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Part II: Finding a Sustainable Highway Funding Source

Baruch Feigenbaum
April 22, 2014, 9:55am

Yesterday we discussed how the U.S. highway trust fund is “running dry” and how solutions such as general fund transfers and gas tax increases are short term solutions. Today I want to detail the most promising long-term solution: mileage based user fees (MBUF) 

MBUFs charge drivers based on the distance they travel. They can also charge by the time of day people travel and the type of road they use. 

MBUFs are controversial to some. Privacy advocates do not like MBUFs because they worry that government or a private company could track folks. Truckers do not like MBUFs because they would have to pay the real cost imposed on roads. (Trucks wear out roads 10 times faster, on average, than cars, but pay only twice as much in fuel taxes.) And others view MBUFs as an academic exercise for university professors with nothing better to do. 

But none of these issues is insurmountable. States such as Oregon that have permanent MBUF programs provide options. Drivers can use a GPS system to pay differing rates based on how far and when they travel. But if privacy is an issue drivers can also use a simple odometer reading that measures how far they travel but not when or where. Drivers can also opt to pay a flat fee regardless of how far they travel. Drivers using the GPS system get the biggest discount; those who choose a simple odometer reading get a smaller discount while those who pay a flat fee get no discount at all. But in the third option neither the government nor the private sector knows where you have traveled, how far you traveled or when you traveled. 

The trucking community has raised a big stink about mileage based user fees. The issue is that trucks wear out roads faster than cars. Truckers know this but want to pay as little to use roads as possible. While trucks wear out roads ten times faster than cars, nobody is proposing they pay ten times as much. A small increase would cover trucks usage. Trucks provide valuable goods and services. No one wants to exponentially increase trucking costs; this would cause significant harm to our economy.

MBUFs may have started as an academic exercise but the states of Minnesota, Nevada, Oregon and Washington have proven that they work in the real world. Such real-world studies have focused on ease of implementation and providing drives with a choice of MBUF equipment. States implementing MBUFs have created several innovative implementation options. 

MBUFs are still in the trial stage. As states experiment with the technology, more options become available and nationwide implementation becomes more feasible. 

One problem, however, is that some gas transportation stakeholders seem to be living in an alternate realty. Gas tax advocates pretend that we can raise the gas tax by ten cents and fix all of our long-term transportation problems. Smart Growth advocates think denser development will solve the problem. Still others tear apart mileage based user fees because of their own self-interest. The 112th Congress reached a low point when Representative Chip Cravaack, Republican from Minnesota, sponsored, and the House passed, a bill that prevented the study of MBUFs. This was the first bill that prevented a study to determine the feasibility of a new transportation concept. 

The only thing stopping MBUFs implementation is a lack of will and misinformation. Fortunately or unfortunately, we are approaching a time when the gas tax will become unrealistic. And barring some new innovative funding solution, MBUFs will remain the best option to solve our funding challenges. We need to work together to create an MBUF system, and now is a good time to get started.


Baruch Feigenbaum is Transportation Policy Analyst


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