they also found most people are quite ignorant about gas tax policy. After learning more about the policy people increased support for mileage fees, especially for the non-GPS options.

Generally, at present support for mileage fees is low at 32%, but that rises to 46% after education. 

There was a question about how we would handle out-of-state drivers. Rowangould agreed that was a challenge with no easy solution. A toll at the border based on license plate origin would be simple to do with camera technology, but politically fraught.

NOTE: This might possibly violate interstate commerce because you a treating your own residents differently than those from other states.

Speaking of state borders, Rowangould noted that this may actually benefit Vermont businesses near the New Hampshire border because there would be a disincentive to cross state lines (essentially would be paying the transportation tax twice). He also noted they didn’t have to replace the gas tax with the mileage fee. You can keep the gas tax as a carbon tax or environmental impact fee.

NOTE: We can see where this is going…