Caltrans considers 'road charge' tax as alternative to fuel tax

By Tyson Fisher, Land Line staff writer | 12/29/2017

In 2017, California addressed its short-term transportation funding woes by increasing its gasoline excise taxes by 12 cents and diesel excise taxes by 20 cents. Seeking a more long-term solution, Caltrans recently released a study that looks into the possibility of replacing the fuel tax with a more user-based tax.

According to the report, the majority of the 350 billion miles traveled on California roads are fueled by gasoline and diesel. Over the years, automakers have developed vehicles that are more fuel efficient and use alternative fuels. The combination of a dependency on the fuel tax with regulations pushing for more environmentally friendly vehicles has the left the Golden State questioning the efficacy of the fuel tax.

As Caltrans pointed out, two main factors affect transportation funding: inflation and vehicle fuel efficiency. Until the recent fuel tax hike that went into effect in November, California had not set the gas tax for inflation since 1994. Although the latest tax increase helped fill that gaping hole in revenue in the short term, vehicle fuel efficiency still poses a problem for a long-term solution.

California Road Charge Pilot Program
Caltrans’ recent study was based on assessing the state’s Road Charge Pilot Program. Launched in July 2016, the program collected taxes based on miles driven rather than on fuel consumption.

Over a period of nine months, about 5,000 volunteer vehicles/drivers reported miles traveled and paid a mock road charge. Vehicles used in the study included approximately 50 commercial trucks, 325 business vehicles, 3,400 urban/suburban private vehicles, 1,100 rural/agriculture private vehicles and 125 vehicles designated as “Other.”

Road charge reporting methods
Participants of the pilot program had two choices in methods of reporting their mileage: manual or automated. Within those two categories, there were various ways to report mileage.

Methods for manually reporting mileage:

  • Time permit – Pre-pay for an unlimited amount of driving for a fixed time period.
  • Mileage permit – Vehicle owner pre-pays for a fixed number of miles.
  • Odometer charge – Driver reports miles driven periodically and pays retroactively for the number of miles traveled since the last odometer reporting.

Automated methods:

  • With no location – Uses technology options without location-determination technology such as GPS.
  • With general location – Avoid paying the road charge for non-chargeable travel (out-of-state driving or private roads); requires location-determination technology, but only maps general location rather than precise location once the system determines chargeable or nonchargeable tr

Those who opted for automated mileage reporting chose from four technologies:

  • Plug-in device – Device plugs into the vehicle’s data ports and uses wireless technology to transmit mileage.
  • Smartphone app with no location or with general location – App measures mileage either through odometer images submitted once a month or by identifying when user is driving using GPS and Wi-Fi signals (odometer readings submitted as backup).
  • In-vehicle telematics – Technology integrated in vehicles. For example, GM’s OnStar or Ford’s Sync.
  • Commercial vehicle mileage meter – Mounted in trucks to measure distance traveled; includes other services such as fleet monitoring.

Public perception of road charge tax
Overall, participants were satisfied with their experience using a road charge tax in lieu of a fuel consumption tax.

Regarding reporting methods, 86 percent were satisfied with their choice of mileage reporting method. More than half of the participants who went with some form of technology chose a location-based reporting method.

In terms of the efficacy of a road charge, nearly three-quarters of participants felt that a road charge was more equitable than a fuel tax after the program was completed, up from 66 percent when surveyed before the pilot program began. The experience changed some minds of those who were not sure before the program, dropping from 17 percent to 9 percent after completion. However, the percentage of those who walked into the program neutral or feeling the road charge was unfair changed very little afterward.

Despite opinions of fairness, nearly 90 percent found that participating in a road charge program was easy. More than half walked away more aware of the amount they pay for road maintenance.

Issues with road charge tax
Caltrans identified several issues with the road charge pilot that need to be studied further. One such issue is enforcement/compliance. In the case of the pilot program, all participants were volunteers and no actual money was exchanged. Therefore, enforcement and compliance could not be measured.

Whereas the manual options provided more privacy and data security, they also could prove to be less enforceable and costlier to administer. Plug-in devices were found to be the most reliable, but the technology could be obsolete when/if a road charge is officially launched.

Caltrans concluded that smartphone apps and in-vehicle telematics show more long-term promise, with the latter becoming more prevalent and cost-efficient. However, some in-vehicle telematics services like OnStar are an add-on service that comes at an additional cost to the driver. Also, some manufacturers may be hesitant to turn over data from their in-vehicle telematics.

Fate of road charge tax in California
One thing is clear in Caltrans’ study: A road charge tax will be much more beneficial in the future. With that said, the agency was also clear that many more studies need to be done to determine feasibility, complexity and acceptance.

Regarding acceptance, perception among the participants in the study may have been positive, but that does not mean the general public will welcome a road charge with open arms. For one, the ease of the gas tax may keep many resistant. To address this issue, Caltrans suggests partnering with the Federal Highway Administration to look into a possible pay-at-the-pump method. Essentially, combine the acceptability and ease of the gas tax with the equitability of a road charge.

Even if California decided to move forward by proposing a road charge tax, it will not happen anytime soon. Studies, politics, bureaucracies and a slew of other factors will make such a significant change difficult.

“Implementing a road charge program prior to 2025 could be problematic,” Caltrans concluded.

Stay tuned, because California is certainly entertaining the idea.



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