Mn/DOT assessing potential for mileage-based user fee to replace fuel tax; Battelle conducting technology assessment
21 April 2011
The Minnesota Department of Transportation (Mn/DOT) will recruit 500 people from Wright and Hennepin counties to take part in research to test technology that could someday be used to collect a mileage-based user fee (MBUF) in lieu of a gasoline tax. Mn/DOT will start recruiting volunteers for the Minnesota Road Fee Test in May and research will begin in July 2011.
Minnesota’s highway revenues are derived from three sources: the gas tax, vehicle registration fee or tabs and the motor vehicle sales tax. These funding sources support construction and maintenance of the highway system. Based on its last state transportation plan, Mn/DOT anticipates as much as a $50-billion transportation funding shortfall during the next 20 years.
Other state DOTs also are researching alternative financing methods to supplement or replace a gas tax. The state of Oregon conducted a similar study completed in November 2007 and Iowa, Nevada and Texas are among several states currently researching mileage-based user fees.
This research will provide important feedback from motorists about the effectiveness of using technology in a car or truck to gather mileage information. We are researching alternative financing methods today that could be used 10 or 20 years from now when the number of fuel efficient and hybrid cars increase and no longer produce enough revenue from a gas tax to build and repair roads.
—Cory Johnson, project manager
In 2007 the Minnesota Legislature appropriated $5 million from the trunk highway fund for the demonstration. An adequate evaluation of MBUF technology must include a parallel policy evaluation, so Mn/DOT awarded a $395,000 contract to the University of Minnesota Humphrey School to conduct the policy study.
For the technology component of the Mn/DOT work, Battelle will conduct a $4.1-million project that will use commercial off-the-shelf technology to determine the feasibility of a mileage-based user fee.
Battelle’s Transportation group will conduct the project as part of the National Connected Vehicle Program, a Federal Department of Transportation initiative to use technology to improve safety, mobility, and information sharing between vehicles and roadside equipment.
Minnesota’s Road Fee Test project will be another in a series of technology demonstrations that are being conducted as a part of this federal program. The Battelle project will include designing, building and testing new software applications that will run on cellular smart phones that utilize global positioning system (GPS) to determine location, heading, speed, etc. The GPS display may be mounted on the dashboard of any vehicle.
If the project goes as planned, the state of Minnesota will demonstrate that a commercially available device can be used to collect a miles-based user fee, and that these devices also can provide benefits for both drivers and others who interact with them.
—Ben Pierce, Battelle’s Project Manager
The volunteers will use a Smart Phone with a GPS application that also has been programmed to allow motorists to submit information, which Mn/DOT will use to evaluate whether the device provides timely, reliable travel data from that specific trip.
In addition, the test will examine whether other applications, such as real-time traffic alerts that provide information on construction zones, crashes, congestion and road hazards, are effective in communicating safety messages to motorists. Three different groups of volunteers will test the devices for six months each. The volunteers will be paid a nominal stipend to cover the expenses of this test.
The technical research is designed to record miles and road use while strictly protecting the privacy of participants. The participants’ names and home contact information, as well as the data that identifies their vehicle, financial account information, travel routes, and days and times of trips, are classified as not public by the Minnesota Department of Administration to ensure that the research and results are valid.
Mn/DOT has established a policy task force to examine implications of implementing a mileage-based user fee. The task force, to be chaired by former state representative Bernie Lieder, will hold meetings throughout the state and survey Minnesotans about concerns that should be addressed before such a fee could be implemented.
The Mn/DOT research is scheduled to end by December 2012 and results will be made available to the public at www.mndot.gov.
Previous MBUF research in Minnesota:
In June and July 2009, Mn/DOT conducted 821 phone-mail-phone interviews with Minnesota drivers selected by random sample augmented by drivers of hybrid vehicles to better understand their understanding of funding of transportation issues.
In August 2008, Mn/DOT conducted nine mini-focus groups (five in the Twin Cities Metro area and two each in Duluth and Mankato) with Minnesota drivers to understand the perceptions and level of acceptance among the Minnesota public about implementation of a mileage-based user fee.
In May and June 2007, Mn/DOT conducted qualitative research to understand public opinion about a mileage-based user fee alternative to the current motor fuel tax. People interviewed included knowledgeable transportation experts as well as the general public. Eight transportation experts participated in an online bulletin board discussion about the issue and 10 focus groups (six in the Twin Cities Metro area and two each in Duluth and Mankato) totaling 89 people provided feedback.
in theory sound cool but in practice
truck driver passes it onto his customer who passes it on to the people of minnesota in the cost of the products on the shelves
Posted by: ds | 21 April 2011 at 11:12 AM
This is very easy to do and what I've been recommending all along!
Just bring in the car inspection report with odometer reading (OBD readout) and compare this with last year reading to determine mileage driven during the year. Formula for vehicle registration tax should be: vehicle weight x mileage driven= total tax.
In this way, a 7,500lb-SUV may pay less yearly registration tax than a 2600lb-subcompact if driven very little in comparison to the subcompact. Less mileage driven= less damage to the road and less traffic congestion!
This is the most fair way for assessing registration tax that will also encourge less fuel consumption and less roadway damage.
The people of Minnesota (or elsewhere) should pay for the real cost of transportation instead of being subsidized by the gov. at the expense of environmental damage and budget deficit.
Posted by: Roger Pham | 21 April 2011 at 12:29 PM
However, fossil fuels should still be taxed in order to curtail fossil fuel consumption that can worsen global warming.
This mileage-base tax is a good preparation for the coming of EV's to share the fair burden of roadway maintenance. May be a little relief for EV's to encourage them until later when their number will increase.
Posted by: Roger Pham | 21 April 2011 at 12:38 PM
actually unless it is a national tax
if you live in a city on a state line whose tax are you going to pay
Posted by: ds | 21 April 2011 at 01:31 PM
Since damage to the roads increases as the third power of axle weight. ie a large truck does around 8,000 times the damage of a car, then IMO tax should increase in the same manner.
It will be argued against that that this will put up the price of goods which are trucked in, but all that happens in the present system is that the same cost in road wear is borne by others whilst the damage remains the same.
This would tend to more traffic from the roads to rail, or perhaps to a more advanced system such as Food Tubes:
'The Foodtubes group wants to put goods in metal capsules 2 meters (6 feet) long, which are shifted through underground polyethylene tubes at speeds of up to 60 miles per hour, directed by linear induction motors and routed by intelligent software to their destinations.
The group, which includes an Oxford physics professor and logistics experts, wants £15 million to build a 5 mile test circuit, and believes the scheme could fund itself if used by large supermarkets and local councils, and could expand because it uses an open architecture.'
http://nextbigfuture.com/2010/12/foodtubes-wants-to-make-internet-of.html
Either the use of rail or Foodtubes would not only greatly reduce road and bridge maintenance costs but reduce energy costs for goods transport by up to 50 times.
If rail were used local deliveries from the railhead could be done with electric trucks.
Posted by: Davemart | 21 April 2011 at 01:49 PM
A gasoline tax IS a mileage-based user fee. The more you drive = the more you use = the more you pay.
Posted by: ai_vin | 21 April 2011 at 02:10 PM
The answer is not to replace the fuel tax, it is raising it.
Canada
Fuel taxes in Canada can vary greatly between locales. On average, about one-third of the total price of gas at the pump is tax. Excise taxes on gasoline and diesel are collected both federal and provincial governments, as well as by some select municipalities (Montreal, Vancouver, and Victoria); with combined excise taxes varying from 16.2 ¢/L (73.6 ¢/imperial gal; 61.2 ¢/US gal) in the Yukon to 30.5 ¢/L ($1.386/imperial gal; $1.153/US gal) in Vancouver. As well, the federal government and some provincial governments (Newfoundland and Labrador, Nova Scotia, and Quebec) collect sales tax (GST and PST) on top of the retail price and the excise taxes.
United States
Fuel taxes in the United States vary by state. The United States federal excise tax on gasoline, as of February 2011, is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. In January 2011, motor gasoline taxes averaged 48.1 cents per gallon and diesel fuel taxes averaged 53.1 cents per gallon. For the first quarter of 2009, the mean state gasoline tax is 27.2 cents per US gallon, plus 18.4 cents per US gallon federal tax making the total 45.6 cents per US gallon (12.0 ¢/L). For diesel, the mean state tax is 26.6 cents per US gallon plus an additional 24.4 cents per US gallon federal tax making the total 50.8 cents US per gallon (13.4 ¢/L). There are also a few states that charge sales tax on top of the excise taxes and the retail price.
Posted by: ai_vin | 21 April 2011 at 03:26 PM
If you take one gallon of diesel and use it in a Super Duty truck versus a big rig, there is a difference. The SD truck weighs 6000 pounds and gets 8 mpg. The big rig weighs 40,000 pounds and gets 4 mpg. The big rig does much more damage to the roads, but pays less for the repairs.
Posted by: SJC | 21 April 2011 at 05:31 PM
Some people seem to be missing the point. EVs use the roads, but don't pay a gas tax. There needs to be a way for EV drivers to pay their fare share. Increasing the gas tax won't do that.
Along comes the mileage tax. As others have stated, it is also full of flaws. Many of these flaws occur at the state line.
The only answer I can come up with is toll roads. That's a lot of toll roads.
Posted by: Nrb | 21 April 2011 at 07:33 PM
Simple, the odometer reading is checked once a year when you get registration and the fee is assessed accordingly.
Posted by: SJC | 21 April 2011 at 07:55 PM
@SJC There's already a system in place for "big rigs."
The states that have a tax on their fuel, impose a tax on commercial drivers that travel through their state, even if the fuel is not purchased in that state. The paper work for this taxed on a quarterly basis and filed somewhat like a federal tax return that is done yearly. Most commercial truck drivers have an agent fill out the paper work. The driver calls in their information, the agent figures out how much tax should be paid to each state, then the agent faxes the forms to the driver and they are required to carry the papers with them along with their travel log books.
@Nrb It's true BEVs don't use gas so they don't pay gas taxes, but they do use electricity and that too is taxed.
Still no need to reinvent the wheel.
Posted by: ai_vin | 21 April 2011 at 09:37 PM
It realy doesnt matter what you think yes they are going to tax by the mile and within 10-20 years.
As for taxing by weight.. the only things that realy damage roads these days are 18 wheelera and other very large trucks. Most modern roads take little or no damage from even a 5 ton or 7 ton truck and take most of thier damage simply from weather.
Posted by: wintermane2000 | 22 April 2011 at 12:47 AM
With the progressive replacement of liquid fuel vehicles with electrified vehicles, a fuel tax will become progressively meaningless.
Users fees (taxes) based on distance traveled + weight of vehicle (as and added percentage or factor) could be used.
For example, a vehicle traveling 15,000 miles per year could pay:
1. 15000 x $0.02 = $300 X 0.0% for all vehicles under one ton.
2. 15000 x $0.02 = $300 x 1.25 = $375 for 1.25 tons vehicles
3. 15000 x $0.02 = $300 x 1.50 = $450 for 1.50 tons vehicles
4. 15000 x $0.02 = $300 x 1.75 = $525 for 1.75 tons vehicles
5. 15000 x $0.02 = $300 x 2.00 = $600 for 2.00 tons vehicles
6. And so on....
Both mile fees and weight penalty could be adjusted to cover ALL highways/bridges/tunnels/roads/streets infrastructure initial and n-going maintenance cost.
Posted by: HarveyD | 22 April 2011 at 07:18 AM
Heh not likely harvey. I expect in the end to deal with various issues they will simply charge a flat rate for every car and truck in the light duty class and a higher flat rate for medium and heavy vehicles.
Posted by: wintermane2000 | 22 April 2011 at 07:47 AM
The point is do big rigs pay to repair all the damage that they cause? Many public resources are a form of subsidy to business. A port, a freeway and many other infrastructure developments are a form of subsidy to business. They enjoy the use of them, but only pay a small fraction of the expense for those resources.
The reasoning is they promote commerce and create jobs, so we should do fuzzy accounting and let them have a discount. If we had all toll roads, the meter would start running on your GPS tracker as soon as you rolled out of your driveway. Instead we all share the costs and all share the benefit, some may benefit much more than others due to indirect and faulty reasoning.
Posted by: SJC | 22 April 2011 at 08:40 AM
It's all the fuzzy subsidies that most governments and most states are having budget deficits today. Transparency is important for a democracy, and everybody should pay their fair share of the burden!
Posted by: Roger Pham | 22 April 2011 at 04:38 PM
@ Roger Pham
What happens with your algorithm if I'm a travelling sales man doing 90% of my business in Canada?
Posted by: Mannstein | 22 April 2011 at 06:38 PM
With the introduction of the Smart Grid the utilities will be able to ascertain if the juice is going into a vehicle or a washing machine.
It's a simple matter of slapping the tax on the electric vehicle recharging energy useage.
Posted by: Mannstein | 22 April 2011 at 06:42 PM
"What happens with your algorithm if I'm a travelling sales man doing 90% of my business in Canada?"
I'm sure that for every American sales man doing 90% of business in Canada,there will be a Canadian traveling sales man doing 90% of business in the US...or 2 Canadians doing 45% of their business in the US...It'll even out, more or less, somehow.
Please educate us about the Smart Grid. How smart will it be, and how can the gov. be sure that people can't outsmart it?
Posted by: Roger Pham | 22 April 2011 at 10:50 PM
@ds,
Likewise, for people living in cities spanning statelines, people from two states are traveling back and forth, thus even out. Just pay your yearly state registration tax by the miles x the GVWR, and all will be OK.
Posted by: Roger Pham | 22 April 2011 at 10:57 PM
I agree with keeping it simple, and cheap to implement in a non invasive way. Yearly odometer readings plus a registration fee based on weight. Done. Big brother tracking my trips with GPS? No way.
Posted by: JRP3 | 23 April 2011 at 06:20 AM
I don't think we should be discouraging the use of higher gas mileage or electric vehicles. These vehicles, especially electric vehicles need all the incentives they can get. Government should be finding ways to encourage moves to these technologies, not penalizing people. Maybe someday far into the future, when electric or alternate fuel vehicles make up a larger portion of the population then it should be considered. Also part of the design of these vehicles calls for them to be lighter, thus causing less impact on the roads, although I don't think that’s the best argument for not taxing them at the same rate. If we move to alternate power generating options, such as solar, wind, etc. then the total impact of the environment will be less and they should be awarded for their contribution to this effort. Its just way too far off to start increasing taxes yet.
Posted by: Phil | 23 April 2011 at 07:14 AM
This is a step backwards. A simple GAS AND ENERGY TAX solves so many problems we face today (including unemployment, because there will be more WORK to do). Another thing, God, now they want me to bring in my odometer report every so often, even if it is for my rarely driven sports car or monster truck, and what about jetksis and chainsaws? They pollute too.
No one likes "more taxes" let alone any new gov't program. SEE? I can CHOOSE not to drive so often, but I cannot choose whether I bring in my odometer report or have a GPS tracker installed. Even with A TAXPAYER REBATE of about $1500yr for basic energy needs we do need to be concerned about gov't wasting our tax dollars, such as for more research projects to the highway associations about mileage taxes. Add this to my reasons for a new "Green" Constitutional Amendment that greenlights (get it?) Earth Friendly and Simple Living activities like tiny economy cars, rainwater collecting, solar panels, community gardens, neighborhood business, etc.
Posted by: William Thomas | 23 April 2011 at 07:34 AM
Thank you AiVin: ""The answer is not to replace the fuel tax, it is raising it.""
Posted by: William Thomas | 23 April 2011 at 07:38 AM
With the introduction of the Smart Grid the utilities will be able to ascertain if the juice is going into a vehicle or a washing machine.
It's a simple matter of slapping the tax on the electric vehicle recharging energy useage.
You don't even need that much.
Without recharging BEVs have limited range. You could apply reduced rates to charge them overnight at home to encourage the switch to EVs. Then, as they become more numerous, you install roadside quick-charging stations to give the BEVs more range. It will be at these stations that the higher taxes will be collected.
Second, as it's been point out by the naysayers, you can't run the big rigs on batteries so they'll still be powered by some kind of fuel, which means special fuel stations where we can collect a special tax to cover the damage they do to the roads.
I'm against the idea of yearly odometer readings because of the short attention span people have these days. If they only have to pay once a year you know they're going to be pissed off and make the effort to drive more carefully for awhile, which is good. But for how long? A month maybe? That leaves 11 months of wasteful driving. People need to be reminded more often, like every time they fill up.
Posted by: ai_vin | 23 April 2011 at 09:11 AM