Oregon Tests Novel Mileage Tax

By Eric Kelderman

In 1919, Oregon was the first state to tax gasoline. This fall, the state will launch the nation's first high-tech experiment to tax drivers for the miles they travel rather than the gas they buy.

The program is the first step in a long-term plan to replace the state's gasoline tax, which pays for about 40 percent of Oregon 's road projects. As in many states, Oregon officials are worried gas tax revenues wont be able to keep up with the rising costs of road building, especially with improved mileage from both traditional and hybrid cards.

Driver advocates and environmentalists said they will be watching the new program to make sure that it charges drivers fairly and that it does not give consumers an excuse to keep driving gas-guzzling cars.

Testing will start in September when the state transportation department plans to equip 20 privately owned cars with electronic odometers to record their mileage at gas stations. When drivers fill up, specially equipped gas pumps will read the mileage and charge 1.2 cents for every mile driven instead of the state's tax of 24 cents per gallon of gas.

The cars also will have Global Positioning Systems (GPS) so drivers will not be charged for driving outside state borders -- the tax is only meant to be applied for use of Oregon roads. Tracking cars' locations also could allow extra fees for traveling in congested traffic areas or during rush hours. Drivers also could be charged less if their car is more fuel-efficient, said James Whitty, manager of the Oregon Department of Transportation division that is overseeing the project.

A bigger, year-long test of 280 cars is scheduled to start in March 2006. After that, the state transportation department will make recommendations to the Legislature on whether to phase in the new-fangled tax statewide, possibly over 20 years to ease privacy concerns and spread out the costs of the new technology.

Elliott Eki, spokesman for the Oregon AAA, said the state absolutely needs to find a new source of money to build roads and bridges. But charging drivers more for driving in congested areas could force more people to use neighborhood streets to avoid extra fees.

Chris Hagerbaumer, a transportation specialist with the nonprofit Oregon Environmental Council, said the state should impose such a new tax slowly. "The issue is, if we make a flat switch, we would lose the incentives for people to purchase fuel-efficient cars," she said.

The mileage tax was the main recommendation of a 2001 state task force studying new ways to pay for road projects, which rely heavily on gasoline taxes. Those fees lost much of their purchasing power as the inflation of the 1970s and 1980s increased the costs of road projects. At the same time, carmakers began to slowly improve fuel efficiency, so that drivers were, in effect, paying less to use the roads, the task force found.

Oregon raised its gas taxes six times from 1981 to 1991 to keep highway funds flush, but politicians have been unable to muster the political will for any increases since then.

In the next decade, gas tax revenues in Oregon are projected to level off, then permanently decline as rising gas prices push consumers to drive less or buy more efficient hybrid electric or other alternatively fueled cars.

Oregon Gov. Ted Kulongoski (D) has said his state will become the 10th to adopt more stringent auto pollution standards than the federal government, standards likely to be achieved through greater fuel efficiency.

The number of hybrid vehicles in Oregon grew by 103 percent from 2003 to 2004, the second-highest percentage increase in the nation after New Jersey, according to R.L. Polk & Co., an automotive data-collection firm. The number of hybrids increased across the nation by 81 percent over the same period, the analysts found.