Here’s how Oregon plans to replace the gas tax as cars go electric

Road upkeep in Oregon is paid for, in large part, by taxes on gasoline. But with West Coast states banning new gas vehicles by 2035, there’s a money problem.

SALEM, Ore. — For Oregonians who drive, chances are that the vehicle they use to get around is much more fuel efficient than models from just a few decades ago — particularly if it’s a hybrid or electric vehicle.

That’s a net positive for drivers and for the environment, but not for the Oregon Department of Transportation. The agency relies heavily on revenue from gas taxes, and the money pays for upkeep on roads, bridges and other transportation projects.

In Oregon, the state part of the gas tax is 38 cents a gallon. For Washington drivers, it’s 49 cents a gallon. Both state transportation agencies are feeling the fuel efficiency squeeze.

As more people go hybrid or electric, there’s a looming eventuality that gas tax revenue will fall off a cliff. In fact, it’s something that both Oregon and Washington have ostensibly embraced. Following California’s example, both states are set to ban the sale of new gas vehicles by 2035.

The problem has been a while in the making, which is why Oregon started a task force way back in 2001 to study the issue. It’s been pumping out reports regularly ever since.

Along the way, ODOT created a website and program called OReGO where drivers can sign up to volunteer for a program where they pay a fee for every mile they drive on public roads. Currently it’s just under 2 cents per mile.

The program isn’t gaining much traction. About 700 people have signed up so far, either reporting their mileage to the state or by using GPS devices to track their travel. 

The people driving hybrids are still paying for gas at the pump, so each quarter their account is balanced to credit the mileage fee against the gas tax, ensuring that they don’t end up paying both.

Even though the number of OReGO drivers is small, the idea has grown and spread across the country. It’s beginning to look like an inevitable solution — and not just for Oregon, but for other states as well.

On Wednesday, KGW’s Pat Dooris spoke with state Rep. John Lively of Springfield. He’s been a part of the pay-per-mile task force for 10 years, and said it’s important to get this program up and going for everyone.

“We’ve been at it for a decade — came close last session when the bill passed out of the joint transportation committee, but did not get out of the ways and means committee,” Lively said.

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Lively said that there’s a reluctance in the legislature, particularly among lawmakers representing rural areas who think that this system would disadvantage their constituents.

“There’s some perception that a road user fee from the standpoint of charging per mile would penalize people, in theory, in rural (areas),” Lively said. “They believe they drive more miles (than people in urban areas). What we’ve shown though, in the studies, that’s just not true. People in urban centers make multiple short trips but those short trips in many cases add up to far more miles than are being driven by farmers and that. So, first this perception it would cost them more is not correct.”

According to ODOT’s own accounting, the average driver in rural Oregon pays $386 per year in state gas taxes. In Portland, the average driver pays $229. So rural drivers do end up paying more on average.

However, there’s nothing about the new pay-per-mile plan that disproportionately punishes rural drivers in a way that the gas tax doesn’t already. Rural drivers already pay more gas taxes because they drive more. They would continue to pay more using pay-per-mile.

If the legislature passes a bill this year to take up pay-per-mile, it would likely take effect for new cars and trucks sold in 2028. Those buyers would be forced to get with the program, while anyone else would not — at least, not until they purchased a new vehicle.

Another concern of Oregonians, according to Rep. Lively, is privacy. Many people worry about the state having the ability to keep track of the miles they drive, of “Big Brother” monitoring their movements.

“I understand that concern, but anybody that has a cell phone — the ability is already there for it to be tracked,” Lively said. “Your cell phone is probably the most trackable device we own and almost everybody has one. But there are several options. We made options that people could just annually, monthly turn in their mileage. So they can tell us where the mileage started, where the mileage didn’t, so that’s one way they can report versus reporting from the car — so there’s several ways in which people can report their mileage.

“But the key in doing it automatically is the systems now in place allow us to know whether they’re driving on state highways or private roads, because our goal isn’t to charge you for driving on private roads but only when they’re using the state transportation system.”

But once the program is launched and running, OReGO has already anticipated that local governments like cities will likewise want to use its technology to charge you for driving on their roads.

“Geo fencing” would track your car, and if you were in one of their designated areas, the city could send a charge that would be added to your pay-per-mile account.

For the time being, this idea still seems to be a hypothetical one — but it shows what officials are thinking about for the future.

In the meantime, Lively is gearing up to try and push the pay-per-mile plan through the 2023 legislature. And, he said, it’s something he was willing to try himself.

“I volunteered several years ago, I’m part of the program. And I’ve installed one of those devices in my car that they automatically track my mileage. And then I get, on a quarterly basis I get a bill that I either own them more money … depending on the efficiency of my car and the trips I’m taking, I either owe them some money or I break even,” Lively said. “The fee now is just calculated on what the mileage would be based on the gas tax. So what the gas tax would be per mile. So I think on any given quarter, the most I pay is $16 over the quarter where my car wasn’t as efficient as I thought it was going to be.”

The program won’t become a statewide and mandatory one until lawmakers pass a bill like the one Lively has been pushing for. And because it’s a tax bill, only a supermajority in the legislature can make it happen — meaning there will need to be some bipartisan agreement first.

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