Thinking beyond the gas tax, Utah launches fee per miles driven for alternative-fuel cars

Utah is about to launch a new way to raise money for highways that someday may replace gas taxes.

On Jan. 1, the state will become the second, after Oregon, to begin a high-tech “road user charge” program — in which volunteers will pay a fee for every mile they drive, measured by a transponder and paid automatically from a customer account connected to a credit card.

For now, it’s available just to owners of the 51,000 electric and hybrid vehicles registered in the state. They have an incentive to volunteer: It may lower, and will definitely not raise, the special registration fees the state recently started charging them because they largely escape the gasoline tax.

“It’s a way for those users to pay and help maintain the roads they use, because right now they are not helping pay for that through the gas tax,” said Tiffany Pocock, Road Charge Program manager for the Utah Department of Transportation.

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The program emerges after states saw gas tax revenues fall continually in recent years, largely because cars are getting better mileage — and because a growing number of electric and hybrid vehicles escape that tax.

UDOT says that nationally, fuel tax purchasing power per mile driven is about 70% less than it was 15 years ago because of construction cost inflation and fuel-efficiency gains.

Charging a fee per mile may help solve that problem, but it creates others that the state has been working through — including privacy concerns that the state could track where people travel, how to handle mileage driven in other states, and the nuts and bolts of how to measure mileage and pay for it.

An incentive to participate

The Legislature two years ago ordered UDOT to come up with this program for owners of electric and hybrid vehicles and launch it by Jan. 1. UDOT says it is ready to go.

“This is not a mandatory program," Pocock said. “The choice is yours. You could only save money.”

That’s because in 2020, the state will charge electric car owners an extra $90 registration fee for escaping the gas tax, which will jump to $120 in future years. Plug-in hybrids will be charged $39, which will rise the next year to $52. Other hybrid cars will be charged $15, which will rise to $20.

If they participate in the per-mile fee program, the state will charge them no more than those extra registration fees — and it will charge them less if mileage charges of 1.5 cents per mile end up being less.

Pocock said that for now, owners of such “clean fuel” cars will still pay a far smaller fee than the 98% of other drivers paying fuel taxes. For example, she said a gasoline-powered car that gets about 20 miles per gallon pays about $2,300 a year in gasoline and taxes, and the driver of an electric vehicle pays $600 for electricity and fees.

How it works

Pocock outlines how the new program works and how those interested may enroll.

“Mailers will be sent out in January to the owners of all eligible vehicles," she said. Another will go out just before they would otherwise need to pay the higher registration fees on their cars.

“It will tell them they can pay the registration fees, or pay as you go” with the new program.

Postcards will direct those interested to a soon-to-launch website with more information and instructions on how to enroll.

Those who sign up will be sent a small transponder that plugs into a port beneath a dashboard, where mechanics often plug in to check diagnostics. It sends mileage information to a state contractor, called Emovis, a global company known for collecting tolls electronically.

Enrollees will need to provide a credit card number for an account from which mileage charges will be deducted automatically. Pocock said at least $15 will be charged initially, and $10 increments may be added. Deductions are made until a car reaches the maximum that registration otherwise would have cost, or the year ends.

Participants also will be asked to download an app to a smartphone. “This will show you your trips and how many miles you're driving,” Pocock said. Owners will also be asked to take a photo of their odometer as they begin the program “so there won’t be any discrepancies between the device and the car.”

Even after participants reach the maximum charge, the app will still track and report to them their trips and mileage.

What about privacy?

The state has been working to address concerns about the program. One raised by lawmakers is how to protect privacy and prevent the state from tracking individuals.

Pocock said the state will not have access to individual data collected by the contractor. Participants will sign an agreement with the contractor about how the data will be used or shared “like they agree to with Google” or other online companies, Pocock said.

She adds again that participation now is voluntary, and anyone with concerns can choose simply to pay the registration fees instead.

While Pocock said the state will not receive any individual data, in time as usage grows it will receive “aggregated, anonymized information” about where drivers in general travel at various times. She said UDOT could use it to identify needed highway improvements.

The Utah Transit Authority does the same with data it gathers from riders who “tap on and tap off” with electronic passes to evaluate what types of transfers and total trips people take, and travel times.

Another concern is whether drivers are charged for trips they make outside the state. Pocock said officials are still working on how to solve that. For now, it will be included in mileage charges. But again, she said the maximum charge is the same as registration fees owners would face anyway.

Wave of the future?

UDOT officials say the new system will help work out kinks, questions and problems the state will face if it someday expands this idea to help replace gasoline taxes.

“We’re trying to be proactive for the future," Pocock said. “The growth in these hybrids is doubling each year,” and old ways of funding highways may soon no longer work.

UDOT spokesman John Gleason added, “This is just one of the avenues we’re investigating for the future because with all the alternative-fuel vehicles, there is going to come a time when the gas tax is not going to be able to fund transportation like it has for the past 100 years.”

Pocock said that 98% of the vehicles in the state are powered by gasoline. “So it’s not like we need to do something tomorrow because the gas tax isn’t able to fund roads,” she said, although it has been subsidized by other taxes to meet highway needs.