A mileage-based tax could rescue the Highway Trust Fund
The Highway Trust Fund, which finances road repairs, construction, and more, is paid for by the federal fuel tax — but will need a new funding model as EVs proliferate, because EV owners won't pay for fuel.
Why it matters: For years, the Highway Trust Fund has barely avoided bankruptcy, saved by marginal increases in vehicle miles driven and by cash infusions. This system will be unsustainable if EVs continue to grow in popularity.
What's happening: EV driving ranges are getting longer, charging times are getting shorter, and demand for zero-emissions vehicles is growing stronger.
- Major automakers plan to launch as many as 100 new electric vehicle (EV) models by 2023 to meet growing customer demand.
What they're saying: A handful of potential solutions to the waning funding problem are under consideration.
- Raising the federal gas tax could act as a stop-gap solution, though it could inadvertently accelerate EV popularity. Meanwhile, improving fuel efficiency could chip away at this solution as well.
- Interstate tolling could incorporate existing toll technology and put gas- and electric-powered vehicles on equal funding footing.
- EV-specific fees, as in California, Minnesota and Tennessee, are currently not enough to offset lost fuel taxes. Raising them too high could dissuade some drivers from making the switch.
The most workable solution has been mileage-based. A car owner would pay a fee based on the number of miles their vehicle travels, and gas-powered vehicles could get a rebate to offset fuel taxes.
- How it works: Oregon has pioneered this promising concept, and several other states have launched their own pilots.
But, but, but: While a mileage-based solution has surpassed alternatives in popularity, even proponents have voiced concern about government tracking their every move to calculate the user fee.
- Additionally, the privacy and data security of car owners must be protected.
What to watch: The pending transportation funding authorization package in Congress includes provisions for pilots of mileage-based fee systems.
Jim Barbaresso is SVP of intelligent transportation systems at HNTB, an infrastructure advisory firm.