Momentum: Issue #75

July 6, 2021

Member View: It is Time to Elevate VMT To a National Level

by Jeff Adler | VP Solution Consulting, Kapsch TrafficCom North America

Interest in moving to a Vehicle Miles Traveled (VMT) charging model (aka Road User Charging (RUC) or Mileage-Based User Fee (MBUF)), continues to spread slowly with more states each year pursuing small-scale pilots and studies to gauge public perception and interest. Tens of millions of dollars have been spent by both federal and state governments to study VMT. After nearly 20 years of discussion, debate, and analysis, only two operational VMT programs exist in the United States – Oregon’s statewide program that targets all vehicles and Utah’s voluntary program targeting Hybrid and Electric Vehicle owners. The most enthusiastic supporters of VMT believe the best-case scenario is to achieve nationwide adoption in 10-15 years. 

Relying on fuel tax revenue to maintain our national highway system is not sustainable and not equitable. Our national highway system is deteriorating as states have not been able to keep up with maintenance due to inadequate funding. The federal fuel tax of $0.18 per gallon has not increased since 1993 and is not indexed to inflation. There is little political will in Washington to reshape the fuel tax. Vehicles have become more efficient, and market penetration rate of electric and hybrid vehicles will continue to increase, thereby decreasing the revenue stream generated by a fuel tax. Since 2008, Congress has transferred $140 billion from the general fund to keep the highway trust fund solvent. 

In principle, it is hard to take issue with the concept of mileage-based user fees. Moving to a “pay as you go” approach that charges vehicles a per-mile fee places the burden of bearing societal costs of roadway wear and tear on those vehicles that use the roadway network. This is a much more fair and equitable approach than today’s fuel tax. 

There are several perceived operational barriers that obscure our ability to achieve widespread acceptance of VMT. 

Lack of Understanding: The biggest barrier to VMT is lack of awareness and understanding of how the highway trust fund works or how much vehicle owners actually pay in federal and state fuel tax per year. 

Social Equity: There are some who strongly oppose VMT because they believe it unfairly burdens some segments of the population (e.g., low-income families, people in rural areas) who drive more miles per year and will be hit harder by having to pay this per mile fee. 

Privacy: Many are rightly concerned that tracking vehicle miles driven will expose too much personal information. 

The good news is that we have learned a lot about public perception through the pilot programs, and these obstacles to acceptance could be easily overcome. Every VMT trial to date has shown that participant involvement increases acceptance of VMT. Participants were more aware of how many miles they drove and how much they paid in transportation taxes. A majority of participants believe VMT is a more equitable way to fund roadways than the fuel tax. The pilot projects have also shown that people appear more trustful of the private sector to manage their private data. 

As a nation, we cannot afford to wait a decade or more to fix the highway trust fund. A healthy roadway system is critical for prosperity. It enables mobility and expands access to better housing, employment, education, and health care. It is time to address these obstacles at scale so we can determine if VMT is the right approach to transition us away from the fuel tax into a better long-term funding model. We need to channel our efforts nationwide to inform and educate the public about transportation funding, the improved social equity benefits of a “pay as you go” approach and take steps to protect data privacy. 

State agencies, most notably in Oregon, Washington, California, and Colorado, and multi-state consortiums, including RUC West and the Eastern Transportation Coalition, have done admirable work in planning and conducting VMT studies and pilots. Due to their efforts, we have gained much knowledge and insight on the path forward. We now need to move the discussion from a local level to a national level with a stronger commitment from Congress and greater hands-on involvement from USDOT working in close coordination with the state agencies and consortiums. 

USDOT should take the lead on a nationwide education program so that Americans understand how the highway trust fund works, how much fuel tax people really pay today, and how shifting to VMT will impact them. People need to understand that the fuel tax is highly regressive. The current fuel tax takes a larger percentage of income from low earners and penalizes owners of older, less efficient vehicles. Hybrid vehicle owners contribute less to highway maintenance while owners of electric vehicles do not contribute at all. The fuel tax also has greater impact on people who drive longer distances and who live in more rural areas and  does not account for the actual wear and tear on the roadways that individual vehicles contribute. VMT ensures that everyone pays the same rates to use the roadways. 

For VMT to succeed on a nationwide scale, it needs to be based around ground truth captured by the vehicle. Technology solutions to apply VMT nationwide are close at hand. As the connected car ecosystem evolves, and the vehicle becomes the center of data collection and payments, a national approach is needed to address privacy concerns with vehicle data. The United States should consider moving closer to the privacy values of the European Union and its GDPR (General Data Protection Regulation). 

Action is warranted, sooner rather than later, to address the insolvency of the Highway Trust Fund and the declining revenues due to more efficient vehicles. VMT has been offered as a viable solution that has several advantages over the current fuel tax. While there have been several complaints about VMT, no one has stepped up with a better and more equitable solution to fund our roadways. Now is the time to fully commit to VMT and encourage our federal government to lead the way.