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Mileage Fees without Big Brother

February 20, 2014 By Conrad deFiebre, Transportation Fellow

America's ongoing privacy wars, turbocharged by Edward Snowden's NSA revelations, have overshadowed the many benefits of charging drivers for the miles they travel instead of the fuel they consume. Although Minnesota has been a leader in studying mileage-based user fees (MBUF) to finance road construction and maintenance, the idea isn't even a blip on the screen in our current debates over transportation funding.

As I wrote three years ago, "reasonable fears persist over an electronic Big Brother on the dashboard monitoring the driver's every movement." Although I tend to exaggerate for effect, I've never totally bought into this kind of thinking. Now, surprising voices from the right have stepped forward with strong arguments why we shouldn't let paranoid worries over government snooping stand in the way of an overdue shift in highway finance.

Robert W. Poole Jr. and Adrian T. Moore, two principled conservatives with the libertarian Reason Foundation, say that "superficial reporting has created the impression that any MBUF system would require active tracking of every vehicle, creating visions of Big Brother (there's that hyperbole again) surveillance." They call it a "misleading portrayal of per-mile charging."

Libertarians, with their focus on individual rights, market discipline and suspicion of government that often verges on the anarchic, might be expected to dismiss such a system out of hand. But in a new policy brief entitled "Ten Reasons Why Per-Mile Tolling Is a Better Highway User Fee than Fuel Taxes," Poole and Moore explain why fuel taxes are failing us and mileage tolling is a better option.

First, they note that fuel taxes have always been an imperfect user fee, "an indirect and opaque means of paying for highways." The emergence of hybrid and all-electric vehicles exacerbates what has always been a disconnect between fuel consumption and road use. For example, drivers who stick to city streets that are supported only by local property taxes pay for highways at the pump.

The Reason authors think motorways should be financed more like familiar utilities: water, electric, gas, cable, phone. "In each case, the charge is based on the amount of the particular service you have used," they wrote. Infrastructure to enable this is already in place on electronically tolled highways, including priced congestion lanes on Interstates 35W and 394 in Minnesota. As with traditional utilities, users get a regular bill itemizing their "consumption" of lane miles.

With a broader system of electronic highway tolling, congestion could be tamed anywhere with variable fees, Poole and Moore say.

Their proposal focuses mainly on major divided highways and other arterials, which long have been supported by state and federal fuel taxes but now are starving for maintenance and expansion because of the levies' declining buying power. They suggest that a secondary "basic per-mile charge for using ordinary streets and roads" could be implemented by states with low-tech collection options such as annual odometer readings or cell-tower data to distinguish between in-state and out-of-state driving.

In addition, they claim that universal per-mile tolling, with nationwide compatibility among regional systems expected by 2016, would end motor transportation's "funding death spiral," would ensure proper maintenance and could be tailored to individual road or bridge costs.

They say it would be fairer even for rural drivers, often pegged as losers in a switch to mileage fees. They cite studies showing mileage fees are more equitable overall than fuel taxes and that, "on average, rural residents drive fewer total miles ... than most urban-area residents ... In addition, if rural drivers use mostly country roads that are not very expensive to build and maintain, they would pay lower per-mile rates than those paid by people using Interstates and especially by those using urban expressways, the most expensive components of our highway system."

Moreover, they say heavy trucks would pay higher rates reflecting their greater wear and tear on pavement, a system that could lead to more truck lanes separated by barriers that would be safe for economical double- and triple-trailer combinations. "This would be popular with motorists on those highways, increasing their safety and comfort levels," the authors wrote.

Finally, the wide acceptance of current transponder-based tolling and Minnesota drivers' positive response in tests of mileage fees based on smartphone technology show that "there is no need for a costly, complex GPS box in every vehicle in order to do variable pricing," Poole and Moore wrote. "The system used to implement the direct charge should not create privacy concerns by enabling governments to track where and when people travel" if they have "choices in how to pay for their miles traveled."

To be sure, Reason's analysis should be criticized for an autocentric bias that touts as one of the virtues of mileage fees an end to federal fuel tax support of transit and nonmotorized travel. That view ignores the benefits of a multimodal transportation system for everyone, drivers included.

The authors also ignore potential downsides of electronic mileage tolling such as vulnerability to hackers and fee evasion as well as collection costs several times greater than the tried-and-true method at the pump.

On the whole, though, this is a welcome entrant in the discussion of the future of motorway finance. Poole and Moore show that mileage fees can be phased in with existing transponder technology that hasn't raised privacy concerns, beginning with the Interstate system that handles nearly a quarter of all U.S. vehicle traffic. A full switchover would still take decades, buy we need to start somewhere.

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  • Mike Lilja says:

    February 24, 2014 at 11:06 am

    No.  We should not change the way we collect highway user fees.  It isn’t just the collection of more data about us, which is very wrong.  The cost of putting in the infrastructure and the other resources necessary to collect the information and then bill us is still many times more than the cost of collecting the gas tax is now.  That means we have to charge even more to get the same dollars we are now through the gas tax.  Does this mean the gas tax would go away as well, or are we going to get pinged twice?

    People driving further and driving at the most congested times of the day are already paying higher costs in the form of larger fuel bills because of distance and poorer gas mileage in stop and go traffic.

    Here are some other thoughts on this whole mess.  If the purpose is to make the users pay, are they not already through the current gas tax system?  If you charge for mileage on the road, instead of just raising the gas tax, what’s my incentive to drive a more fuel efficient vehicle?  Which, most likely, uses fewer resources of all sorts.  If the problem is lack of funds or getting people to drive less, just raise the gas tax to a level that makes roads self supporting.  My guess is that will eliminate quite a few vehicles as we saw when gas broke $4.00/gallon.  Everyone using the system pays for it through the current gas tax.  Unless you make your own fuel or have all electric (which is very, very few) no one escapes without paying.  There is a direct feedback with the current system in how many times this week did I fuel up and how much did it cost me.  When the roads are 100% self supporting, then there will be an argument for making transit self supporting.  The current system is hacker proof.  I am not sure, but I would guess, the tax is paid at the wholesale level, meaning, the tax is collected before the miles are driven.  Even if it is collected at the pump, it still is paid for at the time of driving.  The new system would have a delay in collection of the money.  If I travel across state lines, am I going to end up getting a bill from all the states I entered or are the states now going to have to install a complicated system of reciprocity to give each other credits and debits?  People are expected to be to work at a certain time, if they are billed for travel at peak times, are they not being punished excessively, just for going to work?  Will urban and rural drivers be punished the same or are the rural areas going to be subsidized even more than they are now?  How will I be billed?  Through a credit card?  What if I don’t have one or wish not to have it used?  What if I don’t have a smart phone or leave it at home or turn it off while traveling?  What if people with smart phones are car pooling or on a bus, does everyone in the car or bus get billed?  What if I have a dispute about a charge?

    There may have been a few good reasons pointed out in the article for changing the system, but I can think of a whole lot more for not doing so.  Raising the gas tax to a level where roads are self supporting would solve most of the problems, but this is unpalatable to Republicans, mostly, and to the public in general.  Does this then, just become a more easily acceptable way of raising the funds or eliminating some driving?  Or will motorists just get used to seeing a bill and ignoring the individual charges and go back to the same old way of doing things.  Someone still has to collect data about our driving in way or another.  Does that mean our government or some third party?  What would you prefer?  Let’s leave the current system in place and just raise the gas tax to where it needs to be and most of the issues will go away on their own.