Oregon Launches First Mileage-Based Fee Program For U.S.

With its new program debuting this July, Oregon will become the first state to collect road use fees through mileage instead of fuel.

The program will charge drivers a road use fee based on how many miles they drive, instead of using a state tax built into gas prices. The Oregon Department of Transportation (ODOT), the sponsor of OReGO, will be analyzing the program to see if the fees can lead to a “fair, reliable source of revenue to fund transportation projects.”

“We are seeing a growing trend in the number of electric and hybrid vehicles on our roads, which has led to a significant fall in critical gas tax revenues being collected for road maintenance,” said François Gauthey, President of Sanef ITS.

The New York-based Sanef ITS specializes in toll roads and other road charging programs, and is working with ODOT on the OReGO program.

“To improve and maintain America’s roadway infrastructure, the transition from a gas tax to a distance-based road usage charge solution is a critical evolution,” Gauthey said.

“Moving forward, creating a sustainable but fair system for collecting revenues is essential for future sustainability of critical transportation networks.”

Though the program launches this July, it doesn’t mean that over the summer all Oregon drivers will be converting to this system. The first phase of OReGO will begin with only 5,000 volunteers.

After signing up, volunteers install a small electronic device to track the number of miles driven. Using this data, OReGO will charge volunteers 1.5 cents per mile. Drivers will also get a credit for any fuel taxes paid at the gas pump, so they won’t be charged twice for road usage fees.

Individuals with either personal or commercial light duty vehicles are eligible for the program.

Under the OReGO program, the amount drivers will pay in comparison to fuel tax depends on the efficiency of their car. The more fuel efficient the car, the more the OReGO program will cost them.

For cars that get 20 mpg or less, it’s cheaper to sign up for OReGO. Using the national average of 13,000 miles driven per year, a vehicle that gets 15 mpg will pay $21.66 in fuel tax each month, but only $16.25 to OReGO.

On a vehicle rated 25 mpg, the monthly costs flip to $13.00 paid fuel taxes. Because OReGO is mileage-based, this fee remains the same at $16.25 per month.

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The issue of funding road maintenance costs using a fuel tax versus a mileage tax has been debated in other states as well.

California Assembly Speaker Toni Atkins, D, recently addressed the California Transportation Foundation on the issue.

“While it’s great our air is cleaner as cars have become more efficient and less dependent on gasoline, it’s clear we must now move forward to the next generation of transportation funding,” said Atkins in February.

“It could take any number of forms.

“You’ve heard vehicle mileage, you’ve heard vehicle license fee, there’s a way you could attach it to insurance – people pay insurance on a regular basis. Either way, it’s a fee that we have to figure out how best and the easiest way to collect it.”

Atkins estimates that by finding a solution to charge drivers about $1 a week, a fee could raise $1.8 billion for transportation funding in the next five years.

In Minnesota, legislators began debating a bill last month that would prohibit the state from funding any research into mileage-based road usage fees. Republican Rep. Bob Barrett, the bill’s author, said the GPS tracking used for this type of research is a privacy issue.

“I don’t know if we want government to be that involved in our private lives, to know where we’re going and when we’re going,” said Barrett.

In Oregon, the future of the OReGO program will depend on the success of this first stage. There is no end date built into the program, leaving it up to the legislators and voters to develop the next step.