LOUISVILLE, Ky. — States are considering multiple ways they can make up for a decline in gas tax revenue unlikely to ever turn around.
Pilot programs to collect fees from drivers based on the number of miles they drive are underway in Hawaii, Oregon, Utah and Virginia. States, including Colorado and Minnesota, have enacted fees on retail deliveries to supplement gas tax revenues before more sustainable models take hold. And 11 states have introduced “managed lanes,” which allow drivers to pay extra fees to travel in express lanes.
The push comes in response to transportation budgets being hammered by the popularity of electric vehicles and new cars with better fuel efficiency. Gas sales have declined or remained stagnant to varying degrees in states across the country. That includes those with declining populations, such as California, and rapidly growing states, such as Utah or Arizona.
Where they can find new revenue sources was the subject of a panel of transportation experts here at the National Conference of State Legislatures’s annual legislative summit.
“Obviously that is not sustainable,” Baruch Feigenbaum, senior managing director of transportation policy at the free-market Reason Foundation, said during a panel Monday. “It’s a big problem.”
The focus on new sources of transportation revenue highlights a paradox for states, as they try to encourage investment in more sustainable modes of travel — the subject of another panel at the summit.
Adding to the pressure, money that states collect for transportation projects no longer goes as far because of inflation in the construction industry, which has outpaced post-Covid-19 inflation in other sectors, Feigenbaum said.
State lawmakers are exploring various options to replace the gas tax, including new fees on electric vehicles, tolling and charging drivers for each mile they travel.
Andrew McLean, transportation policy specialist with the CDM Smith engineering and construction firm, and a former Democratic Maine House member, said so-called road use charges are more equitable and durable than fuel taxes.
“So even if energy sources change from electricity to hydrogen, for example, the measure around which the system is based remains the same — that is until we start using flying cars,” he said.
Rates can be determined through odometer readings collected during annual safety inspections, or through smartphone apps. The latter option comes with its own set of privacy concerns that many states are working to address through model data privacy legislation, McLean said.
While states have been slow to adopt vehicle-miles-traveled programs, charging for lane usage has taken off in some states. Managed lane programs, first introduced as express lanes for high-occupancy vehicles in California in 1995, have become major money makers in states with congested urban areas.
The 11 state programs in effect have seen usage increases of 37% per year, with combined revenues of $4.2 billion per year, according to Chris Tomlinson, managing director of Deloitte Consulting.
Tomlinson said states can borrow money against future revenues to build the lanes, and that as drivers get used to paying such fees, it could lay the groundwork for other new ways to pay for the roads.