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Oregon’s Pay Per Milage Program Offers Alternative to Gas Tax

Wednesday, June 24, 2015


In exactly one week, Oregon hits two milestones: the state legalizes recreational marijuana and launches OReGO, the first-in-the-nation program that asks volunteers to pay for their miles, instead of the fuel tax they’re already charged at the pump.

As an initiative of the Oregon Department of Transportation (ODOT), the program is based on a “pay for what you use” policy and aims to boost the projected dwindling state funds for road maintenance, preservation and improvements. 

For almost a century, Oregon roads have been funded by fuel taxes. But with the emergence of more fuel-efficient cars on roadways, the traditional means of generating revenue could be made redundant, according to ODOT.

At the end of 2014, 3.3 million passenger cars were registered in Oregon. Of them, 68,000 were hybrid, 3,500 electric and 620 were plug-in hybrids. 

These vehicles make up a little more than 2 percent of all passenger cars on Oregon roads. But that does not take into account fossil fueled vehicles with high miles per gallon (mpg) – which are the most concerning for ODOT. 

“There are vehicles that are consuming the road and are not contributing to the system because they’re not paying fuel tax,” said Michelle Godfrey, Public Information Officer at ODOT. “The gas tax is becoming obsolete given that the modern car gets high mpg.”

With the Corporate Average Fuel Economy (CAFE) aiming to hit the 54.5 mpg standard by 2025, “that’s going to be a major impact to the collection of fuel tax. OReGO is an attempt to come up with an alternative before we get into a dire straits situation,” continued Godfrey.

Today, Oregonians pay 30 cents per gallon in fuel taxes. The road usage charge program could eventually replace that tax as a source of road maintenance funds. So testing its potential success is the first step. 

But with niche technology, alongside skepticism from hybrid and electric car drivers, ODOT might have a tougher time recruiting volunteers than once believed. 

Who wants to participate?

OReGO volunteers will continue to pay the gas tax every time they fill-up, in addition to paying 1.5 cents per mile they drive. At the end of each month, they will either be charged an additional fee or receive a credit to offset the fuel taxes paid at the pump. 

But critics of the program believe OReGO provides incentive only to owners of gas-guzzling vehicles – for instance, with 20 mpg or less – who would likely receive the credit. 

As Godfrey said, the existing fuel tax “un-fairly burdens those individuals who have lower mpg vehicles.”

Conversely, drivers of hybrids or fuel-efficient cars will end up paying the additional fee.

But that’s the whole idea. 

“Ultimately, we would want to have those high mpg vehicles in the program so they can start contributing their share,” said Godfrey.

But convincing them to volunteer is wishful thinking, said Dylan Goodfellow, a Portland resident who drives a Toyota Prius. 

“I’ve never received a tax credit in Oregon for driving a fuel-efficient car, so I don’t believe I should pay more than my normal contribution at the pump,” said Goodfellow. 

“If this program became mandatory, I think it would unfairly target environmentally-friendly vehicles, simply because they use the same roads as SUVs and other obsolete transportation,” he said. 

To date, ODOT has received “sign-ups” from around 2,500 interested drivers, with 78 percent of them expressing their intent to enroll. 

Committed to selecting 5,000 volunteers come July 1st, ODOT still requires double the participants. 

But OReGO is not completely in its infancy. Back in 2012, they launched the Road Usage Charge Pilot Program, as a first-phase test. 

Among its volunteers was Democratic Representative Tobias Read of District 27, which comprises parts of Beaverton and southwest Portland. 

Read enrolled with a 2003 Audi Sedan. His mileage was tracked and at the end of three months he owed $1.20 to ODOT. But that’s no bother to him. 

“The incentive is to have a transportation system that works and there are roads and bridges on which to drive,” said Read. 

He’s since moved on to an electric car and still plans to sign up for July’s program.

“It’s not fair that I’m driving around and not contributing to the cost of the infrastructure on which I’m relying,” he said. “The gas tax is just a proxy for the driver’s impact on the road. We can be much more precise in assessing that impact through a road use charge.”

But others are not as easily swayed, especially in Portland – the city with the least number of commuters and one of the most bike-friendly in the nation.

“I don’t actually use my car to commute,” said Goodfellow. “My hybrid vehicle was much more expensive than a standard fossil-fueled car, so you can understand why I’m not singing up to pay more money when I barely use the roads.”  

Shea, who declined to offer his last name, is a Portland resident who does commute – a hefty 200 miles per week to work. Still, he’s not incentivized by OReGO.  

“As someone who doesn't itemize deductions and credits on my tax return, I don't think it would appeal much to me personally,” he said. 

The connected car

To run the program, ODOT has partnered with three vendors, Azuga, Verizon Telematics and ODOT/Sanef, which will provide tracking devices to record the mileage. 

Volunteers will plug their chosen device into their vehicle’s onboard diagnostics port. 

The device will then collect data on their speed, mileage, fuel usage and other emissions-related information. But to protect location privacy, only mileage data will be shared with ODOT. 

It’s all part of the connected car, according to ODOT and its partners. 

“Our goal is to help people connect with their cars in a manner that has, until now, only been available to vehicles with embedded systems,” said Azuga’s Nate Bryer, VP of Innovation and Marketing.

“Every car on the road is continuously generating oodles of data that goes untapped,” continued Bryer. “We refer to this as ‘digital exhaust,’ which is data that can tell you about your driving style and how that driving style affects efficiency and safety.”  

Connected car features – which even extend to “gamify” one’s car to compete with other drivers on efficiency – are marketed as incentives for drivers of hybrid or fuel-efficient cars.

As the program stands, purely electric cars are unable to enroll in the program, as their data port is currently incompatible with those offered by the vendors. 

OReGO is being implemented as a long-term program, with no end date until the legislature assesses its worth to funding state roads.  

Interested drivers can visit OReGO’s site to calculate how much they would be credited, or owe, based on their miles and their vehicle’s mpg.  

The 1.5 cents per-mile-rate will likely to be adjusted for heavier vehicles that cause more wear and tear on the roads, such as cargo trucks, which many Oregonians say should pay more to maintain roads. 

Melanie Sevcenko is a journalist for radio, print and online. She reports internationally for BBC World Service and Monocle Radio (M24) in the UK, and for Deutsche Welle in Germany. Melanie also reports for the online news source GoLocalPDX, in Portland, Oregon. Her work has been broadcast by CBC in Canada and the Northwest News Network, and published by Al Jazeera English, Global Post, Pacific Standard, the Toronto Star and USA Today, amongst others.


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