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Build America Transportation Investment Center (BATIC) Institute: An AASHTO Center for Excellence
Build America Transportation Investment Center (BATIC) Institute: An AASHTO Center for Excellence

Funding

State Funding

Road Usage Charges

Introduction

Road Usage Charges (RUCs) - also known as vehicle-miles traveled (VMT) fees and mileage-based user fees (MBUFs) - are distance-based fees levied on a vehicle user for use of a roadway system. As opposed to tolls, which are facility specific and not necessarily levied strictly on a per-mile basis, these fees are based on the distance driven on a defined network of roadways. The RUC strategy links transportation user fees more closely to actual roadway usage compared to traditional fuel-based charges.

RUCs have the potential to provide a growing share of State DOT revenues by charging drivers on a per-mile driven basis. Proponents see this as a way to increase transportation revenues as vehicle-miles traveled increases while fuel utilization decreases due to increased vehicle efficiency and alternative fuels. At least 10 states have passed legislation to study RUCs since 2013, and others have explored the concept without enacting legislation.

A three-part video series prepared by AASHTO Transportation TV titled "Another Way to Pay" explores RUC as an alternative to the traditional motor fuel tax.

Part I: Underinvestment

Part 2: Explaining RUC

Part 3: RUC Hits the Road

The BATIC Institute hosted a webinar to provide an accessible introduction to RUC as a user-based alternative revenue mechanism for surface transportation and highlight successful examples of collaboration, leadership, and public education from states working to build internal capacity and external support around this issue.

Federal Involvement

The Fixing America's Surface Transportation (FAST) Act of 2015 established a new program - Surface Transportation System Funding Alternatives (STSFA) - to explore alternative revenue mechanisms including RUCs to maintain the long-term solvency of the Highway Trust Fund. The FAST Act provides up to $15 million to states in 2016 and up to $20 million per year thereafter through 2020.

Projects qualifying for grants include:

  • Full new demonstration projects.
  • Extensions or enhancements of existing demonstration projects.
  • Necessary pre-demonstration activities leading directly to a planned future demonstration project in the near term (less than 18 months from award).

In August 2016, FHWA awarded a total of $14.2 million in STSFA grants to eight states. These grant-funded pilots explore onboard vehicle technologies to charge drivers based on miles traveled, and multistate or regional approaches to road user charges. The pilots explore challenges including public acceptance, privacy protection, equity and geographic diversity. The projects also evaluate the reliability and security of the technologies available to implement mileage-based fees.

View the FHWA press release announcing the award of the 2016 STSFA grant recipients.

In October 2017, FHWA awarded $15.5 million in STSFA grants to seven projects in six states. View the FHWA press release announcing the 2017 STSFA grant recipients.

State RUC Pilots Involvement

Several states have conducted pilot tests of different RUC concepts. Some of the most advanced pilots have been located in Oregon, California, Colorado, and Washington State.

Oregon

Launched in July 2015, the OReGO Program is the first statewide program to collect revenue from light vehicles based solely on the distance they travel. OReGO volunteers pay based on the actual number of miles they drive, and receive credits on their bill for the state fuel tax they paid on the gallons used to drive taxable miles. OReGO initially used a rate of 1.5 cents per mile, which was equivalent to the state's 30-cent-per-gallon fuel tax at the time for vehicles with a fuel efficiency of 20 miles per gallon. In January 2018, Oregon's fuel tax increased to 34 cents per gallon, and the RUC rate increased to 1.7 cents per mile. The 2017 legislature also included in its funding bill (HB 2017) a provision that exempts electric vehicles that are enrolled in OReGO from payment of the enhanced registration fee.

OReGO is the state's third iteration of RUC, with the first originally having launched in 2007 and the second one in 2012. Oregon DOT published in 2017 a Final Report on the OReGO Program that provides background and rationale for the program, what the state has learned, what the public thinks, and next steps for the future.

OReGO uses two mileage-reporting options and three different account management vendors:

  • A plug-in Mileage Reporting Device (MRD) with GPS that reports on all miles driven, fuel consumed, and delineates between miles driven within and outside of Oregon. Any miles driven outside of Oregon with this option are not charged the 1.7 cents per mile.
  • A plug-in MRD without GPS that reports on all miles driven and fuel consumed but does not delineate between miles driven across state lines. Because the miles are not differentiated, all miles are presumed to be taxable miles driven within the state.

Oregon is using its 2016 STSFA grant to expand the market, increase public awareness, evaluate compliance, and explore interoperability. It also developed a manual mileage reporting component but has not deployed it into the existing program. The OReGO Program is working with Washington State on an interoperability pilot, and will be undertaking one with California as a part of RUC West, a coalition of 14 member states collaborating on RUC research, concepts, and implementation. Oregon also received a 2017 STSFA grant, which it is using to improve OReGO's scalability and demonstrate how it could be implemented for local jurisdictions. If the legislature passed a local option RUC bill, it would require that the OReGO RUC system be flexible enough to accommodate a variety of tax rates and jurisdictional types. As such, funding from the grant will be used in order to demonstrate that OReGO's interoperable platform can scale to include local governments and municipalities, thus decreasing overall administrative costs. The goal is to demonstrate that the OReGO RUC system is capable of providing transportation funding levels to local governments equivalent to that which the fuels tax system already provides.

California

California conducted a voluntary road charge pilot program that relied heavily on Oregon's experience. The California Road Charge Pilot included more than 5,000 participant vehicles, but unlike in Oregon, the state did not collect actual revenues. The California Road Charge Pilot concluded in March 2017 and the California State Transportation Agency submitted a Final Report to the State Legislature and California Transportation Commission in December 2017.

Colorado

Colorado completed the Colorado Road Usage Charge Pilot Program (RUCPP), a four-month statewide pilot for 100 motorists. These participants consisted of transportation officials, legislators, members of the general public and the media. The Colorado RUCPP used three mileage reporting options (GPS, non-GPS, and manual self-reporting) to assess a simulated 1.2-cents per mile charge. The Colorado RUCPP ended in April 2017 and a Final Report presents results and findings. An independent evaluation was also performed.

Washington

The Washington Road Usage Charge Pilot is a one-year study conducted by the state transportation commission to assess options for charging vehicle owners a tax based on the number of miles driven within the state, rather than on the amount of gas purchased. The pilot, funded by a FY2016 STSFA program grant concluded in January 2019 with 2,000 motorists having tested one of four mileage reporting options: mileage permit, electronic or in-person odometer readings, plug and play automated mileage meter with or without GPS, or smartphone app. A report to USDOT, the Governor, and State Legislature will be delivered in 2020.

Earlier State Pilots

FHWA's Center for Innovative Finance Support website includes information on several earlier state RUC pilots.

More on Current State Pilots

Delaware (I-95 Corridor Coalition)
Hawaii
I-95 Corridor Coalition Multi-state Truck Pilot
Western Road Usage Charge Consortium