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SAdvancing the state of the practice of Mileage-Based User Fees 

           Spring 2011

In This Issue
Executive Director's Message
The Need for Alternative Transportation Funding
Getting to Yes on VMT
DC Update: Mileage Based User Fees in Federal Reauthorization
Transportation Funding News
VMT International News
Research Library



   Research Library Archive 


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Welcome to the first issue of MBUFA's Quarterly Newsletter. Each issue will give you articles from experts in alternative transportation funding.  Taken together these features will take a look at the issues and technologies of VMT and sustainable transportation funding solutions.  You'll also find transportation funding news from Washington DC, state capitals, and nations around the world.  We welcome your comments and suggestions. We also welcome your contribution, whether news tips or guest feature suggestions.
Jack Basso, Chairman of MBUFA
Jack Basso, Chairman of MBUFA

Letter from Chairman Jack Basso


It is my pleasure to introduce the inauguration of the  Mileage Based User Fee Alliance newsletter. Our coalition has as its mission promoting the necessary research and providing education and information as consideration is given to transitioning to a new robust way of ensuring we can as a nation finance our future transportation infrastructure.


I want to thank all of the MBUFA members that have volunteered their time to contribute to this newsletter and for all of their efforts to advance the state of the practice on this important subject. It is clear that if we are to pay for future surface transportation infrastructure needs we must have the systems in place to collect the revenues to meet the needs. We hope you find this newsletter a useful source of information. 



Executive Director's Report

Barb Rohde

by Barbara Rohde

Welcome to the Inaugural Issue of the MBUFA Newsletter!!  This newsletter will b


We also hope you will visit our new website www.mbufa.org.


The Mileage Based User Fee Alliance was founded in August, 2010, as a 501 (c) 3 organization to provide a unified voice toward information and education on this topic to interested parties around the globe.  We were very pleased to have three such distinguished professionals in the field as Jack Basso (Washington, D.C.) , James Whitty (Oregon)  and Lee Munnich(Minnesota)  agree to serve as Officers of the organization.  We held the first quarterly meeting in September 2010 in Washington, D.C. and have been working at a very active pace since that time. 


Membership in the organization provides immediate access to updated mileage based issues as they happen around the world.  In addition, members provide input into policy decisions for the organization as it addresses questions on this issue on almost a daily basis at this time.

Members include state DOTs, local government transportation divisions, not for profit organizations, universities, and corporations.


Currently, we are monitoring legislation in both the U.S. House of Representatives and the U.S. Senate involved in mileage based legislation.  In addition, we are monitoring legislation in the State of Oregon that specifically addresses the mileage fee issue beginning in 2014.

We will also monitor related activities in other states as well as many initiatives of local units of government on mileage based programs as a potential revenue source in the near future.  At the same time, we are continuing to follow international developments in user-based road pricing.


We look forward to you enjoying this newsletter and the information provided about MBUFA and its Members.  We hope if you are not a Member of MBUFA at this time, you

will join in the near future and be a part of this exciting organization.


The Need for Alternative Transportation FundingKevin Condon, Managing Partner, Verdeva LLC

by Kevin Condon, Managing Partner, Verdeva LLC



1982: President Ronald Reagan: "We have an emergency situation with regard to our national highway system and a great many bridges, anyone of which has the potential for a tragic disaster. We feel that a gas tax as a user fee to fund necessary repairs is a fair way to solve the problem. I assure you I will never approve such a tax as just a part of general revenue raising." (Letter to constituent from President Ronald Reagan, 12/27/82) 

2009: Commission Report to Congress: "The nation faces a crisis. Our surface transportation system has deteriorated to such a degree that our safety, economic competitiveness, and quality of life are at risk.  As a nation, we have reaped the benefits of previous generations' foresight and investment, generations that developed and built a transportation system that became the envy of the world ... Not only have we failed to make the needed and substantial investment; we have failed to pursue the kind of innovation necessary to ensure that our infrastructure meets the demands of future generations."  (Report to Congress by the National Surface Transportation Infrastructure Financing Commission, February 26, 2009)

1982 to 2011 - Two factors -- aging infrastructure and chronic under-funding over three decades threaten our transportation system more than ever. Wait, though.  Going forward a third factor makes the prognosis even worse:


2012-2032 -- Over the next 30 years we face a third and more existential threat to the system: declining gas sales due to increasing fuel efficiency. The urgency of transportation funding now collides directly with another national priority: reducing our consumption of oil by increasing the fuel efficiency of vehicles, including the transition to hybrid and electric vehicles.  Less gasoline consumption per mile means less revenue per mile but not less use of the roads. There is bipartisan recognition of the severity of the shortfall in the Highway Trust Fund and much has been done to find a solution. But much remains to be done.


Eisenhower's idea of funding the highways with a user-fee system (the per-gallon gas tax) remains an idea with support across the political spectrum. The problem is that the flat gas tax is less and less effective each year as more vehicles use the roads but burn fewer gallons doing it. Real highway spending per mile traveled has fallen by nearly 50 percent since the federal Highway Trust Fund was established in the late 1950s. Going forward, stricter CAFE standards and rising prices at the pump will accelerate that shortfall, worsening a situation where total combined highway and transit spending as a share of gross domestic product (GDP) has fallen by about 25 percent from the late 1950s to 1.5 percent of GDP today. 


State and local transportation funding faces the same three challenges.  According to the National Conference of State Legislatures "The cumulative national shortfall for transportation funding to keep pace with projected needs has been estimated at $1 trillion through 2015. Of this, $34 billion is the annual unmet need to maintain existing roads and transit facilities."  Look for states to lead the way exploring and adopting alternative funding approaches


Saving the User Fee Model: VMT as an Alternative Approach: There is widespread consensus among transportation funding experts in government as well as the research community that there is an urgent need to replace the current system with an alternative revenue model. The National Surface Infrastructure Finance Commission (NSITFC) recommended to Congress that the current gas tax be replaced with user-based charges --a vehicle mileage tax (VMT).   There isn't a one-size-fits-all VMT approach and states will likely consider different versions (see articles below by Jim Whitty and Adrian Moore). It is, however, the most viable way toward sustainable funding tied to user charges.


Jim Whitty, Oregon Department of Transportation
Getting to Yes on VMT: An Open Systems Approach to Mileage Based User Charges 
by Jim Whitty, Manager, Office of Innovative Partnerships and Alternative Funding, Oregon Department of Transportation

Seeking to resolve public concerns and improve system design of its road user charging program, the state of Oregon fundamentally revised its concept for collecting mileage based user charges.  Moving past the original pay-at-the-pump model, the state's Road User Fee Task Force now proposes legislation (HB 2328) for a vehicle road usage charge to electric and plug-in hybrid vehicles under an open technology platform.


Though hailed as a success, national scrutiny of Oregon's 2007 Road User Fee Pilot Program revealed design flaws and public enmity for the GPS technology employed.  Many members of the general public strongly object to a government mandate for a "GPS box" in their cars as a violation of privacy.  They also expect a large and costly government bureaucracy to manage the new revenue system.


The principal design flaw was dependence upon a closed system for mileage data collection and payment.  The pay-at-the-pump model only had one way to develop data, one way for data to flow and only a government agency could manage accounts.  The technology experts noted the applied technology would become stuck in time. 


To address these issues, Oregon DOT revised its road user charge model as an open system platform that allows the marketplace to play a large role in data collection and management of accounts.   The state could tap into market forces to allow the public to choose the means by which they report their mileage from approved methods, the on-board technology to suit their needs and the method of invoicing and payment  


 An open system is an integrated system

based on common standards and an

operating system accessible to the marketplace

whereby components performing the same

function can be readily substituted or provided

by multiple providers.


An open system platform for road user charges has strong potential for resolving key issues discovered during assessment of Oregon's road user fee pilot.  The open platform allows design of a mileage data collection and payment system to access existing processes familiar and acceptable to the public such as the smart phone, navigation unit and tolling markets. 


Rather than one way to do things, an open system allows many ways to do things so that technologies and systems can evolve with improvements and preferences.  The state would set common standards for how mileage data should flow to a central computer system maintained by a billing agency.  The state and private sector companies would provide motorists choices for electronic data creation and data transfer from among certified options. 


The basic options for mileage data generation and data transfer would involve either the odometer or vehicle location technology.  Motorists obviously accept the odometer as standard equipment in their vehicles but a requirement for GPS is another matter.  While motorists object to a mandate for GPS, many readily access the GPS function in smart phones for apps they want to use.  Avoiding a GPS mandate seems essential to obtaining public acceptance for charging by the mile but allowing optional use of motorist owned GPS devices for location based mileage counting also seems necessary. 


The basic system for mileage counting would involve reporting directly from mileage counting equipment already in vehicles-the odometer-and for accuracy, the reporting should be electronic.  One way might involve accessing the on-board diagnostic port (OBDII).  A less cumbersome way involves wireless transfer of mileage data directly from the odometer.  A 2009 report prepared by Noblis for FHWA and RITA identified three ways for wireless transfer from the odometer.


Reporting of mileage directly from the odometer will solve the privacy issue because this method does not require vehicle location technology.  Motorists choosing an odometer method, however, will report mileage undifferentiated by geographic location.  Thus, they will be charged one rate for all miles reported.  If motorists want to differentiate their mileage by geographic location, they should choose on-board technology that performs this function, whether GPS, cellular or something else.


The state would provide the basic invoicing and payment system, probably a simple invoice sent by mail with the motorist paying by mail or on-line.  The state would certify options available under alternative account management services offered by the private sector.  During a no growth period for public sector employment, having private sector account service alternatives will enable the mileage charging system to grow as the number of accounts grows.


The open system approach for collection of mileage taxes is part policy and part theory.  If the Oregon Legislature passes HB 2328, the state of Oregon will move to make application of a vehicle road usage charge under an open system a reality, perhaps with public acceptance.



DC Update: Mileage Based User Fees in Federal  Reauthorization

 by Dr. Adrian Moore, Vice President, Reason Foundation  


(Editor's note: On March 20, 2011, Dr. Moore testified before the Subcommittee on Highways and Transit, in the U.S. House Transportation and Infrastructure Committee.  His article below draws on that testimony.) 


Adrian Moore


User fees are financially and economically superior means of paying for services compared to taxes and indirect charges.  Our transportation system has traditionally been funded overwhelmingly by user fees, and this has served us well.  As fuel taxes become a less effective form of user fee, we should be seeking a replacement that is even better.


I was honored to serve on the National Surface Transportation Infrastructure Finance Commission created by Congess in the last transportation authorization.  We invested the majority of ouot time as a commission to considering all possible mechanisms for funding the federal transportation program. no suprise, we confirmed that there are no silver bullets--they all have advantages and disadvantages.  Our report provides a detaild analysis of our comparison of mechanisms.  But we unanimously concluded that one mechanism, according to all of our criteria, clearly had the most promise for the future.  That mechanism is mileage-based user fees. They can be more effective, economically sustainable, and flexible than the current system, and at least as equitable.


But mileage-based user fees need some time to develop as a viable way to pay for transportation.  Fortunately, number of states are interested in working on mileage-based user fees as potential future funding mechanisms for their states.  This reauthorization is a chance for Congress to make a modest investment in helping develop the next generation of user fees for funding transportation. They should partner with state and local governments to conduct large scale trials of mileage based user fees to advance our understanding of the technical, administrative, and financial feasibility of mileage-based user fees.


NCHRP Web Only Document 161: System Trials to Demonstrate Mileage-Based Road Use Charges National Cooperative Highway Research Program, authored by a team from Rand, provides the best current assessment of how to conduct such trials and should be a resources for setting them up.


The point of the trials is to answer the many questions about mileage-based user fees. The biggest concern people have is the protection of privacy and security of information.  It is crucial that the trials put emphasis on these issues.  The biggest concern people have about mileage-based user fees is the protection of privacy and security of information.  It is crucial that the trials conducted under this program put emphasis on these issues, including:


a.  Testing technologies and system architectures, including revenue collection processes, that at a minimum offer participants an option that does not collect or transmit detailed or disaggregated information about their travel.


b. Developing policies to complement technologies and system architecture so that privacy protection options are transparent to participants and are ensured, not subject to being overturned by policy changes or court orders, etc.


c. Gathering feedback from participants about what they want in the way of privacy options and their judgments of the effectiveness of privacy protection systems and policies utilized.


But the trials should answer other issues as well, such as:

  • The costs of collection
  • How to reduce the costs of collection
  • Interoperability
  • Structures to avoid double payments of mileage fees and fuel taxes.
  • Voluntary systems and incentives for adoption
  • Equity
  • Attitudes of participants before, during, and after trials.


Evaluation of all that is learned from the trials must be thorough and objective and widely disseminated.


This authorization period is a chance for Congress to preserve the user fee principle of funding transportation, empower state and local governments to take the lead in developing means of making these user fees work, and take significant steps towards making the next generation of user fees viable in time to replace fuel taxes before the current system becomes untenable.

Aging Bridge

Transportation Funding News



Oregon Legislative Committee Advances VMT Tax Bill for Electric Vehicles

By James M. Whitty, MBUFA


An Oregon legislative committee advanced a bill on April 4 to apply a vehicle road usage charge to operators of the emerging electric vehicle fleet.  The House Committee on Transportation and Economic
Development passed HB 2328 out of committee-six in favor and two opposed-on an evenly split bipartisan positive vote.  The bill now heads to the House Committee on Revenue.


The state's Road User Fee Task Force developed HB 2328 last autumn with the assistance of the Oregon Department of Transportation.  Oregon's Governor, Senate President and House Speaker reconstituted the nearly ten year old body to address a new hole in the highway fund owing to the recent entry into the marketplace of plug-in electric and hybrid vehicles that pay either no fuel tax or very little.  The task force decided applying a distance based charge to this new fleet would be consistent with Oregon's 92 year-old policy of "users pay for the roads."  Oregon was the first state to adopt the gas tax in 1919.


The transportation committee adopted amendments to HB 2328 to apply a tax rate of 1.43 cents per mile.  This rate is comparable to what an average motor vehicle pays in Oregon gas taxes.  The amendments also allowed the Oregon DOT to apply the new tax program to up to 5,000 non-electric volunteer motorists operating vehicles of 10,000 pounds or less.


HB 2328 as amended does not apply a particular data generation and payment collection system.  Rather, the bill requires ODOT develop methods for these functions under an open system that could allow motorists many options for data generation and payment collection.  The bill defines the term open system as "an integrated system based on common standards and an operating system accessible to the marketplace whereby components performing the same function can be readily substituted or provided by multiple providers."  The bill also specifically allows the creation of public private partnerships to accomplish the data generation and payment collection functions under standards established by Oregon DOT.


The task force may have solved the privacy concerns that emerged from Oregon's original Road User Fee Pilot Program by eliminating the mandate for a GPS receiver to be placed in vehicles.  Rather, HB 2328 requires development of more than one method of collecting and reporting the number of miles traveled and at least one method must not involve vehicle location technology.  The bill requires that a vehicle subject to the charge, however, must be capable of electronically reporting an odometer reading.   Oregon DOT could allow motorists who want to differentiate their mileage by geographic location to use their own GPS receivers certified by ODOT for that purpose. 


If passed by both houses and signed by the Governor, the new road usage tax would become effective January 1, 2014 for 2014 model years and beyond. 



Other News 



CBO Weighs Benefits, Risks Involved in Using VMT Tax to Fund Highways 

AASHTO Journal Weekly Transportation Report

(To read more http://www.aashtojournal.org/Pages/040111vmt.aspx)


CBO: Taxing mileage a 'practical option' for revenue enhancement

By Pete Kasperowicz - The Hill 

 (To read more: Click Here)


"We Must Invest in Infrastructure or We Are Cooked as a Nation" --Former PA Governor Rendell to IBTTA

(To read more: Click Here) 


Pennslyvania Drivers Could Be Taxed on Miles Traveled, Not Gas Usage

(To read more: Click Here 


The Aging Fuel Tax

John D. Boyd -Journal of Commerce

(To read more: Click Here)


Oregon Proposal: Road tax for Electric Vehicles

By Hasso Hering, Albany Democrat-Herald

 (To read more Click Here)


Tolls on I-4?

(To read more: Click Here)



Should electric car owners pay a mileage tax?

By Tom Adams KVAL News and KVAL.com staff

(To read more Click Here)


Mileage Tax Could Get Test Drive in Hawaii

By Michael Levin, Honolulu Civil Beat

(To read more: Click Here)


Texas Report: Taxing Drivers by the Mile is Feasible

By Mike D. Smith, Beaumont Enterprise

(To read more: Click Here)


Transportation Experts Urge Significant

Changes in Transportation Agenda:

(To read more: Click Here)


Rep. Dean Says Funding Woes May Cause Tennessee DOT to be "Department of Emergency Repairs"

The Chattanoogan

 (To read more:  Click Here

PA: Highways and Bridges Will Go Unfixed, blocking 39,000 new jobs.

Pennsylvania Department of Transportation

(To read more:Click Here )


Growing Pothole: Alternatives Need as Gas Tax Fails to Meet Transportation Needs

Editorial, The Columbus Dispatch

(To read more: Click Here)






International image
VMT International News  

European Roadmap Recommends Road User Charges

European Commission Mobility and Transport
To read more: Click Here


Montreal: So what will it be? A payroll tax, a mileage tax or bridge tolls ...

By Andy Riga, Montreal Gazette

(To read more: Click Here )


Montreal: Mileage tax better than gas tax to curb car use, experts say

Montreal Gazette

Ninety-one per cent of participants said that they would agree to continue paying the mileage fee in lieu of the gas tax. Though never tried on a large... (To read more: Click Here)


Europe: Telenor Connexion Test Wireless Road Traffic Monitoring

By David Ng, Cellular News

(To read more: Click Here)

MBUFA logo
Research Library

Alternative Approaches to Funding Highways

Congressional Budget Office

Click Here


The Intersection of Urban Form and Mileage Fees: Findings from the Oregon Road User Fee Pilot Program, 2011

Mineta Transportation Institute

Click Here


Guidelines for Shaping Perceptions of Fairness of Transportation Infrastructure

Policies: The Case of a Vehicle Mileage Tax  

University of Nevada Las Vegas

 Click Here


Well Within Reach - America's New Transportation Agenda

Miller Center of Public Affairs, University of Virginia

Click Here


A Forum on the Future of Highway Transportation in America

International Bridge and Tunnel Tolls Association

Click Here


Transitioning to a Performance-Based Federal Surface Transportation Policy

Bipartisan Policy Center

Click Here


Paying Our Way

Report of the National Surface Transportation Infrastructure Financing Commission

Click Here


National Surface Transportation Policy and Revenue Study


Click Here


System Trials to Demonstrate Mileage-Based Road Use Charges

The RAND Corporation for the National Cooperative Highway Research Program

Click Here


Surface Transportation Funding: Options for States

National Conference of State Legislatures

Click Here


Idaho Governor's Task Force on Modernizing Transportation Funding in Idaho: Final Recommendations 

Click Here


NCHRP 08-36: "Road Pricing Communication Practices"

Transportation Reseasrch Board

 Click Here


Vehicle Mileage Fee Primer

Texas Department of Transportation

Click Here


Roadmap to a Single European Transport Area - Towards a competitive and resource efficient transport system

European Commission 

Click Here


Road Pricing: Public Perceptions and Program Development

National Cooperative Highway Research Program (Transportation Research Board)

Click Here


Mileage-Based User Fees: Defining a Path toward Implementation

University Transportation Center for Mobility

Click Here

Implementable Strategies for Shifting to Direct Usage-Based Charges for Transportation Funding

The RAND Corporation, University of Minnesota and National Cooperative Highway Research Program

Click Here


Multi-State VMT-Based Road-User Fee Initiative

I-95 Coalition

Click Here


National Evaluation of a Mileage-Based Road User Charge

University of Iowa Public Policy Center

Click Here


The Fuel Tax and Alternatives for Transportation Funding

Transportation Research Board

Click Here


Are We There Yet? Creating America's Future Transportation System -2009

American Association of State Highway and Transportation Officials

Click Here

Congressional Budget Office 

How Fair is Road Pricing? Evaluating Equity in Transportation Pricing and Finance

Bipartisan Policy Center

Click Here