Road usage fee could replace state’s gas tax

A new state pilot program for alternative fuel vehicles may pave the way for a gas tax alternative.

“The current tax structure is not keeping up with our road demand,” said Sen. Scott Sandall, R-Tremonton, at a town hall meeting on Wednesday evening in the Historic Cache County Courthouse.

To address this issue, state policymakers are considering implementing a road usage fee. Rather than paying a gas tax at the pump, road users would pay a fee based on the number of miles they drive each year.

According to Linda Hull, the policy and legislative services director at the Utah Department of Transportation, this approach would be a truer user fee than the gas tax currently is.

“It is great that cars are getting better fuel efficiency,” Hull said. “But when you get better fuel efficiency, you buy less fuel, you pay less taxes.”

Hull said Utah’s first gas tax was implemented nearly 100 years ago as a user fee. At this time, all vehicles on the road were very similar, meaning that drivers with similar usage habits paid comparable fees. The diversity in modern vehicles means this is no longer true.

Not only that, but gas mileage for vehicles across the state has dramatically improved to the point that the current structure can no longer pay for all the expenses it once did. The hope is a road usage fee would address this issue in an equitable way.

However, there are a lot of bugs that would have to be worked out before a system like this could be rolled out statewide. In an effort to work through these, a pilot program involving only alternative fuel vehicles will be conducted next year.

Individuals who drive alternative-fuel vehicles, such as electric cars, are already required to pay a yearly fee of $150 since they do not pay any gas taxes but still use the roads. Next year, interested drivers can opt into the road usage fee pilot program and pay a fee at the end of the year based on their mileage, up to $150.

In an effort to protect privacy, the data for these road usage fees will be collected by a third party agency.

The plan right now is to keep the sample size at around 500 vehicles so the state can work through issues that may arise with collecting data and implementing the program. If they decided to use the program on a statewide level, this would give them information to hopefully make the process smoother.

Hull said an argument against the road user fees she often hears is that it will disproportionately affect poorer Utahns and those who live in the rural areas of the state.

While it is true that rural users drive more, Hull said the data collected shows they are more likely to be driving vehicles that are older or less fuel-efficient than people who live in urban areas. Because of this, the road usage fee could end up being more equitable.

During the meeting in Logan on Wednesday, attendees asked questions and shared other concerns they had with the program.

One woman said a road usage fee did seem like a logical way to address the issue, however, she took multiple cross-country trips each year. If she paid a user fee to the state each year for all the miles she had driven, many of those would not be in Utah.

“Does this program take into account that fact, or are you guys getting benefits with all my trips to Iowa and North Carolina?” she asked.

Hull said Utah is part of a coalition of 15 Western states that are working through the idea of a road usage fee together and that this is one of the issues they are trying to address. Currently, a study is being conducted on interstate traffic between California and Oregon.

“It is not right if you are paying all your tax in Utah but you are driving somewhere else, that is not fair either,” Hull said.

One man in attendance said if the plan increased the state’s revenue in the transportation fund, then it would technically be a tax increase. Sen. Sandall said the hope is if the user fee adequately paid for road needs, then general funds would not be used for that purpose and sales tax could decrease.

Another individual at the meeting pointed out that if the road usage fee had a cap, it would still be inequitable for drivers. In response to that, Sandall said from a policy perspective he was spot on.

“From a test program perspective, we are going to set that policy discussion aside and try to work out the technology and the program and the company that is doing this,” Sandall said. “It is such a small feasibility study that the policy discussion will have to come if we build this taxing model out. Then we will have to discuss the policy of fairness.”