Long-term trends strongly suggest reliance on oil-based revenue for transportation funding is precarious, the author says.

Editor’s Note: Michael D. Meyer is a professor of civil and environmental engineering and former chair of the School of Civil and Environmental Engineering at the Georgia Institute of Technology. From 1983 to 1988, Meyer was director of Transportation Planning and Development for Massachusetts, where he was responsible for statewide planning, project development, traffic engineering and transportation research. Before this, he was a professor in the Department of Civil Engineering at Massachusetts Institute of Technology.

Story highlights

Transportation expert Michael Meyer: Per-mile road tax may lead to prosperity

Current fuel tax will be unable to meet highway financial needs, he says

Maintaining highways is strongly tied to a healthy economy

Pay-per-mile tax now possible through technology

CNN  — 

Based on recent history and what’s likely to happen to the nation’s infrastructure, it’s an inescapable conclusion: We will need new and different sources of funding if we are to have the type of transportation system that is needed to support economic prosperity.

For the past 75 years, the U.S. road network has provided the foundation for much of the nation’s economic development. This network has not come without a cost; estimates are that the replacement value of the nation’s roads is $1.3 trillion.

The bulk of the revenue to build the world’s most extensive road network has come from motor vehicle fuel taxes, first used by Oregon in 1918 and culminating in a 1956 federal motor fuel tax to construct the national highway network, including the Interstate highway system.

But big challenges loom. The U.S. population is expected to grow through 2100 and the economy likely will be strongly tied to the movement of people and goods. The need for added capacity to the nation’s transportation system is great.

When one adds the hundreds of billions of dollars that will be needed to reconstruct and rehabilitate existing infrastructure, the demand for transportation funding will be perhaps even greater than ever.

The big problem in meeting this demand, however, is that the motor fuel tax won’t be enough to pay the bills for our highway needs. The fuel tax revenue stream will decline because of increasing motor vehicle fuel efficiency and the growing number of hybrid and electric vehicles on the road.

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Where will the funding come from to maintain the nation’s transportation infrastructure?

How will the nation expand vehicle capacity where necessary?

Proposed solutions include public/private partnerships, often taking some form of road tolling. Many cities are advancing such projects. Other cities are relying on public referenda sales tax revenues. But both sources fail to provide enough revenue to make up for the decline in motor fuel tax receipts.

One possible source of future transportation funding that should be considered seriously is called vehicle miles traveled fees, or VMT – charges to vehicle users based on how many miles are traveled regardless of vehicle fuel type.

This concept is based on the time-honored economic principle of user fees: The user pays for the amount of a resource being consumed.

The more one uses the road network, the more one should pay.

It’s similar to motor fuel taxes, where user costs vary by a vehicle’s fuel economy and the type of fuel used.

Technology opens the door

Although economists have argued for decades that such pricing schemes are the most economically efficient, it is only recently that the technology of pricing has caught up to the concept of road user fees.

With the availability of global positioning systems, sensors, advanced communication technologies and sophisticated database management systems, a VMT fee-based revenue source can be a feasible alternative to a motor fuel tax system.

There have already been demonstrations of such an approach in several U.S. states and cities, and in Germany, Austria and Switzerland such an approach has been implemented for long-distance trucks using those countries’ freeways.

A recent study by the U.S. Transportation Research Board conservatively estimated that if the per-mile charge were made equivalent to what one would face with a motor fuel tax, a VMT fee system would generate approximately 20% more transportation revenue nationally by 2030.

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So why hasn’t there been more interest in transitioning to VMT?

There are several reasons:

–It’s not clear how the revenues from a VMT-based system would be collected. Motor fuel taxes are efficiently collected today from wholesalers and/or gasoline retailers, most often through a state’s long established tax collection system. With a VMT-based system, the unit of consumption is now miles not gallons, thus creating a challenge in how to collect on the number of miles consumed.

–A VMT-based fee will most likely rely on some form of vehicle use monitoring, which could also be used to identify where and when a vehicle was used. Many will view this as an infringement on personal privacy, although in many ways no more so than what is already feasible via mobile phone technology. Many of the demonstrations of VMT-based fees have included the showcasing of technologies that can be used to protect traveler information. However, in today’s world, overcoming this “big brother Is watching” perception could be one of the most significant challenges facing a VMT-based fee system. The general distrust of government in today’s American political discourse leads many to question how the government might use a VMT-based system to increase the cost of transportation. Focus groups on the possibility of VMT fees werer most contentious on whether or not they were anything more than an attempt by government to charge more for travel.

–A VMT- based fee system cannot be put in place in one day. The transition to a national system would require many years of retrofit (depending on the technology chosen), most likely a decade of transition of incorporating capability in new vehicles as part of the normal vehicle fleet turnover, and years of educating the traveling public on how the new system works.

These challenges seem almost insurmountable.

And yet, the nation faced similar challenges when motor fuel taxes were introduced as a transportation funding source.

New generations of Americans have been raised on technologies that would be used for a VMT-based fee system, and thus be perhaps more comfortable with their use.

The federal fuel tax has remained at 18.4 cents per gallon of gasoline and 24.4 cents for diesel since 1993. Even if political leaders find the will to raise it – which they might still have to do in the short term – the long-term trend in vehicle technology and fuel use strongly suggests that the reliance on a petroleum-based revenue source for transportation funding is precarious.

The nation needs to transition to a different way of providing the necessary funding to keep our transportation infrastructure in a state of good repair and responsive to new demands being placed on it. The VMT-based fee is a strong candidate to be that new system.

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The opinions expressed in this commentary are solely those of Michael D. Meyer.