State Road User Charge Pilot Results and Legislative Action

Road User Charge Fact Sheet: Missouri

State: Missouri.

Publication Date: Oct. 30, 2020.

History: Missouri’s Department of Transportation (MoDOT) received three grant awards over three years totaling $4.8 million from the federal Surface Transportation System Funding Alternatives (STSFA) program. These grants enabled MoDOT to study an alternative revenue mechanism designed to address payment inequities in the state’s fuel tax structure. Specifically, MoDOT designed a proposed miles per gallon (mpg)-based registration fee to replace its current registration fee structure, along with a financial model assessing the potential impacts of such a transition, and a platform for a full-scale implementation strategy with Missouri’s Department of Revenue (MoDOR).

STSFA Awards

Federal Fiscal Year	Grant Amount	Description
2016	$250,000	Study a new annual registration fee schedule based on estimated mpg and determine concept feasibility.
2017	$2,772,000	Conduct public outreach on concerns related to equity and data security issues.
2018	$1,782,000	Deploy innovative strategies such as annual vehicle registration fees varying by vehicle fuel economy along with other user-based charges.

Legislative Activity:

In 2017, Missouri’s General Assembly adopted HCR 47, which established the “21st Century Missouri Transportation System Task Force.” This task force was a 23-member bipartisan panel consisting of participants from the private sector and legislative and executive branches.  A report was published in 2018 “with recommendations regarding the state transportation system and the funding of that system.” One recommendation called for legislative changes to approve a new annual registration fee structure based on a vehicle’s mpg instead of a vehicle’s taxable horsepower.

According to MoDOT, legislation is required to implement an mpg-based registration fee structure. The Missouri General Assembly has considered five pieces of legislation over three years that would have implemented the proposed revenue mechanism supported by MoDOT. However, none of these bills had been enacted as of October 2020.

In 2018, HB 2600 would have established a base vehicle registration fee totaling $29 for all vehicles with an Environmental Protection Agency (EPA) fuel economy under 30 mpg. Vehicles achieving an EPA fuel economy of at least 30 mpg would have paid an incremental fee per mpg, an amount set by administrative rule. This bill was referred to the House Transportation Committee but did not advance beyond that point.

In 2019, HB 500 and SB 201 would have replaced the current registration fee structure with one based on the combined city and highway mpg rating using the fuel economy label by the EPA or a rating obtained using vehicle identification numbers. The House Transportation Committee held a hearing in Feb. 2019 but did not advance the proposal beyond that point. The Senate Transportation, Infrastructure and Public Safety (TIPS) Committee voted its bill out of committee in Feb. 2019, but it was not subsequently considered by the full Senate. The new base annual registration fee would have been $24 and, for each additional mile per gallon over 29 mpg and up to 60 mpg, the fee would have increased by $6. Plug-in hybrid and electric vehicles would have been subject to an mpg-based annual registration fee totaling up to $204.

In 2020, HB 2301 and SB 906 also would have replaced the horsepower-based registration fee structure with one using mpg ratings and set annual fees based on such ratings.  The House version was referred to the Transportation Committee but did not receive a hearing. The Senate TIPS Committee held a hearing in March 2020 on its version, but the proposal was not advanced beyond that point.  Vehicles with an mpg of 19 or less would have paid $25, 20 mpg to 29 mpg would have paid $32, 30 mpg to 39 mpg would have paid $39, 40 mpg to 49 mpg would have paid $46, 50 mpg to 59 mpg would have paid $53 and 60 mpg or more would have paid $75. Additionally, plug-in hybrid and electric vehicles would have been subject to fees of $112.50 and $125, respectively.

Project Details:

Missouri’s registration fee is currently based on a vehicle’s taxable horsepower, a calculation determined by a vehicle’s cylinder dimensions. MoDOT studied the feasibility of transitioning its registration fee structure from taxable horsepower to a vehicle’s combined mpg rating. An operational framework was developed to implement the amended structure. The proposed revenue mechanism is not meant to replace current fuel taxes and is also not a per-mile charge based on road usage. Additionally, a technical memorandum was produced to identify each passenger vehicle with the appropriate EPA fuel economy rating. The project found that “by charging vehicle licensing fees, the state would be able to maintain the Highway Trust Fund revenue stream while simultaneously addressing the existing payment inequity between high and low-efficiency vehicles. Specifically, low-efficiency vehicles would be charged a smaller registration fee than high-efficiency vehicles, as lower efficiency vehicles carry a larger motor fuel tax burden.”

Project Status:

MoDOT completed pre-deployment activities on Aug. 15, 2018. These activities involved testing the feasibility of transitioning to a fee schedule based on the combined mpg rating of vehicles and coordinating with MoDOR to develop a full-scale implementation strategy to replace the existing registration fee structure. Since then, MoDOT has worked with the General Assembly regarding alternative funding mechanisms for transportation infrastructure. This has included an outreach campaign to lawmakers about the need for alternative funding, as well as new technologies. A State Innovation Forum was also organized in which stakeholders presented their ideas on possible solutions to transportation funding problems.

MoDOT’s phase two STSFA award provided $2.7 million to investigate attributable revenues in rural and urban areas. Furthermore, MoDOT received a third STSFA award of nearly $1.8 million in federal fiscal year 2018 to design and implement mpg-based registration fees. According to MoDOT, two studies were conducted. One study sought to understand highway use on a per-year, per-mile and per-driver basis to determine highway impacts and the fees paid by non-gasoline and non-diesel vehicles. This study concluded in September 2019 and its results will support a policy that benchmarks mpg-based registration fees according to highway use and the amount of fees presently paid into the highway system.

The other study explored fees paid by rural and urban drivers under a potential mpg-based registration fee structure while addressing commuting patterns and vehicle types. This study concluded in June 2019, with results indicating that rural drivers are effectively subsidizing urban drivers. MoDOT notes its primary project goals from the studies were twofold. First, MoDOT seeks to “generate revenues consistent with technological trends in the motor vehicle market,” and second, MoDOT is committed to “ensure privacy and security for drivers while using current adaptable technologies to collect and administer the fee.” 

Additional Resources:

• MoDOT Gets Federal Grant for Alternative Funding Study, Jefferson City News Tribune, Feb. 14, 2019
• Missouri to Test New Fees to Pay for Highway Projects, St. Louis Business Journal, Feb. 13, 2019
• 21st Century Missouri Transportation System Task Force (2018) 

NCSL Kicks Off Project to Expand Understanding of Road User Charging

Since the early 2000s, states have been at the forefront of discussions to explore possible replacements for the motor fuel tax (MFT). States are heavily reliant on MFT revenue as a source for transportation funds. According to the National Association of State Budget Officers’ 2019 State Expenditure Report, “Motor fuel taxes represented the largest revenue source for transportation funds at 39.8%.”

Motor fuel tax receipts are projected to continue to decline as vehicles become more fuel-efficient and the surge of new electric vehicles continues to spark interest among buyers. The announcement that the nation’s most populous state, California, will end all sales of new gas-powered vehicles beginning in 2035 is one indicator of the momentous changes the transportation system and industry will undergo in the next few decades. An analysis published by Bloomberg predicted that 10% of all new car sales will be electric by 2025, increasing to 22% by 2030, and could be even higher as electric cars become more affordable.

Not only are vehicles revving entirely independent of gasoline, but internal combustion engine vehicles are simultaneously becoming more fuel-efficient. The most recent data by the U.S. Bureau of Transportation Statistics reported that the average light-duty vehicle in the U.S. achieved 22.3 mpg in 2017, up from 20 mpg in 2000 and 14.9 mpg in 1980. The U.S. Energy Information Administration predicts a 19% decline in gas consumption through 2050.

CDM Smith, a global engineering and construction firm, predicts a $9 billion annual decline in fuel tax revenues beginning in 2020 when considering what had been expected by 2015 revenue estimates and the fiscal impact of more fuel-efficient vehicles and new electric vehicle sales. This is forecast to accelerate by approximately $12 billion over the next five years, totaling $21 billion annually at that time.

Thus, the fallout is already hitting states as they investigate alternative sources of transportation funding. It is worth noting that revenue reductions are not one-time, but cumulative, recurring and deepening every year. CDM Smith’s 2040 revenue forecast, using the same variables and accounting for inflation, shows lower fuel tax revenues totaling as much as $66 billion annually. For state transportation agencies, this could mean fewer resources for new construction and bridge projects, repairing crumbling infrastructure and maintaining the existing network of highways, roads and bridges.

Given these two major pressures on the MFT, states have begun to actively study, explore and pilot road user charge (RUC) systems as the most likely long-term replacement for declining MFT revenue. Also known as Vehicle Miles Traveled (VMT) charges or Mileage Based User Fees (MBUF), these efforts have been supported by the federal government via the Surface Transportation System Funding Alternatives (STSFA) grant program.

Created as part of the 2015 FAST Act, the most recent federal surface transportation reauthorization, STSFA has granted over $50 million to states to deploy pilots designed to help identify potential alternatives to the gas tax. The objective is to identify alternative revenue mechanisms that utilize a user fee structure to help fund the nation’s systems of highways, roads, bridges and mass transit.

Thus far, 11 states have received STSFA grant awards: California, Colorado, Delaware (the Eastern Transportation Coalition serves as the project lead representing Delaware, New Jersey, North Carolina, Pennsylvania and Virginia), Hawaii, Minnesota, Missouri, New Hampshire, and Oregon (overseeing two grants including one to the Oregon Department of Transportation and the other to RUC West (consisting of Arizona, California, Colorado, Idaho, Hawaii, Montana, Nevada, Oklahoma, Oregon, Utah and Washington), Utah, Washington and Wyoming.  

NCSL is collaborating with the Federal Highway Administration (FHWA) to provide NCSL’s legislative constituents, RUC pilot administrators and other transportation policy stakeholders with insight on how the RUC pilots have fared thus far, lessons learned and areas in need of further inquiry. NCSL will develop a number of fact sheets on state actions and common challenges for RUC programs. NCSL will convene an in-person meeting in the future to bring RUC stakeholders together.  To visit NCSL’s RUC webpage and read the first fact sheet on Missouri’s RUC efforts, click here. More fact sheets and resources will be added in the months ahead.

States Ramp Up Road User Charging Pilots and Studies 

Statehouses have been at the forefront of considering road user charges (RUC) since Oregon enacted the first bill to study RUC as a potential replacement for the gas tax in 2001. This is perhaps fitting given Oregon created the nation’s first gas tax over a century ago in 1919. 

Former NCSL President and ex-Oregon State Senator Bruce Starr helped lead the efforts to develop the RUC system that is now operational in Oregon. For the past 10 years, NCSL has been actively researching RUC and convening state lawmakers and legislative and state department of transportation staff to discuss challenges and opportunities related to the development of operational RUC systems. 

State legislatures continue to debate RUC legislation. In 2019 and 2020, at least 19 states—Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, Oregon, Texas, Utah, Vermont, Virginia and Washington—considered 34 pieces of legislation addressing RUC. Of which, at least seven states—Maine, Nevada, New Mexico, Oregon, Utah, Virginia and Washington—have enacted eight pieces of legislation. Five states—Illinois, Massachusetts, Michigan, New York and Vermont—currently have seven pending pieces of legislation, including carryover bills from 2019.

A few of the most recent notable state actions to study and establish RUC programs include:  

• The Nevada legislature directed (AB 483) the state Department of Motor Vehicles to conduct a pilot program on annual vehicle miles traveled charging, as adjusted by type of vehicle and fuel system.

• Oregon lawmakers modified (HB 2881) eligibility and other requirements in 2019 to enroll in their voluntary RUC program, known as OReGO, by exempting vehicles achieving at least 40 mpg from an additional registration surcharge of $33 and by exempting electric vehicles from a registration surcharge of $110 if they enroll in OReGO. The legislature also increased the minimum fuel economy that new vehicles participating in OReGO must achieve, from 17 mpg to 20 mpg. OReGO’s enrollment cap was also removed and the per-mile rate charged to participants was adjusted to 5% of the per-gallon license tax. Currently, the per-mile rate is set at 1.8 cents per mile, according to OReGO.

• Utah’s legislature established (SB 72) an RUC program that went live on Jan. 1, 2020. The legislation also requires the Utah DOT to submit annual reports on Utah’s RUC program and submit a plan to enroll all vehicles by Dec. 31, 2031. Eligible vehicles include full electric vehicles, plug-in hybrid vehicles and gasoline hybrid vehicles. Participation is voluntary and eligible car owners must opt-in. By doing so, they agree to pay a 1.5 cent per mile charge in lieu of an alternative fuel vehicle registration fee of $90 in 2020, which will rise to $120 beginning in 2021.

• The Virginia General Assembly established (SB 890) a mileage-based user fee (MBUF) program in 2020. Eligible participants include owners of electric vehicles, alternative fuel vehicles or a fuel-efficient vehicle subject to a “Highway Use Fee.” Drivers of any fuel-efficient, alternative fuel, or electric vehicle may enroll in the MBUF and not pay a newly created annual highway use fee. Additionally, owners of other fuel-efficient vehicles, defined as vehicles with a combined fuel economy of at least 25 MPG, may enroll. 

• The Washington legislature required (HB 1160) the state DOT to submit recommendations that considered the impacts of RUC on low-income households, vulnerable populations and displaced communities. The law also established an RUC working group and required a final report on implementation that was submitted in Jan. 2020 to the governor, legislature and the Federal Highway Administration. The report addressed topics such as privacy, rate-setting, compatibility with tolling systems and out-of-state drivers and had a recommendation to assess equity impacts of RUC on certain communities, including low-income residents, elderly and persons with disabilities and rural and displaced populations.

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