A VMT tax in Idaho? Lessons from our neighbor to the west

Did you know that in 1919, Oregon was the first state to institute a fuel tax? Now, in 2015, they are the first state to institute a vehicle miles of travel (VMT) tax – or, as they call it in Oregon, a road usage charge.

Within 10 years of instituting a fuel tax, every state in the nation had followed Oregon’s example. Will the nation again follow Oregon’s lead and establish a VMT tax? Will Idaho?

I honestly don’t know, but I do know that we need to revisit the way we fund our transportation system and a VMT tax is one way of doing that. The concept of a VMT tax is simple: drivers would be charged a fee based on the number of miles they drive, instead of (NOT in addition to) the amount of fuel they purchase. With this type of tax, everyone pays the same amount per mile, tying the amount paid in “transportation tax” directly to the amount of use.

Maureen Bock, Oregon Department of Transportation (ODOT), and Colleen Gants, PRR (a consultant working with ODOT), shared insight into Oregon’s new road usage charge – OReGO – as part of the COMPASS education series in September. I’d like to share a little of what they discussed – focusing on the “why” and “how” of the program.

Why? Oregon instituted its OReGO program to address declining gas tax revenues, a disparity between revenues and expenses, and social equity issues.

Declining gas tax revenues:

• Changes to the nation’s vehicle fleet
• The number of hybrids and electric vehicles on the road is increasing rapidly
• Less fuel (or no fuel at all!) is consumed by hybrid and electric vehicles than traditional gas/diesel-powered vehicles

• Stricter fuel efficiency standards
• Traditional gas/diesel vehicles are getting more and more fuel efficient
• As standards become even more strict, this trend will continue

• The bottom line: less fuel used means less fuel tax collected

Disparity between revenues and expenses:

• Fuel taxes are typically priced per gallon
• A price per gallon method of taxation doesn’t increase with inflation
• For example, the federal gas tax has been 18.4 cents per gallon since 1993. That 18.4 cents could buy much more in 1993 than it can today

• Construction costs are increasing

• The bottom line: stagnant or shrinking fuel tax revenue can’t keep up with costs

 Social equity:

• Middle- and upper income individuals benefit from increased fuel efficiency as they purchase new vehicles, while lower-income individuals tend to drive older, less fuel efficient vehicles

• The bottom line: lower income individuals pay more in fuel tax for the same usage than middle- and upper-income individuals

 How? How does the OReGO system work? Why was it set up as it was? 

• The OReGO program is voluntary and limited to 5,000 participants. Currently, about 1,000 are enrolled.

• To allow for flexibility and to address privacy concerns, participants have a choice in service providers – much as someone chooses their cell phone or cable provider. Different providers offer different types of service. For example, a participant can choose a provider that tracks miles only (no GPS to track where they drive) or they can choose a provider that collects more data and provides feedback to the driver. Regardless of the provider, all that ODOT ever sees is the total number of miles driven. The “extra” information is only shared with the participant

• Costs to the participant vary depending on the type of vehicle they drive. OReGO charges a flat rate of 1.5 cents per mile. Someone driving a gas guzzler will likely save money with OReGO, as they use more fuel per mile, and thus pay more in fuel tax, than the flat rate per mile charge. On the other hand, an owner of a hybrid likely will pay more with OReGO, as they use less fuel – and therefore pay less in fuel tax – than the flat rate per mile charge.

• As I said above, OReGO replaces fuel tax for participants…they are not double taxed. However, the way the program is currently set up, participants do pay fuel tax at the pump, then later the amount they paid in fuel tax is compared against the road usage charge and they are either invoiced or reimbursed the difference.

One big drawback of a VMT tax is the cost to administer the program. VMT taxes are collected from individual vehicle owners, while fuel taxes are collected from gas stations. More “users” (individuals vs gas stations) means more work to collect the taxes, which makes it more expensive. It’s unknown how many vehicles would need to be enrolled in a VMT program for it to make money, but the number is likely in the millions. For now, with 1,000 enrollees in Oregon’s voluntary program, it is far from breaking even.

Will a VMT tax solve our transportation funding woes? It’s hard to know, but the fact that Oregon – and others – are exploring how it works is a step in the right direction. Something needs to change. Our current method of paying for our transportation system is not keeping up with transportation costs or societal trends.

What do you think? Is a VMT tax worth exploring, or is Oregon wasting its time? Do you think Idahoans would jump on board if given the chance? Submit a comment below to share your views.

Want to learn more? Link to a video and slides of ODOT’s OReGO presentations at www.compassidaho.org/comm/publicevents_2015_ed_series.htm. 

Expanded public transportation…unfunded, but not forgotten

Public transportation is sorely underfunded in Idaho. It does not receive any dedicated state funding; it must rely solely on federal funding, contributions from local governments, and fares and advertising revenues.

However, that does not mean it is forgotten. COMPASS has been working diligently to plan for a future public transportation system – what is needed, when, and steps we need to take to get there.

The next long-range transportation plan, Communities in Motion 2040 2.0 will integrate four transportation components into one complete transportation system: bicycle and pedestrian networks, freight, roadways, and public transportation. While work on some of the other components has received more fanfare (see my blog below about bicycle and pedestrian planning), COMPASS has been laying the groundwork for the public transportation component of Communities in Motion 2040 2.0.

COMPASS contracted with Kittelson and Associates to develop a technical analysis for establishing the future needs for the public transportation system in Ada and Canyon Counties. The analysis recommends criteria for developing public transportation routes, taking into account the patterns of regional population and economic growth, development activity, transportation infrastructure, relevant urban design principles, and the need to make effective use of available funding.

COMPASS, with its Public Transportation Workgroup, produced a systematic step-by-step process for developing the public transportation system for 2040, including identifying key milestones necessary to develop any future high capacity public transportation corridors (e.g., bus rapid transit or light rail). This process identifies steps such as prioritization of key corridors, preservation strategies, funding requirements, and targeted investments. Phasing strategies, corridor prioritization, and mode choices (e.g., bus vs rail) will be developed as the public transportation component of Communities in Motion 2040 2.0 is fleshed out in 2017. If a high capacity corridor is identified as a near-term priority in Communities in Motion 2040 2.0, COMPASS will use the strategic process to guide necessary planning.

In tandem with developing this process, COMPASS and the Public Transportation Workgroup have been evaluating how to make the best use of funds allocated to study options for a future high capacity corridor, such as for bus rapid transit or rail. Funding had been budgeted in FY2018 for this study, but based on the findings of the technical analysis and resulting process I described above, it was determined that FY2018 is premature. These funds will be set aside to use when the timing is right, as determined through Communities in Motion 2040 2.0.

So, the next time you hear someone say “No one cares about public transportation in the Treasure Valley,” or “Hey, hasn’t anyone ever thought of light rail?” you can assure them that COMPASS – all of our member agencies – care and that, yes, “someone” has thought of light rail. Enhancements to our public transportation system – from an expanded bus system to projects as large as bus rapid transit or light rail – don’t happen overnight and they don’t happen without a way to pay for them. They take dedicated funding and a lot of careful, deliberate planning.

I’m confident that someday we will have funding for a more robust public transportation system. When that day comes, we will be ready.