States Experiment with Controversial Taxes to Pay for Highway Construction
Some states are experimenting with controversial new taxes to pay for highway construction. Special correspondent Lee Hochberg reports from Oregon, where officials are looking into charging drivers a tax based on the number of miles they drive in lieu of a highly-debated gas tax.
JUDY WOODRUFF: Now experimenting with controversial new
taxes to pay for highway construction.
Special correspondent Lee Hochberg reports from Oregon.
LEE HOCHBERG: Anyone who has driven the West Coast's major
north-south highway, Interstate 5, knows this maddening half-mile bottleneck in
where the southbound roadway narrows to two lanes.
It's needed to be widened since the 1970s. Finally, a lane
is being added, paid for with money from Oregon's
gasoline tax, which funds 65 percent of the state's road projects.
But, a year into the job, the amount of revenue available
from that tax is dwindling. State transportation spokesman Dave Thompson is
will be able to complete the interchanges needed to connect the widened freeway
to these feeder roads.
DAVE THOMPSON, Oregon Department of Transportation: That's a
$90 million project. And the gas tax does not give us enough money to do that
at this point. We can't even put it on our schedule, because we look out to see
where the gas tax will be in the next three or four years, and there's not
MAN: Yes, $10 regular, please.
Gas tax revenue plummets
LEE HOCHBERG: In Oregon, while miles driven have increased
19 percent over the last 15 years, gas tax revenues have only gone up 3
percent. That's because many are driving more fuel-efficient cars and buying
fewer gallons. Fewer gallons bought means less tax money brought in.
JAMES WHITTY, Oregon Department of Transportation: It is
already not performing right now. And where are we going to find the money to
build projects like this or maintain the system?
LEE HOCHBERG: State manager of innovative partnerships and
alternative funding, James Whitty, says it is only going to get worse.
JAMES WHITTY: And, in fact, we know that vehicles are coming
that will get 70 to 100 miles per gallon and vehicles that will use no fuel
whatsoever. So, the gas tax cannot last. It will fail. And it is failing right
LEE HOCHBERG: It's not just a state problem. The Federal
Highway Trust Fund, fueled by an 18-cent-per-gallon federal gas tax, is also
running short. If that piece of the funding pie is missing, it could jeopardize
critical projects that the stimulus package hoped to get up and running.
Some members of Congress and Transportation Secretary Ray
LaHood have called for new approaches to funding. One they are looking at, and
the most controversial, is a mileage tax, where drivers pay for their miles
driven, instead of the gallons they buy.
It's a method Oregon
experimented with from 2005 to 2007. In a pilot project, 300 volunteers let the
state hook up computers and transmitters to their cars, so that their mileage
could be tracked with a GPS, global positioning system. Only miles within Oregon were counted.
Each time they bought gas, their data was transmitted to the
state Department of Transportation, which calculated a 1.2-cent-per-mile
charge, and added it to the gasoline bill. It replaced the old gas tax of 24
cents per gallon.
The state says the program showed a mileage tax could
generate more revenues than what the gas tax would be expected to generate. But
there were some issues raised. First, drivers who got more than 20 miles per
gallon paid more in mileage tax than they would have in gas tax.
That happened to Lee Younglove, a 65-year-old retiree who
tested the mileage tax for a year in his 2001 Subaru, which gets 25 to 30 miles
per gallon. He paid 25 cents more tax per fill-up. But he says, it's only fair
that those who get better mileage pay more than they have been.
LEE YOUNGLOVE, 65-Year-Old Retiree: As I drive down the
road, I see some electric vehicles and some hybrids. I know they're not paying
their fair share for maintaining the highway. In fact, for an electric vehicle,
I don't know that they are paying anything for road-use taxes. So, they are
using the -- the highway for free. And, in my view, that's not very fair.
Mileage tax 'more fair'
LEE HOCHBERG: The state's report on the pilot project also
says the mileage tax is more fair. It says: "These fuel-efficient vehicles
will be purchased largely by more affluent members of society. The less
affluent will tend to purchase used vehicles, the minivans, SUVs and trucks of
today." It asked, "Do we as a society want to place the bulk of the
burden for funding our road system on the poorer element of society?"
Still, some think it's wrong to suddenly remove an advantage
to driving a fuel-efficient car.
JOE BERTRAND, Motorist: A year ago, everybody was, you know,
giving incentives for that. So, it just doesn't make any sense.
ESTHER WRIGHT, Motorist: I think those people should be
rewarded for being conscious and ecologically concerned. So, if they are
getting a tax benefit because they bought a Prius, for example, I think they
deserve to have one.
LEE HOCHBERG: Oregon
was the first state to tax gas back in 1919 to pay for its first road system. The
tax never was designed to encourage fuel-efficiency.
And Whitty doubts that it does today.
JAMES WHITTY: People will continue to buy fuel-efficient
vehicles because of the price of -- of fuel, not -- not because of whatever the
tax system is.
Privacy concerns a factor
LEE HOCHBERG: But the hit on fuel-efficient cars isn't the
ACLU of Oregon executive director David Fidanque worries
just how much information the GPS will collect and who will have access to that
DAVID FIDANQUE, Executive Director, ACLU of Oregon: Any time
technology is capable of collecting information, there are people who want that
There will be tremendous pressure from law enforcement, from
intelligence agencies, because they're going to want to collect as much
information as possible about where motorists have been and when, because they
will be able to use that for all kinds of other reasons that have nothing to do
with the mileage tax.
LEE HOCHBERG: Some drivers are concerned about privacy as
AUDREY NELSON, Motorist: I don't know if I would want someone
to know exactly where I was all the time and where I was going and what I was
LEE HOCHBERG: In the pilot project, only total miles, not
whereabouts, were tracked. And no records were kept. Fidanque says, that's
good. But that creates its own problem. How do drivers challenge the state if
they disagree with the bill they get for mileage?
DAVID FIDANQUE: You won't have the ability to tell the
government: "Look, I didn't drive 600 miles, but I was charged for 600
miles. The machinery was wrong. Give me a refund."
Mileage-based toll system
LEE HOCHBERG: The state says the technology in its trial
worked exceptionally well. Its mileage readings averaged within 2 percent of
car odometers, although, in some cases, they varied as much as 21 percent.
The state says improving the technology will not be
difficult. But some analysts say there's a much simpler way to raise the same
John Charles is president of the Cascade Policy Institute, a
JOHN CHARLES, President, Cascade Policy Institute: All we
need is a very simple mileage-based toll collection system that is convenient
in electronic tolls on the highest-used system, the interstate highways. I
think a more modest system of user fees would get the job done. And it would be
way more politically palatable.
LEE HOCHBERG: Charles says, 50 percent of U.S. driving is on freeways, so,
they alone could be tolled and generate sufficient revenue. New in-car
transponders, already used in some states, can make billing easy.
And he says they can be programmed to charge more for peak
travel hours. But focusing on freeways raises worries that other roads will
just get more traffic, and they will need more repairs. Oregon officials are convinced a mileage tax
is a better way to go.
JAMES WHITTY: And, so, there will have to be a new system. I
would guess that the mileage fee is -- is the most likely possibility for that
new system in the future.
LEE HOCHBERG: Making a mileage tax workable will require
having the technology embedded in new cars and depend on both automakers and
the federal government to buy in. Nobody is near there yet.
In the meantime, to keep the road fund from running empty, Oregon's governor is
asking for a hike in the gas tax and a doubling in the price of auto title fees.