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Oregon begins pay-per-mile fee test drive

Sen. Betsy Johnson, D-Scappoose, skeptical of how program will run and how it will be administered


TRIBUNE FILE PHOTO - The Oregon Department of Transportation expects about 500 people to sign up for its OReGO program in the next few weeks. OReGO is testing technology for drivers who agree to pay a per-mile fee as an alternative to the state gas tax.The first volunteers are being recruited in Oregon’s “test drive” of whether a pay-per-mile fee should replace a gasoline tax.

The program is known as OReGO.

But an Oregon Department of Transportation spokeswoman said volunteers first have to ensure their vehicles are registered in Oregon, create an account with one of three private vendors, and install an electronic device that enables a vendor to tally miles, manage the account and collect fees.

“So there are a few steps yet before we know whether anybody is signed up,” said Michelle Godfrey, spokeswoman for OReGO.

“But I doubt there will be a problem getting people to sign up.”

About 2,500 people indicated initial interest on the website — myorego.org — and Godfrey said, “We expect to have 500 signed up.”

Interest has been shown from 31 of Oregon’s 36 counties, Godfrey said, except for the five least populated counties in Eastern Oregon.

The target enrollment is 5,000 owners of cars and light-duty trucks. They will be sought in various categories, according to their vehicles’ average mileage per gallon of gasoline.

About a dozen other states have shown interest in the Oregon program, and pilot projects are underway in California, Colorado and Illinois.

Oregon was the first state to institute a gasoline tax in 1919, ahead of the federal tax in 1932.

Although Oregon raised its gasoline tax from 24 to 30 cents per gallon in 2011 — the first increase in 18 years — and Washington plans to raise its 37.5-cent tax by almost 12 cents by mid-2016, fuel taxes are not generating as much because people are driving less and doing it in more fuel-efficient cars.

The federal tax has remained at 18.4 cents per gallon since 1993.

How it works

Under the 2013 legislation that authorized OReGO, drivers who enroll will pay 1.5 cents for every mile driven on Oregon public roads, minus any fuel taxes paid.

Three private vendors — not ODOT — will supply measuring devices that will plug in underneath dashboards in newer vehicles. Participants accepted into the program will have their choice.

One vendor — Sanef, part of Intelligent Mechatronic Systems based in Canada — offers an option that does not rely on tracking by a Global Positioning System. Sanef also will tally driver payments compiled by all three vendors and deposit the money in the state highway fund, which also receives fuel taxes and vehicle registration fees.

ODOT’s Godfrey said participants can see their reports online anytime, and vendors will bill them once a month. One vendor will offer an “electronic wallet,” similar to the PayPal online payments system, from which money can be drawn down and refilled so that the participant does not have to act every month.

ODOT will receive only aggregate reports on mileage compiled and deposits made. The agency will not get data on individual drivers from the vendors.

The commercial account vendors are Azuga of Colorado Springs, and Verizon Telematics, based in Atlanta. They use GPS systems to provide data.

All the vendors will offer participants other services based on vehicle usage and driving habits. Azuga, which is advertising on Portland television, will offer them free to drivers who sign up for OReGO.

“We see the road usage fee program as an incidental benefit to us,” said Ananth Rani, Azuga’s cofounder and president.

"We want customer feedback, because we are investing a lot in this program."

Under study

ODOT has studied a road usage fee as an alternative to the gasoline tax since 2001. It has run two previous tests.

One test in 2006 relied on a GPS system that drew public concerns about privacy. It also required the use of specially equipped gasoline pumps, where participants paid their fees.

After the development of smartphone technology, however, ODOT ran a second test with 88 participants from three states — including eight Oregon lawmakers — from November 2012 to March 2013.

“That technology allows this program to be possible,” Godfrey said.

Lawmakers in 2013 set up this program in lieu of levying a fee on vehicles averaging 55 miles per gallon or better. Such a fee lacked the 60 percent supermajorities for approval in both chambers.

This “test drive” with 5,000 participants will be on a far larger scale than before.

Among others, reports will go to the Department of Administrative Services, the budget and management agency for state government, and the Legislative Fiscal Office, which does the staff work for lawmakers on budgets.

“We will be doing a lot of reporting,” Godfrey said. “We want to see what those reports are. People have to be satisfied with their experience. We need to be on top of how the system is working.”

What critics say

Not everyone is enamored of Oregon’s latest pay-by-the-mile experiment.

“I think in concept, charging vehicles by how much road they use is a good idea,” said Joe Cortright, an economist who leads the Portland consulting firm Impresa.

“But I am against the particular method they are doing. The way they have structured it, a straight mileage fee is a subsidy to big fuel-efficient vehicles — vehicles that do more damage to the pavement — and is a way of subsidizing pollution.”

ODOT has estimated the break-even point for vehicles at 20 miles per gallon, below which drivers will pay less in taxes overall — and above which they will pay more, given that hybrids and all-electric cars use less fuel (or none) and are more efficient.

Cortright thinks a better test would focus on cars and trucks on congested highways during peak traffic flows.

“If we vary the fee by the time of day you drive, we can send a signal to people that it would be much better if you chose to drive at a different time, or take a different route or alternate transportation,” he said. “Driving at 5 a.m. is different than driving at 5 p.m.”

The Oregon Environmental Council did not take a position on the 2013 law that sets up the current program. Chris Hagerbaumer, its deputy director, said her group is concerned that a flat per-mile fee offers the wrong incentives for drivers.

“We think it could have been set up in a way that you reward the people who drive gas-sipping vehicles, instead of gas guzzlers,” she said.

“But from the beginning, we have supported the concept that Oregon needs to find a new way to fund its road system.”

Hagerbaumer said a program could be designed to focus on urban congestion and exclude rural drivers.

Ben Adler expressed a differing view in a May 12 post on Grist.org critical of a pay-per-mile fee. He said higher fuel taxes would be more effective in reducing use of fossil fuels.

“What’s far more important than a funding stream to spend on roads is a funding mechanism to discourage emissions of carbon dioxide and conventional pollution,” he wrote. “With a gas tax, you get both.”

Public reaction?

Depending on the polling, Oregonians support or oppose the concept of a mileage fee.

Asked whether they support or oppose a mileage fee as a replacement for fuel taxes, a majority of 625 registered voters surveyed by Mason Dixon Polling & Research said no, 56 percent to 32 percent.

ODOT spokesman Tom Fuller said the agency’s own survey of transportation issues and needs indicate a more nuanced and different position.

Asked whether they support keeping a fuel tax and charging more to owners of all-electric vehicles, those sampled were in favor, 51.2 percent to 30.8 percent. Asked whether they support keeping a fuel tax and charging more to owners of hybrids, the margin narrowed, 44.2 percent to 36.1 percent.

However, when asked whether they favored doing away with fuel taxes and going with a mileage fee, it was 55.8 percent against to 27.1 percent in favor.

The survey is conducted every other year and was done by the Survey Research Center at Oregon State University in fall 2014 and compiled in January of this year. Results are based on 1,288 completed questionnaires, about half by mail and half online.

State Sen. Betsy Johnson, D-Scappoose, voted for the 2013 legislation that authorizes the test.

“But I have considerable skepticism about how that program is going to run, and how well administered it is going to be,” said Johnson, Senate co-chairwoman of the Legislature’s budget subcommittee on transportation. “A lot of data needs to be gathered before we move forward. There is a certain mindset in this state that wants to move to a mandated program — but I am not part of that group."

Johnson concluded, “I am willing to observe what is going on, but with considerable wariness. Let’s see what this project yields.”

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