Could a Pay-Per-Mile Plan Fix Our Interstate System?

A "pay-per-mile" strategy to pay for transportation system maintenance may not be a better replacement for higher fuel taxes.

By SHARE
FE_DA_070206biz.jpg
LOS ANGELES, CA - FEBRUARY 03: A motorcyclist drives in the High Occupancy Vehicle (HOV) lane, also called the diamond or commuter lane, on the 118 or Ronald Reagan Freeway on February 3, 2005 near Simi Valley, California. To encourage sales of environmentally-friendly hybrid cars, lawmakers are contemplating legislation that would allow states to determine whether to allow hybrid vehicles with no additional passengers to be driven in highway HOV lanes, currently reserved only for motorcycles and vehicles carrying multiple passengers.

Gregg Laskoski is a senior petroleum analyst for GasBuddy.com

If there's one issue where states large and small from the Pacific to the Atlantic stand in solid agreement, it's that our Interstate system, highways, bridges and secondary roads have been neglected for too long. As you would expect, the discussion gets dicey when politicos start debating how to pay for it.

Rest assured, we taxpayers will pay the price if we want safe and uncongested roads, bridges and highways. It now boils down to the terms of payment; how much can be squeezed from us and how often. For many years it's been the federal gas tax (18.4 cents per gallon) that primarily pays for interstate repairs but that's been a rapidly diminishing revenue source and that's why the government's attention has turned to other options. The federal government is now focusing on a 'pay-per-mile' system of some sort, that could be cobbled together using the most practical and viable elements from a variety of pilot programs in the Unites States, and similar approaches in Germany and New Zealand. Here's an update. It's the Government Accountability Office report on the Viability of Mileage Fees (December 2012).

[ See a collection of political cartoons on gas prices.]

According to the report,

We modeled the average mileage fee rates that would be needed for passenger vehicles and commercial trucks to meet three illustrative Highway Trust Fund revenue targets ranging from about $34 billion to $78.4 billion per year. To meet these targets, a driver of a passenger vehicle with average fuel efficiency would pay from $108 to $248 per year in mileage fees compared to the $96 they currently pay annually in federal gasoline tax."

The report cites input from the Congressional Budget Office that says:

Fuel taxes also raise efficiency and equity concerns in that they: (1) do little to promote the efficient use of the nation's roadways because they provide minimal incentive for users to drive less and (2) tend to be regressive, in that they impose a larger relative burden on low-income than on high-income households.

How much would a pay-per-mile plan really cost? The Government Accountability Office dances away from that one. It says: "The costs of managing, maintaining, and enforcing any mileage fee system are also unknown but likely to be substantial."

[ See a collection of political cartoons on energy policy.]

That kind of vagueness is understandable. But the report is not enough to warrant sweeping changes… not yet. The Government Accountability report also notes that had the federal gas tax been indexed to the rate of inflation years ago, there would have been a vastly greater pile of money for which to keep pace with highway repairs than we have now.

Perhaps an increase in the federal gas tax—coupled with inflation indexing—may be the most viable and cost-effective option after all. It certainly deserves a closer look.