In Brief:
- Gas tax revenues are dwindling as cars become more fuel efficient and more drivers switch to electric vehicles.
- That revenue has been the primary source of state transportation funding for decades.
- Several states are pushing this year to adopt a road user charge, which would charge drivers a per-mile fee to gradually replace the gas tax.
Lawmakers have known for years that a reckoning would one day come for the gas tax, the primary source of state funding for roads and other transportation infrastructure.
With cars becoming more fuel efficient and electric vehicles becoming more common, the revenue prospects for gas taxes are dimming. More than half of states have spent some time in the last decade studying alternatives — namely a road user charge or vehicle miles traveled (VMT) fee, which would collect money from drivers based on how much they use the roads. But less than a handful of states have finalized a policy.
This year, lawmakers in a few more states are hoping to pass road user charges. Three of those states — Massachusetts, Illinois and Washington — are also facing funding challenges at their biggest public transit systems. Some are hoping that those challenges will help force a comprehensive overhaul of transportation funding, including a switch to road user charges.
“An idea like this has to travel on the back of a crisis that demands action,” says Mike Barrett, a Massachusetts state senator who is sponsoring a bill that would establish a mileage-based fee for electric vehicles.
The concept of collecting revenue from drivers based on how much they drive has been around for decades. The Oregon legislature launched a study of gas-tax alternatives in 2001, then approved the country’s first road user charge program in 2013. The program is voluntary. It allows enrolled users to have their miles tracked with a GPS device or a non-GPS odometer tracker, and gives enrollees a credit against taxes they pay at the pump. Utah also has a program that allows EV drivers to opt into a road user charge instead of paying an annual flat fee. Hawaii has an optional road user charge for EV owners starting this year, with plans to make it automatic starting in 2028.
Congress included funding for state pilot programs as part of the FAST Act transportation funding authorization in 2015. More than a dozen pilot programs have been launched so far. They’ve helped answer questions about how to track mileage accurately while protecting drivers’ privacy, and some states have collaborated on programs that could track mileage on interstate travel. But those questions continue to come up every time a new road user charge is proposed.
“The question now that has to be answered by each state individually is, do they have the political support to move forward with an actual program or not?” says Rebecca Higgins, vice president of policy at the Eno Center for Transportation.
In Massachusetts, lawmakers and voters are relatively amenable to the environmental benefits of replacing the gas tax. Barrett, a Democrat, is an EV driver himself and believes “EV owners ought to do their fair share to contribute to routine road maintenance.” State lawmakers have also spent the last few years discussing ways to help the Massachusetts Bay Transportation Authority weather a financial crisis stemming from the COVID-19 pandemic, when Boston-area buses and trains lost thousands of riders. The state approved a tax on millionaires a few years ago to fund education and transportation, but transportation still needs a “supplement” source considering the dwindling returns of the gas tax, Barrett says.
“I think the moment is ripe to take a very serious look at the VMT idea. I do believe that this session or next we’re going to need to make a major commitment on funding mass transit, and we’ve got to come up with potential sources for that,” he says.
The Illinois legislature is considering a road user charge as part of a much broader package of transportation funding and governance reforms. With Chicago-area transit systems in crisis, the legislature has been exploring potential mergers of different transit providers and other accountability measures as a tradeoff for more state transit funding. Illinois state Sen. Ram Villivalam has sponsored a measure to create an advisory committee and a pilot program for a road user charge.
“This is not a new concept,” says Villivalam. “But we want to be methodical. We want to be able to explain this to taxpayers and make sure they understand this is not intended to be something that results in participants paying more in fees and taxes.”
Washington state has been studying road user charges for about a decade, says state Sen. Bill Ramos, who sponsored a bill to enact such a policy in the state this year. The policy is meant to gradually replace the gas tax. The biggest arguments that arise every time it’s considered is that it could violate users’ privacy by tracking their movements and that it will end up falling more heavily on rural residents who drive more than urbanites. Ramos believes other states have come up with convincing answers to the privacy question. And as for the question of shared burdens, he says that people in rural areas with less fuel-efficient areas are already paying more than their share of the gas tax. Road user charges can reduce inequities in the current system, Ramos says.
“[The gas tax] is a dying model,” Ramos says. “It’s been a great way to fund transportation for 100 years. That model is on its way out. It’s no longer functioning and it’s not funding transportation like it used to.”
None of the sponsors in Illinois, Massachusetts or Washington were certain their bills would pass this year. Ramos’ bill in the Washington Senate didn’t advance, but he’s hoping that companion legislation in the House will move forward. He says there has been a notable shift in the testimony of business and labor lobbyist groups, who were typically opposed to the road user charge but now seem to recognize the necessity of replacing the gas tax.
“This is going to be slowly implemented over about a 10-year period,” Ramos says. “If we’re going to do a 10-year project, we have to get started.”
In the Infrastructure Investment and Jobs Act signed by former President Joe Biden in 2021, Congress allocated funding for a national VMT pilot that would explore ways to administer an alternative to the federal gas tax. The Biden administration was “not very eager” about getting the program launched, says Higgins of the Eno Center. It’s not clear yet how the Trump administration will approach the issue. The politics of road user fees “are a little unpredictable sometimes,” says Higgins, with supporters on both the environmental left and the libertarian right.
At the state level, policymakers are still looking for proven examples of successful mandatory programs they can emulate.
“If the states that are moving forward with this can demonstrate pretty significant revenue results and low administrative costs, states certainly look to other examples and they will see that as something they can replicate,” Higgins says. “We haven’t gotten there yet.”
