News From the States
On May 14, the BATIC Institute hosted a webinar to provide an accessible introduction to road usage charges (RUC) as a user-based alternative revenue mechanism for surface transportation and highlight successful examples of collaboration, leadership, and public education from states working to build internal capacity and external support around this issue.
The Delaware Department of Transportation and the I-95 Coalition have announced a new RUC pilot study designed to explore issues and potential solutions to interstate travel and interoperability. Phase 1 of the pilot, which began May 1, 2018, will include 120 motorists and focus primarily on Delaware roads. Phase 2 is set to include a multi-state truck partnership to consider how a RUC program might work with commercial vehicles. The pilot will be funded in part by a $3.1 million grant from the United States Department of Transportation's Surface Transportation System Funding Alternatives program.
The Washington State Department of Transportation (WSDOT) has announced a road usage charge pilot program. The 12-month initiative will include 2,000 voluntary participants who will allow WSDOT to track, report and analyze their driving. Participants will receive mock invoices comparing their hypothetical road charge to their estimated gas tax burden. More than 5,000 Washington drivers volunteered for the pilot. The facilitators narrowed the pool to 2,000 participants while ensuring geographical and social-economic diversity. Drivers will choose between two service options with a variety of mileage tracking technologies. Reporting options include GPS, smartphone apps, in-dash plug-in devices, odometer readings or a pre-selected mileage permit.
On April 13, 2018, U.S. Department of Transportation's Federal Highway Administration issued a notice of funding opportunity for $20 million in competitive grants under the Surface Transportation System Funding Alternatives Program (STSFA). The STSFA, established by Congress in the 2015 Fast Act, provides for $95 million in competitive grants over five years (through 2020) to help state departments of transportation "demonstrate user-based alternative revenue mechanisms that utilize a use fee structure to maintain the long-term solvency of the federal Highway Trust Fund." The grants will provide up to 50 percent of a project's funding and require at least 50 percent of funding to come from non-federal sources. The application deadline for the 2018 STSFA grants is July 15.
In 2017 and 2016, STSFA grants were awarded of $15.5 million (to six states) and $14.2 million (to seven states) respectively.
The Oregon Legislature enacted HB 2017 (2017) which, in part, made changes to the state’s OReGo program. Specifically, the per-mile rate increased to 1.7 cents (up from 1.5 cents) to reflect the increase in the state motor fuels tax included in the bill. The per-mile rate will grow to 1.9 cents by 2022 to reflect future scheduled increases in the motor fuels tax. Further, the bill includes a provision allowing electric vehicles (EVs) enrolled in OReGO to avoid a new enhanced registration fee ($110) levied on EVs, although the drivers will still be charged the standard vehicle registration fee.
The California Road Charge Pilot Program’s Final Report has been submitted to the California Legislature. More than 37 million miles were driven as part of the pilot, and participant feedback found that 73 percent felt that road charging was more equitable than a gas tax. Further, 87 percent of participants found the pilot to be easy, 85 percent were overall satisfied with the pilot and 91 percent expressed willingness to participate in another road charge pilot.
The final report recommends next steps, most notably exploring the feasibility of a pay-at-the-pump model for road charging, similar to the traditional gas tax collection model.
Launched on July 1, 2016, the California Road Charge Pilot was established by SB 1077 (2014). Conducted by the California State Transportation Agency, the nine-month pilot sought to be a proof-of-concept by tracking and analyzing the driving of 5,000 volunteer drivers from across the state of California, including private citizens, fleet vehicles, commercial trucks and government vehicles.
In December 2017, the Colorado Department of Transportation published the final report for the Colorado Road Usage Pilot Program. Colorado’s pilot studied the concept of road charging by tracking and analyzing the driving of approximately 150 volunteer participants. Three mileage reporting options were tested and simulated fees were provided with other data to the participants. The final report found the overall support of the pilot and the concept. No major technical issues were encountered as part of the pilot. However, some policy-related issues were identified.
Road usage charges (RUCs)—also known as mileage-based user fees (MBUFs) or vehicle miles traveled (VMT) fees—are transportation funding mechanisms that seek to more closely link transportation taxes to the actual use of the roadways by a driver, as compared to traditional fuel taxes.
As states struggle to keep pace with increasing funding shortfalls and maintenance backlogs, lawmakers are exploring innovative approaches to increase revenues for transportation. One approach is to restructure existing gas taxes into a variable-rate tax to better reflect increased construction costs or fuel efficiency of vehicles. Similarly, some states have attempted to recapture revenues from drivers who now use electric or hybrid vehicles that use less or no gas at all.
A RUC goes one step further, potentially eliminating the need for a gas tax altogether, by charging drivers on a per-mile-driven basis. Proponents see this as a way to increase transportation revenues even as fuel purchases decrease and vehicle miles traveled increases, due to improved vehicle efficiency.
NCSL is aware of at least 10 states since 2013 that have passed legislation to study RUCs and many more have examined the feasibility of such a mechanism without official legislation. NCSL tracks state legislation related to RUCs in the Transportation Funding and Finance Legislation Database.
States across the country are conducting or planning pilot programs as a proof-of-concept for road usage charges. Furthest along is Oregon with the permanent, but voluntary, OReGo program which is the only program to implement actual financial transactions. California recently completed that nation’s largest pilot in which a theoretical road charge was levied. See below for additional information about these two pilots.
Below is a map compiled by the Oregon Department of Transportation indicating which states have completed RUC pilots, which states are considering or planning RUC pilots, and which states are actively monitoring the topic either via their department of transportation, state legislature or another agency.
Two regional groups of states have begun coordinating around RUC issues and programs, bringing together state officials for peer exchange and educational opportunities focused on alternative funding solutions.
RUC West, also known as the Western Road Usage Charge Consortium, is a group of 14 states seeking to “share resources and explore innovative funding solutions for preserving the future of our transportation network.”
The I-95 Corridor Coalition is a partnership among the Eastern Seaboard states which provides “a forum for key decision makes to address transportation management and operations issues of common interest.” While their scope is broader than just innovative transportation funding options, in recent years RUC and transportation financing has become a key issue of exploration for the Coalition.
Oregon launched the largest user-fee pilot program to date in July 2015. The OReGo program is building a cadre of volunteers who agree to receive a monthly rebate for the gas taxes they pay at the pump in exchange for a bill based on the miles they drive. At a rate of 1.7 cents per mile, a vehicle with a fuel efficiency of 20 mpg would break even under the program by not having to pay the state’s 34-cent-per-gallon fuel tax.
Officials attempted to anticipate public concerns by letting volunteers choose from a variety of mileage-tracking options: an in-car GPS unit, self-reporting based on odometer readings or a monthly set mileage fee. Private third-party companies are administering the program to alleviate privacy and data-collection worries.
"Ultimately, the goal of this public-private partnership is to pave the way for reform by removing the uncertainty surrounding a workable road-user charge,” says Bruce Starr, a former Oregon senator and past NCSL president. “Our program is voluntary, users have choices, it’s transparent and the private sector is collecting the fee—all necessary for a successful pilot.” Starr, a vocal supporter of RUC and OReGO, co-sponsored SB 810 in 2013 which created the pilot program.
California has completed the Road Charge Pilot Program, a voluntary effort that relied heavily on Oregon’s experience. The program was created by the Road Charge Technical Advisory Committee, which was established by 2014 legislation to study user-fees and lay the groundwork for a statewide pilot program. The California Road Charge Pilot served as a proof-of-concept and included 5,000 volunteers. Unlike Oregon’s pilot, this program was conceptual in nature and did not involve any actual financial transactions.
A number of smaller short-term pilot programs have taken place across the country. The Federal Highway Administration’s (FHWA) Office of Innovative Program Delivery catalogs many of these past efforts.
The 2015 Federal FAST Act created the Surface Transportation System Funding Alternatives (STSFA) program, a new state-based pilot program that allows a state or group of states to receive federal funding to demonstrate alternative funding mechanisms that employ user fees to maintain the solvency of the highway trust fund. Money is to be used to test the design, acceptance and implementation of such an alternative as well as for outreach to increase public awareness on the need for alternative funding.
The program is funded at $15 million in 2016 and $20 million thereafter through 2020. NCSL advocated heavily for the inclusion of this program based on our policy resolution to solve America’s long-term transportation crisis.
The program provides funding to states to help them develop alternatives to the gas tax that utilize a user fee structure to help fund the nation’s systems of highways, roads, bridges and mass transit through the Federal Highway Trust Fund (HTF). Projects qualifying for grants include:
- Full new demonstration projects.
- Extensions or enhancements of existing demonstration projects.
- Required pre-demonstration activity leading directly to a planned future demonstration project in the near term (less than 18 months from award).
Proposals may also address the flexibility and choices available for user payments, administrative costs and ability to audit and enforce compliance. Additionally, cost sharing or matching is required, with awardees providing a 50 percent share. Although other federal funds may be leveraged for the deployment, it cannot be considered as part of the STSFA matching funds, which must come from non-federal sources.
For those states that receive an award, FHWA anticipates substantial federal involvement with STSFA recipients during the course of these projects, which will include oversight, technical assistance, and guidance to the awardee.