FutureStructure

The Gas Tax is in Trouble, and the DOT Wants to Help States Find an Alternative

The Federal Highway Administration is planning to fund state efforts to find an alternative revenue source for transportation projects.

by / March 22, 2016
(AP/Stephan Savoia)

The movement to come up with an alternative to the gas tax has just become $15 million bigger.

That’s how much the Federal Highway Administration is offering to states in grant money, according to a March 22 statement. The money will be available to either state agencies or groups of state agencies that are proposing user-based systems for collecting revenue that can bolster transportation budgets.

The basic concept is to tax people for how much they use the roads instead of how much gasoline they buy. That’s a big deal because the Highway Trust Fund, the federal recipient of gasoline taxes, has faced financial jeopardy for years and required congressional intervention to stay solvent.

The price of gas, and thus the amount of tax revenue from the product, is subject to unpredictable fluctuations. On top of that, cars are getting more fuel efficient — according to data from the University of Michigan Transportation Research Institute, the average miles per gallon of vehicles sold in the U.S. has risen from 20.8 in October 2007 to 25.2 in February 2016.

Meanwhile, cities, states and the federal government are putting their weight behind programs meant to get people to stop using so much gas. That ties in with national and international carbon emission reduction goals like the Clean Transportation Plan. As people start driving more electric and hydrogen fuel cell vehicles, they will contribute less revenue toward gas-dependent transportation budgets while still using the roads.

Some states, such as California and Oregon, have already begun experimenting with “road use charge” programs. Though there are different approaches to figuring out how far participants drive, a common approach is to have volunteers plug devices into their car’s standard computer ports. Those then report mileage back to the state so it can learn how to best design a program to charge people for how much they use the roads.

The Federal Highway Administration grant will go to either refine existing pilot projects or help launch new ones, but either way the department wants to fund large-scale efforts according to its Notice of Funding Opportunity.

However, there’s a catch — the administration will only fund projects that can help out the Highway Trust Fund.

“The mechanism would ultimately need to demonstrate that it could effectively collect federal user fee revenue and be scalable nationally, but it could also be used to collect state user fee revenue,” Transportation Department spokesperson Nancy Singer wrote in an email. “It should be noted that during the demonstration, federal user fee revenue would not actually be collected; rather, the pilot approach would demonstrate how it could be collected.”

The department plans on handing out the first round of funding this year, with another $80 million available between fiscal years 2017 and 2020.

Ben Miller Staff Writer

Ben Miller is the business beat staff writer for Government Technology. His reporting experience includes breaking news, business, community features and technical subjects. He holds a Bachelor’s degree in journalism from the Reynolds School of Journalism at the University of Nevada, Reno, and lives in Sacramento, Calif.