The Future of Transportation Funding

The Future of Transportation Funding

September 27, 2016

Want to keep Oregon’s great transportation system alive and well into the future? There are storm clouds ahead for funding that system.

A new economic report from the Oregon Department of Transportation forecasts declining state fuels tax revenue:

“In 2020, fuels tax is projected to decline due to increased vehicle fuel efficiency and slowing employment growth….increased fuel efficiency will continue to reduce fuels tax revenue every year into the future.”

The bottom line?  “As vehicle technology increasingly decouples use of roads from gallons of fuel used, so must transportation funding if it is to remain sustainable in the long term.”

Read the full report here.

6 thoughts on “The Future of Transportation Funding

  1. Peter Burnham says:

    can’t understand why ODOT is even considering such a plan. The fuel tax works and works well. Specifically:

    • The fuel tax costs more for lower MPG vehicles and incents people to operate high mpg vehicles
    • The fuel tax is in place and has worked for DECADES
    • The fuel tax requires no technical infrastructure

    The concerns with vehicle tracking are:

    • A lack of privacy!
    o It matters not what precautions ODOT takes, a subpoena or a hacker will obtain driver records. The fuel tax is anonymous to the user

    • Increased cost.
    o Somebody has to pay for all this and the cell carriers will not do it free
    o How many more ODOT employees (or contractors) will be needed to market, install, maintain this scheme?
    • Plenty of belching old cars don’t have an OBD port and consume fuel at a higher rate.

    IF the fuel tax is not generating enough revenue because of higher mpg and electric only cars THEN raise the fuel tax! The argument that the fuel tax is ineffective on electric vehicles is just silly. A registration fee, added to the electric car registrations, that is equal to the average annual fuel tax consumed by a high mileage car driving 10,000 miles a year will suffice. Remember, the federal and state incentives for electric/hybrid cars are designed to promote their use. Now that we spent all this government resource and tax dollars on clean energy production and clean consumption why would ODOT counter the incentive with such a scheme?

    This is an over complicated scheme that is not necessary and smacks of big brother and big government. Packaging this as a “Green Option” is green washing at its best. It’s no more or less green than the fuel tax that already exists. In fact the fuel tax, because it discriminates against low mileage cars, IS THE GREEN OPTION!

    If ODOT is short on road maintenance then look for efficiency in ODOT operations and if still necessary, raise the fuel tax. More employees and more complexity is going a long way to solving a simple problem. While I’m not certain about this, is it possible that not all fuel tax is going to ODOT and road repair?

    • I have to totally agree! This system rewards me if I drive my 12mpg F250, and allows me to pay less than if I were to drive my fuel efficent smaller car. The whole idea is a typical government waste of money and resources.

  2. Michelle Godfrey
    Michelle Godfrey says:

    Hi Peter! Thank you for commenting.

    It’s true: the fuel tax works well and has for nearly 100 years (since 1919). The problem is that it is not keeping pace with modern vehicles and driving habits. As vehicles become more fuel efficient, less fuel is consumed and less tax revenue is collected to maintain our roads. Yet, construction costs are increasing dramatically along with vehicle miles traveled (due to more cars on the road and people driving more). Now we are challenged to maintain a modern 2016 highway system with funding that has not increased much since the 1990s. You can read more about that here: http://www.community.myorego.org/blog/why-do-we-need-orego/

    The fuel tax actually does require technical infrastructure (collection at the pump), we’ve just been using it for so long we don’t even really notice it…except when we try to meet our road maintenance needs. It’s sort of like connecting to the internet with a dial-up modem. Sure, it works. But it’s becoming troublesome, even dangerous when road safety and integrity are at stake.

    The fuel tax system required initial investment to set it up back in 1919. But over time, costs were recovered and are now a small percentage of the revenue collected. The road usage charge program also requires an initial investment in technology, but over time – and as more drivers participate – we will recover that initial investment and day-to-day costs of collection will decline, just as it happened with the gas tax.

    Different from the gas tax, though, is the open market created by OReGO. Account managers compete to provide services to OReGO drivers and are thus motivated to develop technology at the lowest possible cost to attract drivers to their option. As other states start using road usage charge technology, this new market should evolve as any other tech service has: the technology will become cheaper to produce and more affordable for state DOTs to deploy and drivers to use.

    We hear your concerns about privacy: many folks around the state have expressed that to us. Great care was taken by the Oregon Legislature when they created OReGO to insure privacy protection for drivers. By law, OReGO account managers are held to high standards of privacy in delivering services to participants. You can read the specifics about privacy protection built into the program on our FAQ page under the “Privacy/Security” tab: http://www.myorego.org/frequently-asked-questions/

    We certainly don’t want to discourage the production and purchase of fuel efficient vehicles – we want to encourage that! But currently, high mpg vehicles are not paying their fair share for road use with the fuel tax system. It’s not their fault; the fuel tax was designed for a uniform fleet that gets about the same average mpg. That is no longer the case. Now, a high mpg vehicle is paying very little tax compared to a low mpg vehicle for the same use of the road. The road charge actually decouples our transportation funding model from the consumption of fuel, which further reduces our dependency on fossil fuels. Read more about how fuel efficiency factors into the road usage charge here: http://www.community.myorego.org/blog/the-rewards-of-driving-hybrids-and-evs/
    And how OReGO is actually the “green” option here: http://www.community.myorego.org/blog/orego-is-the-green-option/

    Raising the fuel tax rate would help us in the short term, but it does not address the fundamental problem of unfairness to drivers who drive different types of vehicles, yet consume the road at the same rate. We talked about that issue here: http://www.community.myorego.org/blog/splitting-the-check-to-help-fund-our-roads/

    Thank you again for your comment! We appreciate your contribution to the ongoing discussion.

  3. Peter Burnham says:

    Michelle, Thank you for the reply. It shows guts to leave my contrary posts up.

    Some of the answers are not direct and some have not been answered at all. Perhaps you want to discuss this privately?

    The first thing the public needs to understand is what will this scheme cost? What percentage tax dollars collected under OReGO will not make it to ODOT?

    By way of comparison, what is the current overhead cost of the Fuel tax? That is to say, for every tax dollar collected at the pump, how many cents make it to ODOT?

    How many cents go to administration of the fuel tax?

    Of what is remaining after administration, How many cents go to non ODOT activities? How many cents remain with ODOT?

    How will this overhead in the current fuel tax compare to the OReGO method? Please be specific! In-other-words What does OReGO cost in overhead and how does it compare to the traditional fuel tax overhead?

    You said “The fuel tax actually does require technical infrastructure (collection at the pump), we’ve just been using it for so long we don’t even really notice it…except when we try to meet our road maintenance needs. It’s sort of like connecting to the internet with a dial-up modem. Sure, it works. But it’s becoming troublesome, even dangerous when road safety and integrity are at stake.” Fiddlesticks!

    The real issue is one of revenue collected, not the method by which the revenue is accessed or collected. To construe the fuel tax as old fashioned and then connect that method of collection to the safety of roads makes no sense. The issue is not how the revenue is collected it’s how much is collected. Just charge more fuel tax at the pump and be done with it!

    The second concern is why does Oregon feel it’s necessary to go about a more complex way to measure tax due? While there may not be the political will to raise the fuel tax, is it possible that OReGO can be done as an administrative fiat that does not require the political to raise taxes? In-other-words can OReGO and the tax increase it represents pass into law without a vote? Does the universal adoption of OReGO allow the legislature to raise road use fees in the future without a vote?

    The third concern is privacy. EVERYTHING gets hacked. ANY information can be taken by subpoena. Some of the strongest organizations in the world get hacked and OReGO is thinking that by telling vendors they are responsible for leaks that’s good enough? No way! That just spreads the exposure and passes the responsibility to another organization.

    And last is the notion of fairness. Why would Oregon, the Federal government and other states incent high mileage vehicles if it was fair? The short answer is the environment. With a $7500 tax credit on an electric car and the old incentives on hybrids, the people (via the state) got what they wanted; a higher mileage fleet! Is that fair to the low mileage car/truck buyer? No! Is it the right thing to do? Maybe! The point is that fairness has nothing to do with DOT or ODOT or general government revenue policy. It is already not fair that electric car buyers receive $7,500 in tax rebates for what is almost always a Nissan Leaf and the occasional Tesla.

    Without getting to far into the weeds on what damages roads more, the simple facts are:
    1.studded tires are devastating to roads
    2. Time in service (regardless of miles traveled) damages roads and bridges
    2. commercial trucks damage roads but they pay a tremendous and separate road tax
    3. Electric cars have little impact upon roads. They don’t go far per year and rarely run studs. And the “what damages roads more” argument has nothing to do with a revenue shortfall or fairness. To say the fuel tax system does not keep up with the way roads are used may be true, so raise the fuel tax and be sure all the money gets to ODOT. Electric cars can pay a small extra registration fee to account for what little road use they have and don’t currently pay for.

    Looking at the info graphc, I see under OReGO the F150 driver pays $25 less per year and the Prius driver pays $116 more than under the current fuel tax system. OReGO seems like a complex scheme in order to raise revenues. While I don’t know the Oregon ratio of Prius to F150 miles it looks like an increase in the fuel tax of +15% (30 cents per gallon to 35 or 6 cents) will get the job done and with NO additional overhead! Using your own info graphic, we are looking at 15% increase in revenue. Is that really all ODOT needs? Will 15% more revenue fix the ODOT funding problem?

    And calling OReGO the green option is just patronizing, green washing non sense. OReGO is not green, quite the opposite. Demonstrated here in the OReGO info graphic and here in the Green section. http://www.community.myorego.org/blog/orego-is-the-green-option/
    This is a pretty transparent attempt to sway public opinion by appealing to their better natures without basis. The fuel tax is the green option!

    Please understand that I am not objecting to the additional tax. I am objecting to a gigantic, inefficient, unnecessary, expensive scheme that replaces a perfectly simple system that incents the desired energy use behavior. And it is even more objectionable that OReGO is being marketed under the false pretense of green, fair and urgent messaging.

    Perhaps there is something more that we don’t know?

    Thank you, PB

  4. Peter Burnham says:

    The issues I have raised have not been answered. Is the OReGO scheme still in progress or has this died in favor of an honest discussion about fuel tax?

    • Michelle D Godfrey
      Michelle D Godfrey says:

      Hi again Peter,

      The road charge concept will be discussed by the Legislature this session as part of the larger transportation funding discussion…along with it, the fuels tax and other funding options. I’d be happy to talk with you about it further offline (or connect you with the appropriate person) by writing me at michelle.d.godfrey@odot.state.or.us.

      Meanwhile, consider your views and thoughtful recommendations here as a public record of sorts for legislators and other decision makers to consider. We very much appreciate your contributions.

      I apologize that some of your comments were not posted when you wrote them and got “back-logged.” I’ve just approved them all, so you should see them now (on this blog post and the one-year anniversary post).

      Thank you very much!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Recent Posts

The Future of Transportation Funding

Want to keep Oregon’s great transportation system alive and well into the future? There are storm clouds ahead for funding […]

View

We’re 1 Year Old!

August 9, 2016

Greetings from OReGO! On July 1, 2016, OReGO entered its second year of program operations. There is no set end […]

View

OReGO Program Update for the first quarter of 2016

May 16, 2016

The OReGO program has been operating since July 1, 2015. Senate Bill 810 created the program, and successful implementation of […]

View