Oregon plans to make VMT fees mandatory
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Oregon lawmakers are considering a bill that would require owners of new, fuel-efficient cars and trucks to pay a fee for every mile driven starting in 2026.
Bill aims to help solve what transportation officials see as a grim financial reality for Oregon and other states: Gasoline taxes are not a sustainable way to pay for maintenance projects roads and streets. This problem will only get worse as vehicles become more fuel efficient, they say. Oregon has estimated that its highway fund, 40% of which comes from gasoline tax revenue, will be insolvent by 2024 without significant action.
Oregon’s experiment with vehicle-mile-mileage charges has been hailed nationally as a bold step towards what will ultimately become a reality if, or when, local governments can no longer depend on taxes on l gasoline because the transportation sector will not run on fossil fuels. . It’s unclear whether Oregon’s bill will move this session forward. But the national conversation has changed dramatically as the pay-as-you-go mechanism has grown in popularity, including among some advocates in the Biden administration and Congress and through legislation in several states, including a failed effort. in Republicans ruled Wyoming.
If enacted, Oregon vehicle miles charges will not be effective until July 2026. This is just the beginning of the caveats. The fee in House Bill 2342 would only apply to owners of new 2027 vehicles that don’t use gasoline or get 30 miles or more per gallon of gasoline. Drivers could also choose not to track their mileage and pay a flat annual fee of $ 400, a provision that would expire in 2030.
Mileage charges and the looming question of how to supplement and replace the gas tax are nothing new – Oregon began studying this topic decades ago. In 2001, the state created a task force to study the issue and then led the country to adopt a pilot project in the mid-2000s. In 2013, the Legislature created what became its voluntary OReGo program. which allows drivers to register and pay a per kilometer charge, now 1.8 cents.
Drivers of gasoline-powered vehicles receive a credit on gasoline taxes paid, but this credit cannot exceed the charges paid for miles driven in a given month. The state has just 714 vehicles participating in the program out of more than 3.4 million registered statewide.
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Michelle Godfrey, spokesperson for the program, said the financial benefits of the current highway trust fund program were “negligible.”
“He will never bring in any income until there is a tenure,” she said in an interview.
According to state figures, 376 of the cars entered in the system are gasoline powered. Drivers of electric vehicles and vehicles with an efficiency of 40 mph or more benefit from a reduction in vehicle registration fees. Under the new bill, they would no longer pay for vehicle title registration when purchasing a car.
The Joint Transport Committee held a public hearing on April 20 on the proposal, which was established by a state task force formed in 2001 made up of transport officials and lawyers as well as local and state lawmakers. .
Rep. John Lively (D-Springfield), the sponsor of the bill and the vice-chair of that working group, said the legislation is meant to serve as a starting point.
“A lot of us think we should make the transition faster than that,” he said of the 2027 timeline.
Lively also noted that there would be millions of cars on the road that would not be required to participate.
“We still have a lot of transition to do,” he said.
According to some who testified before the Legislature on April 20, Oregon is at risk of losing its status as a transportation innovator because the bill as drafted does nothing to discourage drivers from driving. buy gasoline vehicles.
“It makes the situation worse,” Angus Duncan, former chairman of the Oregon Global Warming Commission, told lawmakers on April 20. “This will increase the cost of operating an efficient vehicle while continuing to reward drivers of gasoline consumers.
Duncan, one of some 700 Oregonians participating in the voluntary program, said it didn’t make sense to give a discount on electric vehicles like the state did through its historic transportation bill. of 2017, then turn around and ask only fuel-efficient vehicles the fee. Many conservationists argue that owners of fuel-efficient cars do not sufficiently feel the economical price of their choice of car. State officials note that so-called gasoline consumers still pay gasoline taxes and vehicle registration fees.
He suggested that Oregon do what California and Washington plan to do, which is to tie the cost of vehicle-miles driven by drivers to a formula that takes into account the fuel efficiency of their vehicles. . Another option would be to simultaneously increase the gasoline tax and index it to inflation.
Duncan said the state’s global warming commission had recommended moving to a vehicle efficiency formula with mileage charges as early as 2011. He called the current proposal “a step backwards on the road.” weather”.
Tesla, the electric vehicle giant, presented a testimonial echoing Duncan’s suggestion to link the mileage tax to energy efficiency.
“It makes people buy more efficient vehicles and drive them more efficiently,” the company wrote.
State transportation officials say the 2027 timeline is based on an estimate that one-third of new cars will hit the 30 mpg or more threshold.
Some legislative amendments introduced this week attempt to do more. A proposal would eliminate the energy efficiency standard and require all drivers of new vehicles to pay the charge. Another amendment, supported by Rep. Susan McLain (D-Forest Grove), would eliminate the fuel efficiency requirement while requiring owners of certain vehicles to pay additional fees to reflect the damage that greenhouse gas emissions cause. greenhouse inflict on the environment.
Vivian Satterfield, director of strategic partnerships at Cully-based Verde, said the state should do more to raise the costs of fossil-fueled vehicles. She said rising operating costs for vehicles that consume less fuel per kilometer “defeats state goals.”
She also raised concerns that the bill does not address the transportation costs already facing low-income Oregonians, saying the plan must be “structured from the start” to address these inequalities.
McLain asked Duncan if he supported his amendment or if he preferred to do nothing. He said the amendment was better than none at all, but he said the bill still did not do enough. “We are making progress on utility emissions, but we are losing ground on transportation emissions every year,” he said.
Transportation accounts for about 40% of Oregon’s greenhouse gas emissions. The state estimates that under the current proposal, owners of fuel-efficient vehicles would still pay more than vehicle-miles driven per mile, plus full vehicle registration and title fees.
Portland transportation and planning officials wrote a letter supporting the bill, but said it should be made clear that cities have the right to impose their own road user charges if they do so. wished. Portland voters have twice approved a 10-cent-per-gallon gasoline tax.
“Road charge programs must be structured in such a way as to allow for the future integration of variable prices linked to demand, climate and equity,” wrote Chris Warner and Andrea Durbin, directors of urban transport and offices, respectively. planning and sustainable development. .
Several lawmakers have echoed the fear that drivers of fuel-efficient vehicles will pay the same rate as someone who drives much more in a less efficient vehicle. “I don’t think it’s appropriate,” said Senator Lynn Findley (R-Vale).
Other lawmakers have expressed concerns about privacy, including the GPS tracking software needed to report mileage. Rep Paul Evans (D-Monmouth) said having a fixed fee to opt out of the per mile charge could be a revenue generator.
“I think we’ll be surprised at how much revenue this could generate,” he said, adding concerns about privacy were real issues.
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