New Solutions for Oregon’s Roads & Bridges
By State Representative Dennis Richardson,
Oregon has good roads. Our freeways, highways, and bridges are some of the best in America. In some states, potholes are large enough to require state mining department regulation. We may criticize Oregon’s Department of Transportation for having too many employees and spending too much money, but in truth we owe ODOT and our city and county road departments our thanks. Their care of our transportation infrastructure enables us to drive wherever and whenever we want, without giving the matter much thought. Maintaining such infrastructure in not cheap, and as explained below, Oregon’s primary reliance on the gas tax to fund our transportation system will be unsound in an Oregon where high fuel efficiency and reduced gas consumption will become the rule. At the end of this newsletter, I will be asking for your input and ideas on what can be done to replace Oregon’s gas tax.
Background. Oregon has 4.1 million registered vehicles driving on our state freeways, roads, bridges and trails, motoring on our lakes and waterways. That is more than one vehicle for every man, woman and child in the state. Collectively, Oregon’s 4.1 million vehicles travel 33.8 million miles and generate $400 million in gas taxes every year. These gas taxes are the main source of revenue that pays to construct and keep Oregon’s roads, highways and bridges in a safe and sound condition. In the future, for the following reasons the gas tax will not be able to provide sufficient revenues to maintain our transportation infrastructure at the level to which we have become accustomed.
Consider what has happened in less than a year. Last summer we all felt the pinch when crude oil prices climbed to $150 a barrel and prices at the pump climbed to $4.30 – $4.99 per gallon. Pundits prophesied gas at $8 per gallon, then the oil bubble burst and within five months the price per barrel dropped more than 75% to $34. Consumer gas prices at the pump dropped in as low as $1.50 per gallon. Since then, the price of crude oil has climbed back up to $54 per barrel, and we are now paying $2.29 at the pump. What a ride this has been. More important is the following question.
What lessons can we learn from our recent gas price roller-coaster ride that would aid Oregon’s long-term planning for our transportation infrastructure?
First, as price-conscious consumers, we react in multiple ways to price increases. When gas prices were high, we cut back substantially on our consumption of gasoline. In addition, we looked for economical cars and for alternative ways to get to our destinations. Gas guzzling SUVs (like the one I drive) were sitting like dust-covered rocks on car lots across America. In short, we are cost-conscious consumers and when gas prices rise, we react by lowering the amount we spend on fuel for our vehicles.
Second, although gas prices have lowered considerably, once the economy improves and consumer demand increases, the cost of oil and gas will inevitably rise again. Economic cycles are perennial, and, unless there is an intervening, history-changing event, it is just a matter of time before we emerge from our current economic crisis. The present recession/depression may last longer than previous ones, yet the financial readjustments will eventually be made and the escalating demand for energy will resume. China and India will again compete with the US, Europe and Japan as active bidders in the international market for global oil resources. With the renewed competition for global oil will come a renewed awareness that a consensus of scientific opinion advises that “easy oil” production has peaked, and world oil reserves will be exhausted in approximately 35 years. Thus, notwithstanding our current respite from last summer’s high gas prices, since oil reserves are declining and international demand will increase, the days of cheap oil and gas will soon be past.
Third, President Obama has made it clear that future automobiles, trucks and buses will be more fuel efficient and less dependent on gasoline and diesel. Hopefully, this will become a national crusade to lessen American dependency on foreign oil and gas. As a result, in the next decade we can expect (1.) an increase in fuel efficient vehicles, (2.) a substantial increase in vehicles that use alternative fuels, and (3.) a resulting reduction in the amount of gasoline consumed in Oregon.
Consequences of lower gasoline consumption. Since our transportation system is primarily funded with gas tax revenues, this reduction in gas consumption will result in a diminishing source of revenues for the state and counties to pay for road and bridge construction and maintenance. Thus, we find ourselves on the horns of a dilemma:
On the one hand, we want to lower dependence on foreign oil, reduce our dependence on a diminishing natural resource, and save money by buying less gasoline. To do this we will be producing more cars that use less gasoline””fewer gallons of gas purchased will result in less gas tax revenues to pay for transportation infrastructure.
On the other hand, Oregon’s population will continue to grow, and there will be an increase in the number of vehicles on Oregon roads, highways and bridges””the cost to maintain road infrastructure will continue to increase while gas tax revenues are decreasing.
One Proposal””A Mileage-Based Transportation Tax that Replaces the Gas Tax.
One alternative for raising the revenue needed to pay for constructing and maintaining our transportation infrastructure would be to replace the tax based on gas consumption with a new system based on two components: miles driven and size/class of vehicle.
Miles Driven. It makes sense that the more I drive, the more I should pay toward the costs of constructing and maintaining our roadways and bridges. This currently is the case with the gas tax–the more I drive, the more gasoline I use and the more gas tax I pay.
Size and Weight of Vehicle Driven. In addition to the miles I drive, my choice of vehicles also affects how much I pay currently in gas taxes. I drive a 2003 GMC Yukon. It has 120,000 miles on it””mostly driven to and from the Capitol in Salem and my home in Central Point. With the reduced gas mileage, I get as a result of Oregon’s mandatory Ethanol law, my Yukon gets about 17 miles per gallon on the freeway. By comparison, my friend, Representative Peter Buckley, (D-Ashland) also commutes to Salem. Peter drives a Toyota Prius and gets 47 miles per gallon. He drives more miles than I drive, yet his choice of a highly-efficient, light-weight car results in Peter using less gas and paying less in gas taxes to the state than I pay. In sum, since our choices of vehicles to some extent determines how much we each pay in gas taxes, a transition to a mileage-based transportation tax should likewise be based on the size/weight classification of the vehicle being driven.
Considerations. (1.) This solution of transitioning from a gas tax to a mileage-based transportation tax is not new. The Governor likes the idea and considered having every car install a GPS satellite tracking device that would automatically count the number of miles the car is driven. I, along with most Oregonians, strongly disapproved of this solution because such a device could be used as an unlawful tracking device and an invasion of individual rights to privacy. (2.) The proposed mileage-based transportation tax should be low and not cost drivers any more in taxes than they currently pay in gas taxes. The cost per mile driven could be lowest for smaller, more economical cars and motorcycles, a little higher for light trucks, SUVs, etc., higher yet for buses, R.V.’s and big trucks. Since each ascending class of vehicles currently is using more gasoline (and paying more in gas taxes) than those in the lower weight class, the parity with a higher mileage tax could be maintained.
Challenges. Making such a transition to a mileage-based transportation tax would not be easy. Creative solutions are needed to address the following challenges:
(1.) How do we determine the rates-per-mile that take into consideration miles driven and size/weight/class of vehicles without raising the current costs being paid in gas taxes?
(2.) How do we track miles being driven on a vehicle without infringing on individual rights to privacy””without using a GPS satellite tracking device?
(3.) How do we collect revenue from non-resident drivers using Oregon roads?
(4.) How do we keep from charging for miles driven outside of Oregon?
You Can Help. The challenge of decreasing revenues from gas taxes and increasing costs to construct and maintain Oregon roads are real. Long-term planning is needed to solve Oregon’s dilemma and you can help. If you have ideas on solving any or all of the challenges listed above, your Legislature would benefit from reading them. If you have an alternative solution that would provide long-term revenues to fund Oregon’s transportation infrastructure, we would also like to read your ideas. To share your solutions to these challenges or to propose alternative solutions, Please Click Here.
Conclusion. Thank you for reading about the challenges facing Oregon’s future transportation infrastructure funding. Providing safe, sound and attractive freeways, highways, bridges and roads is a core purpose for State and local government. I am happy to pay my “fair share” to support such infrastructure, and I am honored to share the responsibility to help plan for Oregon’s future transportation needs. Your thoughts and suggestions can help me and your other Representatives and Senators to do our jobs better.