Vehicle Mile Tax Draws Fresh Attention as Buttigieg Takes Post

Pete Buttigieg, confirmed by the Senate Tuesday as transportation secretary, will take office with a funding crisis confronting the nation’s highway system.

The main source of federal money for highways and transit, the gasoline tax, hasn’t been increased since 1993. Without additional revenue, the Highway Trust Fund will soon run out of money.

From his confirmation hearing to his run for the Democratic presidential nomination, Buttigieg has repeatedly floated a solution: a vehicle miles traveled tax.

Proposals for a VMT tax have been considered and rejected in years past. This time may be different, lawmakers and experts say. Increased investment in electric vehicles, Democratic control of Congress, bipartisan interest, and President Joe Biden’s opposition to increasing the gas tax could jump start a push to a user-based fee.

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Pete Buttigieg speaks to reporters Jan. 21, 2021, after his Senate Commerce, Science and Transportation Committee confirmation hearing.

Rep. Sam Graves (Mo.), the top Republican on the House Transportation and Infrastructure committee, has long supported a VMT tax as a replacement for the gas tax, and is interested in working with Buttigieg on it, a spokesperson for the congressman said.

The concept still faces significant hurdles. State lawmakers who have tested a VMT tax locally warn that a nationwide pilot and larger program would take years to develop — and that is only if the government is able to assuage privacy concerns.

Congress has transferred roughly $144 billion to the Highway Trust Fund since 2008 to keep it solvent, according to the Congressional Research Service. Last year, Congress provided an additional $13.6 billion in a stopgap spending measure to keep the fund afloat, punting longer-term decisions about the fund’s solvency to this year.

If there’s no agreement on user fees or gas tax increases, lawmakers could continue authorizing general fund transfers.

‘Game Changer’

Last week, Biden said he plans to replace the government’s fleet with electric vehicles. Although less than 1% of cars on U.S. roads today are electric, General Motors Co. announced it will sell only zero-emission models by 2035, joining Ford Motor Co.’s similar pledge last year.

Those industry announcements are “game changers” in the push for VMT fees because an increasing number of vehicles won’t need to pay the gas tax and that could lead to fairness issues, said James Burnley, former transportation secretary and now a partner at Venable LLP.

“It’s long overdue. It has been much discussed in transportation policy circles for at least 20 years,” Burnley said. “We’re past the point where we should have started a serious pivot to a VMT.”

Rep. David Price (D-N.C.), chair of the House Appropriations Transportation-Housing and Urban Development Subcommittee, said in an interview that he supports a user-based fee, but that doesn’t mean an increase in the gas tax won’t still be discussed this year — despite Biden’s stance against it.

“The kind of infrastructure investments we need to make, want to make, I still think an increase in the gas tax makes sense as part of that,” Price said. “That’s something we’re going to have to deliberate about.”

The debate will heat up soon. After agreeing to a year-long extension, Congress has a September deadline to reauthorize federal funds for highways, rail, and transit.

State Pilots

Some states have piloted user-based fees, but are mostly in the experimental stage. Taking them national would mean increased enforcement, which CRS said could cost as much as 13% of what it brings in.

Tom Carper (D-Del.), top Democrat on the Senate Environment and Public Works Committee, said he hopes to build on the success of a pilot program in his state to “enable an eventual transition to a VMT fee.”

Last year, the Washington State Transportation Commission received $5.5 million in federal funding to further study road usage charges, which the state has been assessing since 2012.

Reema Griffith, executive director of the commission, said their model, which looked at manual and GPS tracking methods, would be good to mimic at the national level. But it can take years to get people comfortable with the idea, she said.

“We would love to see a national program emerge,” Griffith said. “Right now, when you have states doing it on their own, we’re going to potentially end up with a patchwork of states that do it differently.”

This month, California’s transportation department started a six-month demonstration on road charge research. The state did its first pilot in 2017. California’s Road Charge Program Manager Lauren Prehoda said rolling out a similar program in all 50 states is more complex since every state has a different financial structure and culture.

“It will be complex, but I think it’s definitely doable,” Prehoda said.

Rep. Peter DeFazio (D-Ore.), chair of the Transportation and Infrastructure Committee, said in an email the Invest in America Act, which the House passed last Congress as part of an infrastructure package, aims to take the next step by providing resources for VMT pilots.

“We need to learn from these tests, including about how revenue gets collected and how we address privacy concerns, before we take any additional steps at the federal level,” DeFazio said.

Not ‘Ready for Prime Time’

Buttigieg, the former mayor of South Bend, Ind., acknowledged at his confirmation hearing that privacy and technological concerns accompanying a VMT fee would need to be resolved.

Large segments of the population are as skeptical of government as they’ve ever been, so asking them to install devices in their vehicles to determine how far and sometimes even where they’ve driven seems “tone deaf for this moment,” Carl Davis, research director at the Institute on Taxation and Economic Policy, said.

“I don’t know that the idea is ready for prime time yet,” Davis said. “The vast majority of vehicles are still powered by gasoline, and that makes gas taxes a reasonable way to charge drivers for using the roads now.”

The fees would also likely face opposition from Republicans against tax increases, such as Sen. Rick Scott (Fla.), who said he voted against Buttigieg’s confirmation because of his comments on this issue. Last year, a truck-only VMT tax was proposed, and trucking groups opposed the move.

“It would certainly be a non-starter for our members if Congress pushes a VMT in addition to every other tax that currently exists” for truckers, said Mike Matousek, Owner-Operator Independent Drivers Association’s government affairs manager.

To contact the reporter on this story: Lillianna Byington in Washington at lbyington@bloombergindustry.com

To contact the editors responsible for this story: Sarah Babbage at sbabbage@bgov.com; Robin Meszoly at rmeszoly@bgov.com