Oregon Tests Voluntary Road-Use Fee to Shore Up Gas Tax

OReGO is a voluntary road-usage fee program that allows drivers to pay 1.8 cents per mile traveled. The project could also serve as a mechanism for collecting highway funding from electric vehicle drivers.

A vehicle getting gas at a pump.
Shutterstock/ZikG
Oregon is moving forward with a voluntary road-usage fee program as a potential means of shoring up the diminishing highway funding normally gathered through gasoline taxes. 

The Oregon Department of Transportation (ODOT) recently signed an agreement with Azuga, a connected vehicles technology provider, to serve as the account management provider for an upcoming six-month pilot project. The project will be managed by OReGO, an arm of ODOT which handles the state’s road-usage fee program. 
 
“This is a first in the nation, road-usage charge program,” said Michelle D. Godfrey, education and outreach coordinator for OReGO. At least 16 other states have explored road-usage fees in various capacities. Utah recently passed similar legislation allowing EV owners to participate in the state’s road-usage fee program, in lieu of paying a flat fee at registration. 
 
Road-usage fees are viewed as a replacement for the gas tax, as cars increasingly consume less gas, or in the case of EVs, no gas at all. 
 
Oregon began exploring the concept in 2001. The Legislature established a road user fee task force from members of the public and private sectors to study the issue and explore solutions to “make up the funding gap that will, no doubt, start occurring,” said Godfrey. 
 
“And just in the past year or so, it has started occurring,” she added.  
 
Oregon DOT conducted a pilot project in 2006-07, and another in 2012-13, which created the OReGO program, which officially launched in July 2015. 
 
The voluntary program includes a registration fee waiver for high gas-milage vehicles enrolling in the program. As of March 1, OReGo includes 2,014 vehicles, with participants paying 1.8 cents for each mile traveled in the state. 
 
“[The gas tax] really is a Band-Aid on a gaping wound that’s getting worse,” said Nate Bryer, executive vice president for road usage charging at Azuga, remarking on the highway funding shortfalls many states are encountering.
 
While other regions are eyeing the road-usage fee technology, Azuga is in project development talks with states like Hawaii, California, Colorado and others. 
 
“So yeah, many, many states are involved in looking at this. Oregon is the first state to actually start collecting actual money,” said Bryer. 
 
The U.S. Department of Transportation's Federal Highway Administration also recently announced it has awarded more than $18.7 million in grants to eight pilot projects focused on exploring user-based funding approaches for highways and bridges.  
 
The technology in Oregon works by drivers attaching devices to their cars which collect the milage and location data. The location data is needed to ensure drivers are only charged for miles driven in Oregon. 
 
“All we do is we aggregate the data, differentiate the miles, and then tell the state how much is owed,” explained Bryer. “And then we collect the money, and pay the money on behalf of the customer.” 
 
There has been some concern on the part of motorists around the notion that cars are being tracked. 
 
“That’s been a concern since the concept was developed and introduced. People have the misperception that government is going to follow them on their trips … That is not the case. The location data is never shared with ODOT,” said Godfrey.
 
“The data is used entirely for calculating the road charges,” she said, adding, state law then requires that the data be destroyed after 30 days. 
 
Even though the Oregon road-usage fee program is the first in the nation to actually collect money, the program is still largely in the development and rollout phase, say state officials. 
 
“It’s a nominal,” Godfrey said of the money collected so far. “It’s a voluntary program, so we’re not really looking at the revenue being generated. But over time, the program is expected to close the highway funding gap. 
 
“We have had a number of economists look at the road-charging scenarios, and determine that this system can get us back on track, over time,” she added. “The sooner we implement it, the better.” 
 
Skip Descant writes about smart cities, the Internet of Things, transportation and other areas. He spent more than 12 years reporting for daily newspapers in Mississippi, Arkansas, Louisiana and California. He lives in downtown Sacramento.