About 8,000 years ago, somebody in what is now Iraq came up with the idea of taxing the public for services and infrastructure. In addition to funding armies, taxation in the ancient world went heavily toward building roads. Whether it was property taxes or some other exaction, few were particularly pleased. Tax collectors were despised in the ancient world.
After these millennia, is it possible that Utah has figured out the best way for the public to pay for roads? That’s the question at hand in Utah Foundation’s new report, “Measuring the Miles: Road Usage Charges in Utah.”
Inflation, greater fuel economy and the rise of electric and hybrid vehicles have been ganging up to erode motor vehicle fuel tax revenues, a key transportation revenue source. As a result, Utah is collecting less and less tax revenue per mile driven, driving a wedge between road usage and the available resources for upkeep.
As a response, the Utah Legislature directed the Utah Department of Transportation to create a road usage charge (or RUC) program in 2020. Motorists enrolled in the RUC program pay a per-mile charge. As of October 2020, the program had enrolled 2,882 activated vehicles. Participating motorists had logged 2.1 million billable miles, at 1.5 cents per mile.
Under an RUC system, drivers pay for roads based on how many miles they drive, rather than how much gas they consume. The notion is that, compared to a gasoline tax, an RUC is a more reliable revenue stream, fairer to drivers and better at predicting the funding need for road maintenance and repair.
But a higher number of miles traveled does not necessarily equate to greater impacts on the road system. Depending on the weight distribution of the vehicle, the strain on the road network can vary; the strain that a passenger vehicle places on the road network is negligible compared to a heavy-duty truck. Remarkably, while a 40-ton truck weighs about the same as 20 mid-sized cars, it may have the same impact on highways as hundreds or perhaps even thousands of those cars — depending upon numerous road and vehicle factors.
To the extent that the charges are not calibrated to reflect the greater strains heavier vehicles put on the road, drivers of passenger vehicles may be in effect subsidizing the goods shipped across the country on heavy trucks.
From this standpoint, a motor vehicle fuel tax will tend to be fairer than a universal per-mile charge, as heavy-duty vehicles such as trucks and buses do more damage to the road but also use more fuel.
Similarly, a fuel-based tax will tend to hit heavier polluters harder. Heavy-duty vehicles use more fuel and tend to be older, and therefore pollute the air more.
Utah can also use RUCs to discourage commuting during times of traffic congestion.
However, an RUC can be crafted to address these issues. For instance, Utah could consider employing the best research available to estimate the actual costs of wear and tear on roads for different vehicle types and set RUC rates to better approximate these costs per mile driven.
Road usage charges can also be structured to target heavy polluters directly. In Austria, Germany and Switzerland, a primary goal of RUCs on trucks is to encourage lower greenhouse gas emissions and air pollution. Rates are higher for trucks with older, less efficient engines.
There is the potential to allocate funding according to precisely where drivers rack up miles. Take, for instance, a commuter driving from home in West Valley City to work in Salt Lake City, using a state highway for part of the trip. Through GPS technology, the charges incurred during that trip could be allocated to each jurisdiction and the state accordingly. And if the commuter met someone for lunch in Cottonwood Heights, that city could receive its relevant share, as would the jurisdictions along the way.
Utah can also use RUCs to discourage commuting during times of traffic congestion. For instance, a commuter traveling during rush hour might be charged 10 cents per mile at that time, but only one cent per mile during other times. Using the charge to encourage commuting outside of rush hour could help not only to reduce traffic congestion, but also improve air quality.
With any significant shift in revenue policy, there will be winners and losers, and the economic ripple effects of various RUC policy choices deserve consideration. Privacy issues also arise, though there is a menu of methods to address those concerns. But the promise of a fine-tuned transportation revenue source is there, and Utah is in the vanguard of states exploring RUCs.
Peter Reichard is president of Utah Foundation, a nonpartisan, nonprofit public policy research organization. Reach him at firstname.lastname@example.org. Find the new report, “Measuring the Miles: Road Usage Charges in Utah” (March 2021), at utahfoundation.org.