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Credit: Washington Department of Transportation

Democratic lawmakers steer pay-per-mile into slow lane to replace gas tax, eventually

Would you prefer to pay a couple of cents for every mile you drive in exchange for not having to pay gas tax or those steep electric car registration fees? A mileage-based tax is the top choice of Pacific Northwest policymakers to make up for the long-term decline in gas tax revenue. But imposition of any new tax tends to be politically fraught, and this one is no exception.

On Tuesday, Washington state legislators began discussing whether to copy Oregon's voluntary pay-by-the-mile program with an eye toward getting electric car drivers used to the idea first. Meanwhile, a Democratic state representative in Salem introduced a bill to make the Oregon road usage charge mandatory for vehicles that get 30 mpg or better beginning with the 2028 model year.

"Gasoline revenues are headed downward," state House Transportation Committee Chair Jake Fey (D-Tacoma) said at the start of an abbreviated public hearing in Olympia Tuesday. States rely heavily on gas taxes to pay for road construction and maintenance. Fey said Washington's transportation budget is already feeling the squeeze from increased fuel efficiency and vehicle electrification.

"We're in a mode where things are only going to get worse in terms of revenues," Fey said. "We're not going to be able to fund all of the projects that we had planned to have funded."

The proposed transition to taxing drivers by the mile is provoking backseat griping, though. Longtime anti-tax activist Tim Eyman and groups such as Conservative Ladies of Washington urged their followers this week to bombard legislators with messages in opposition to the pay-per-mile tax. Eyman re-posted testimony he delivered to the state House last year to underscore his concern that the mileage-based tax would be an added burden on drivers rather than simply a replacement.

"I'm frustrated and angry on behalf of a lot of taxpayers that feel like they're just getting nickeled and dimed to death," Eyman said. "This is so discriminatory to people that are living in rural areas that have to drive a long distance just to get around."

EV drivers could reap savings in the near term

Right now, Washingtonians who own plug-in electric cars pay an extra $225 in annual registration fees. A new proposal by state Rep. Fey would give hybrid and EV drivers the option to replace the flat fees they pay with a 2.5 cents per mile road usage charge, beginning in July 2026.

Drivers could voluntarily opt in to the pay-per-mile system if they figure it would save them money. It looks to pencil out for drivers of fully electric cars who drive an average amount of miles per year or less. Low mileage EV drivers complain the current system overcharges them compared to the equivalent gasoline-powered vehicle.

"We do wholeheartedly support this effort to create a more equitable system for EVs to pay their fair share of state road costs," Seattle Electric Vehicle Association VP Grace Reamer testified Tuesday.

The Fey legislation sets a target date of 2030 to change over from voluntary to mandatory pay-per-mile, but it would be up to future legislators to actually make that so. The year 2030 coincides with a nonbinding goal the Washington Legislature previously established to end sales of new gasoline-powered cars in the state.

Republicans, who are in the minority in the Legislature, wanted to slam the brakes on the pay-per-mile idea during their weekly media briefing Tuesday.

"We have to look beyond our traditional ways," Senate Republican Leader John Braun of Centralia conceded, but that was his only point of agreement with majority Democrats.

"The road usage tax, I just don't see a future for that," the Centralia senator said. "It's unpopular frankly, on both sides of the aisle for many different reasons. It's the wrong answer to a real problem."

Braun and fellow GOP Sen. Mike Padden of Spokane said a better solution would be to backfill declining gas tax revenues by grabbing the sales tax on electric cars, or on all cars. Sales tax revenues now flow into the state's general operating budget, which pays for schools, social services, prisons and the like.

Oregon lawmaker proposes faster road use tax transition

Oregon leads the nation in rolling out the pay-by-the-mile alternative, having run several pilot road tests dating back more than a decade. It now collects real money from real world drivers who voluntarily opt in to pay by the mile in exchange for a deep discount in their annual car registration fees and/or a rebate of gas tax paid at the pump.

Uptake in the OReGO program has been quite limited, though. Oregon Department of Transportation Innovative Programs Policy Advisor Scott Boardman said the OReGO program had 810 vehicles enrolled as of January, a slight increase from the 787 vehicles participating a year earlier.

Program participants in Oregon currently pay 1.9 cents per mile driven. Boardman said new electric vehicle owners are most likely to come out ahead -- potentially by hundreds of dollars -- under the pay-per-mile program because they escape a significant increase in annual car registration fees that took effect in 2020 and 2022 for highly fuel efficient autos.

Now, Oregon state Rep. John Lively proposes to shift the program into a higher gear by making the per-mile charge mandatory beginning with model year 2028 vehicles rated 30 mpg combined or better. Under legislation Lively introduced on Tuesday, the transition to pay-per-mile would accelerate to nearly all new passenger vehicles in late 2035.

Lively’s bill has not yet been scheduled for an initial hearing.

Two years ago, Lively proposed a similar measure to make the per-mile tax mandatory beginning with model year 2027 high-mileage vehicles, but that proposal died in committee. The Springfield Democrat has served on an ODOT road user fee task force for ten years, which is where some of his motivation comes from.

How would the state track my miles, anyway?

The ongoing OReGO program and a shorter experiment in Washington demonstrated how the pay-per-mile tax could work. One of Oregon's technology contractors, Azuga, said a small GPS-enabled device that plugs into a car's electronic controls is the most popular choice of participating drivers to track and automatically report their miles for periodic billing by credit card. The GPS capability makes it possible to exclude out-of-state miles so that travel doesn't get billed.

But some drivers are uneasy with having a GPS tracker in their vehicle, even though Lively points out that everyone with a smartphone in their pocket is probably already accepting more pervasive tracking. The pilot pay-per-mile programs have always had an option for drivers to manually report their miles accompanied with a proof photo of the odometer reading.

Concern about Big Brother monitoring where you drive could resurface when the Washington House Transportation Committee resumes consideration of Fey's bill on Thursday afternoon. Fey's proposal specified that the state Department of Licensing must strictly protect vehicle location information and cannot disclose it to law enforcement without a court order.

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