(TND) — California is recruiting drivers for a pilot program intended to address its gas tax shortage.
California calls its mileage fee program Road Charge.
Oregon calls its program OReGO.
States across the country are looking for ways to supplement revenue used to build and maintain public roadways.
Oregon was the first state to implement a kind of mileage tax in 2015. Participants there pay 2 cents for each mile they drive, and they have GPS or non-GPS tracking methods.
Three other states now have active programs for passenger vehicles: Utah, Virginia and Hawaii.
Only Hawaii has a mandatory program, which requires electric vehicles to participate by 2028 and all light vehicles by 2033, according to the nonprofit Tax Foundation.
Over a dozen states have carried out pilot programs.
California is taking sign-ups for its pilot program through June, offering incentives. Participants can earn up to $400 in gift cards.
Californians who take part will have their mileage tracked and billed between August and January.
The state is offering several ways to track the mileage: a plug-in GPS device, vehicle telematics or odometer recordings.
Taxes account for 15% of the cost of a gallon of gas you pump into your car. And every state has used gas taxes to fund roads since the 1920s.
But Adam Hoffer, director of Excise Tax Policy at the Tax Foundation, said gas taxes aren’t cutting it any longer.
“I think mileage taxes are the future of roadway funding, especially as we change the dynamics of what kind of vehicles are on the road,” he said Friday.
Gas taxes did a wonderful job of acting like road user fees for many decades.
But people are using less gas to drive these days.
Real gas tax revenues are projected to contract by more than half of their current level over the next 20 years, according to Hoffer and the Tax Foundation.
Only three states can now fully fund their share of road spending with transportation revenues: Maryland, Montana and Tennessee.
Simply increasing the gas tax would only offer a short-term solution, he said.
California said one in every four new cars sold last year in the state were zero-emission. Gov. Gavin Newsom signed an executive order in 2020 calling for a rule to require all new car sales to be zero-emission by 2035.
President Joe Biden wants half of all new vehicle sales to be electric by 2030.
Fewer gas-powered cars will be on American highways in the coming years.
“A really, really good problem to have is that vehicles have become far more fuel efficient, so they use less gas per mile than ever. But roadway maintenance and construction has not gotten any cheaper,” Hoffer said. “And at the same time, gas taxes have been relatively flat, which means that the funding for road maintenance and road construction has been relatively flat, especially compared to how much we actually need to spend on those programs.”
Hoffer said we could do away with all funding sources for roads – tolls, fees and gas taxes – with a mileage fee of 5 cents per mile.
“Most transportation funding is directed by state governments, so this is a state-by-state issue,” he said. “Every state is doing things a little bit differently, but a handful of states already have active (vehicle miles traveled) tax programs, and states like California have been some of the leaders in piloting different ways that these programs can work.”
Hoffer mentioned the privacy concerns with vehicle tracking.
“I think people are understandably leery about having the government place a device in your car that monitors where you go all the time,” he said.
But he said states can use third-party companies to help filter out how much data the government is getting on you.
“The early pilots, most notably in California, have shown this to be pretty effective,” Hoffer said.
California uses a company called Transurban, which gets the driver’s GPS data and relays relevant information to the state. California says Transurban won’t report a participant’s individual trip routes.
Mileage taxes could be a practical and more politically feasible way to increase roadway funding into the future, Hoffer said.
“There's a real opportunity to reconcile expenditures with your new funding source,” he said. “So, states should be able to close that gap and fully fund their transportation programs if they set their rates well.”
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