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.

2 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?

  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.

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