5,000 Californians Sign Up for Mileage-Based Usage Fee Pilot Project

California is discovering a small groundswell of support for mileage-based usage charges, with 5,000 drivers signing up for a nine-month simulation to test payment options that could eventually replace the state’s failing gas tax.

The nine-month pilot project began July 1, and not a moment too soon, reports Nossaman LLP partner Barney Allison. “The VMT program starts just after the California Transportation Commission voted in May to cut planned road and transit projects totaling $754 million, and delayed another $755 million of planned work from the state’s five-year transportation plan, because of a decrease in gasoline tax revenues due to improved gas mileage and a drop in fuel prices.”

Caltrans Executive Director Malcolm Dougherty said participants in the pilot came from every part of the state and every socio-economic background, including 50 members of the California Trucking Association. “The opportunity to provide valuable input and evaluate the viability of a mileage-based usage fee system demonstrates the commitment that Californians have to our roads and keeping them well maintained,” he said

The Vehicle Miles Traveled (VMT) options in the simulation include a time permit for unlimited travel, a mileage permit, and an odometer-based charge. Participants will be able to record their usage with a plug-in device, a built-in onboard recorder, or a smart phone app.

Results of the test will be available next March. Then the California state legislature will decide whether and how to replace gas and diesel taxes that bring in $2.3 billion per year, but leave almost $5.7 billion in annual repairs unfunded.

A Highway Funding Solution That Works

In an op-ed late last month in the Orange County Register, the Reason Foundation’s Adrian Moore underscored the urgency of California’s pilot study.

“As fuel efficiency goes up, we drive as much or more while using less gas and thus paying less in gas taxes,” he wrote. “But there is still more wear and tear on roads, and inflation, labor, land, and other rising costs make roads increasingly expensive to maintain and build.”

Which explains why “transportation should be funded through user fees—the people who pay to use roads should be the ones to pay for them. And the fees charged to use roads should go into dedicated accounts.”

Moore said the California pilot will only succeed if it avoids any hint of double taxation, protects users’ privacy, gives drivers control over their own data, and repeats the experience in other jurisdictions, where user charges were demonstrably fairer than the gas taxes they replaced—all without incurring high administrative costs.

But a month after the simulation began, he declared that the experiment was “off to a good start,” with high stakes attached: “A well-functioning road system is essential to our lives, job prospects, state economy, and mobility,” he wrote, “so developing and implementing a sustainable method of funding the transportation system would be a major boost to the state.”

IBTTA’s Annual Meeting is one of the best places to get the latest scoop on an array of user financing options. That’s yet another great reason to attend the association’s 84^th Annual Meeting and Exhibition, September 11-14, 2016 in Denver.  Only four weeks away, so register today!