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September 2, 2021

Virginia seeking to recover lost gasoline tax revenue

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State officials project almost 975,000 vehicles that use little or no gasoline could be eligible for the program when it launches in 2022.
Some of the options out there do have a device that is plugged into your car’s data port and keeps track of when and where you drive but it doesn’t share that informatio. It’s sort of a tracking device, but it doesn’t share the data.
— Jonathan Gifford, Center for Transportation Public-Private Partnership Policy at George Mason University director
By Graham Moomaw
The Virginia Mercury

A year out from Virginia’s planned launch of an opt-in system that would charge drivers of electric and fuel-efficient vehicles based on how many miles they travel instead of a higher fixed fee, a state work group is hammering out more details on how the program could work.

State officials project almost 975,000 vehicles could be eligible for the program when it launches in 2022, but the details of its implementation could determine how many Virginians decide its worth trying to potentially save money.

With more drivers in cars that use less gas than earlier models or no gas at all, policymakers in Virginia and elsewhere have been looking for road funding solutions to make up for lost fuel-tax revenues.

The goal for the revamped funding system, which also includes a higher gas tax rate and lower baseline vehicle registration fees, is to make sure drivers contribute their fair share to the costs of maintaining the roads they use, without discouraging the adoption of more environmentally-friendly vehicles that can help slow the impacts of climate change.

The mileage-based program will be optional, but some envision the technology as a potential replacement for gas taxes in the increasingly electrified future. The Department of Motor Vehicles solicited bids earlier this year from contractors who offer the technology and could award the project in the next few months.

In 2020, the Virginia General Assembly approved a highway use fee for electric vehicles and vehicles with a combined fuel economy of at least 25 miles per gallon. That fee, assessed when vehicles are registered, is designed to ensure drivers of electric and fuel-efficient vehicles pay 85 percent of what a less fuel-efficient vehicle might contribute in gas and diesel taxes per year.

When the new fee system was implemented last year, that worked out to $109 for electric vehicles and about $19 for a typical fuel-efficient vehicle, based on the 11,600 miles the average passenger vehicle travels per year in Virginia.

But that broad math also creates fairness issues, and that’s where the per-mile system comes in. Proponents say a more precise, mileage-based fee would eliminate some of the guesswork and be a more attractive option for people who don’t drive as much.

“While the program is expected to enroll a relatively small number of participants at its inception, the knowledge gained from implementation will be valuable if the program is later expanded to cover more vehicles,” the work group said in an interim progress report last month.

State law caps the amount participants in the program would have to pay, preventing the variable fee from going over the flat fee other drivers are charged.

One challenge may be convincing drivers there’s a benefit to installing a mileage tracking system in their vehicles and easing any privacy concerns about the device creating a data trail showing where they’ve been. The state work group recommends giving users the option of using either a GPS or non-GPS tracking system and shoring up data protection laws to safeguard any location-based information, similar to an existing law that shields information on vehicles passing through tolls.

“Legislation passed to protect this data can be tailored to address when and how the information can be shared and used and can increase customer confidence that personal information is protected,” the interim report says. “Confidence in the protection of the data generated may enhance customer willingness to participate in the program.”

Jonathan Gifford, director of the Center for Transportation Public-Private Partnership Policy at George Mason University, said the privacy issue is “a live one” but he thinks it can be resolved by giving users options about how their mileage is tracked and what happens to their data.

“Some of the options out there do have a device that is plugged into your car’s data port and keeps track of when and where you drive but it doesn’t share that information,” he said. “It’s sort of a tracking device, but it doesn’t share the data.”

Another potential sticking point that will need to be worked through, Dr. Gifford said, is figuring out how to handle out-of-state drivers using Virginia roads and interoperability with similar programs that may come online in other states. Because vehicles put wear and tear on roads outside their home state, some proponents of mileage-based user fees have suggested national or regional programs that work across state lines.

Mr. Gifford drew a comparison to EZ-Pass, the electronic toll-collection system that started in New York, New Jersey and Pennsylvania in 1990. The program now operates in 19 states, according to its website, with more than 27 million accounts.

“It was able to be stood up pretty quickly and start generating social benefits,” Mr. Gifford said.

The Virginia work group has been in contact with officials in Oregon and Utah to discuss similar programs in their states, according to the interim report.

The group’s final report on how the program could work is due in December.
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