With more cars hitting the road again as the summer travel season begins, Utah officials are studying how the state can continue to maintain and build highways with less gas tax money as cars become more fuel-efficient.
There have been many solutions discussed over the years at the Capitol to shore up road funding, including higher gas taxes, raising vehicle registration fees, using money from the state’s general funds or creating more toll roads, which polling has shown to be unpopular in the Beehive State.
But at a recent meeting of the Legislature’s Transportation Interim Committee at the Capitol in Salt Lake City, lawmakers heard a report on the promising 2020 initiative to recoup costs on state roads that may be the blueprint for a new statewide tax on electric and hybrid vehicles.
The road usage charge program, a voluntary pilot program that started in January 2020, allows users to pay based on miles driven using a device in their car. Users are given the option to pay 1.5 cents per mile traveled or an annual flat fee of $120 for electric vehicles or $20 for gas hybrids. Per-mile payment stops when the accumulated total for the year reaches the flat fee, so customers can pay less if they drive less.
Participants are joining the 3,700 members at a rate of one new member a day, according to Tiffany Pocock, project director at the Department of Transportation.
“We’re happily surprised and thankful for the number of people enrolling,” she said. “We were looking at 700 in the first year, and as you can see, we have a lot more. We’ve learned a lot from our early adopters giving feedback, so we can make this as user friendly as possible in the future.”
The program was based on one done in Oregon, the only other state creating a charge for electric vehicles based on how many miles driven. According to Pocock, Utah far superseded their mentor, gaining three times the amount of users as Oregon’s in the first year.
This program could be the way that Utah supplements its transportation budget that has seen the standard revenue source steadily dwindling since the 1980s.
Fuel taxes aren’t filling the budget tank
Spending on transportation has widely outgrown the percent of money from fuel taxes, officials say, making it untenable as a way to supplement the cost of building and repairing roads, providing transit stations for buses and trains, and upkeep of toll stations throughout the state. While spending has jumped up to over $1.25 billion per year, the share of funding coming from the gas tax has halved since 2000, according to the state auditor’s office.
“The gas tax is a keystone of road funding,” Andy Yewdell, a policy analyst, recently told the legislative committee reviewing the feasibility of options for funding highway improvements. “But it’s financially unsustainable.”
Yewdell insists that we need long-term, sustainable solutions as we move forward.
According to Utah’s Unified Transportation Plan presented by Wasatch Front Regional Council, the total transportation need between 2019 and 2050 is estimated at $108.5 billion. Existing revenue will only cover 85% of what’s needed for state roads, and existing revenue for transit systems covers less than 50%.
“Utah’s great strength is planning and preparing for the future,” said Andrew Gruber, executive director of the Wasatch Front Regional Council. “We have the best-rated transportation system in the nation. We’re the fastest-growing state in the nation if you look at the past 10 years. We need to invest in our future.”
The unsustainability of the gas tax can be attributed to three main problems. The first doesn’t seem like a problem at all: Our cars are more fuel efficient than they’ve ever been.
“The gas tax, when it was created 100 years ago, was a fairly good way of a user’s pay principle,” Pocock said. “All the vehicles on the road were fairly similar, using the same amount of gas, and driving the same amount of miles. Now, things are so different than they ever could have expected.”
The average fuel efficiency of U.S. light duty vehicles increased from 20 mpg in 2000 to 22.2 mpg in 2019, and the requirements are higher for future models.
A counterintuitive problem is the growing adoption of electric and hybrid vehicles. These make up a small portion (less than 3%) of Utah’s registered vehicles, but registrations and sales of these vehicles are growing rapidly. HB209, which would have raised registration fees for electric and hybrid vehicles to supplement the transportation budget, failed to pass the Utah House this year.
Another root cause of the gas tax dwindling in power is inflation. Utah’s gas tax adjusts with the consumer price index, a measure of the average change over time in the prices paid by urban consumers. This should allow the tax to adjust, but inflation has eroded the power of the index in long-term predictions. For road projects that need to be budgeted now, recent spikes in inflation leave a large measure of uncertainty.
Potential policy solutions discussed by lawmakers include a higher gas tax, a sales tax for a general fund, higher registration fees, more tolling along major roads and the vehicle miles traveled tax. The latter had a “trial run” in the past year with the road usage charge program.
How the per-mile program works
Users create a digital wallet with the company, similar to an Express Lanes EZ-Pass, which is automatically charged after reaching a certain threshold of miles. The technology that sends this information is a small attachment inside the vehicle, which connects to the DriveSync UDOT app.
This app allows users to view their driving performance and safety score, see the amount of miles they drive on a daily, weekly and monthly basis, and categorize their driving by personal and professional trips. The device could be manufactured en mass for large car companies in the state to automatically place in the car, should a program like DriveSync actually be drafted into law.
Though privacy concerns were raised at the session over tracking where users were traveling, Carlos Braceras, executive director at Utah Department of Transportation, ensured that it does not receive any personal information on the customers in its trial program. The department receives aggregate anonymous data that is currently unused, but could be used in the future to help with road maintenance and construction in heavily congested areas.
Lawmakers asked about equity in payment for people in rural areas, who often travel on harsher gravel roads and may not have full internet access to continually track mileage, but that issue needs further study.
Home delivery is also a murky area: People gain benefits from the road even when not using their own vehicles.
A study by the Utah Food Bank saw increases in deliveries by over 20% since January 2020, with a 113% increase in households served. The COVID-19 pandemic more than doubled food-delivery apps’ business, with a revenue boost of $3 billion over the summer for the four largest U.S. food-delivery services . With a fee on miles traveled for drivers, these delivery companies will have to charge more for customers utilizing their services.
The pilot program is a step toward the beginning stages of drafting and processing new policies for transportation, and certainly not a final one, said Rep. Kay Christofferson, R-Lehi, noting there’s a clear need for a gap in funding to be filled by something new, but exactly what it looks like is still up for debate.
“The problem is, there were too many questions you brought up,” Christofferson joked after Yewdell’s presentation on funding policies. “We just want answers.”
Correction: An earlier version incorrectly spelled policy analyst Andy Yewdell’s name as Andy Yewell. It also incorrectly attributes Yewdell as saying “We need to plan road funding for the future as we move forward.”