Is your electric vehicle about to cost you by the mile? Oregon lawmakers are eyeing a controversial new fee for EV owners, following Hawaii’s lead, to plug a massive budget hole for roads and essential services. Get ready for a potential shift in how we fund transportation! What are your thoughts on this modern approach?
Oregon is poised to implement a groundbreaking, mandatory pay-per-mile program for electric vehicle (EV) owners, a move that could establish it as only the second U.S. state, after Hawaii, to adopt such a system. This significant policy shift is under consideration as lawmakers convene a special session to address a critical $300 million transportation budget deficit, a shortfall threatening essential public services like snowplowing and road maintenance. The proposal aims to secure a stable funding stream in an era of evolving automotive technology and declining fuel tax revenues.
The state’s transportation infrastructure faces an unprecedented financial crisis, jeopardizing hundreds of state workers’ jobs and delaying crucial repair projects. Legislators previously failed to pass a comprehensive transportation funding package, leaving the contentious proposal for EV drivers’ road usage charges unresolved. This ongoing budget struggle highlights the urgent need for innovative financial solutions to maintain vital services and ensure the safety and efficiency of Oregon’s roadways.
Hawaii, in a pioneering move during 2023, became the first state to mandate a road usage charge (RUC) program, directly responding to projected decreases in fuel tax revenue. This decline is largely attributed to the increasing proliferation of electric, hybrid, and highly fuel-efficient vehicles on its roads. While Oregon, Utah, and Virginia currently operate voluntary RUC programs, many other states are actively studying similar concepts, recognizing the necessity of adapting revenue models to changing transportation landscapes.
The Oregon Department of Transportation attributes the current budget shortfall to a confluence of factors, including persistent inflation, significant projected declines in traditional gas tax revenue, and existing spending limitations. These fiscal pressures culminated in layoff notices for nearly 500 workers over the summer and plans to shutter a dozen vital road maintenance stations, underscoring the severity of the state’s financial predicament and the immediate need for a legislative remedy.
Democratic Governor Tina Kotek intervened, pausing the impending layoffs and closures, and subsequently called for the special legislative session to devise a viable solution. Her administration’s comprehensive proposal includes an electric vehicle road usage charge equivalent to 5% of the state’s existing gas tax. Additionally, the plan suggests raising the gas tax by 6 cents, bringing it to 46 cents per gallon, alongside other proposed fee increases. The EV usage charge would be phased in beginning in 2027 for specific electric vehicles, expanding to include hybrids by 2028. Under the proposed system, EV drivers would either pay approximately 2.3 cents per mile or opt for an annual flat fee of $340, thereby being exempt from supplemental registration fees.
To facilitate mileage reporting, drivers in Oregon’s proposed system would have several convenient options, including dedicated smartphone applications or leveraging their vehicle’s integrated telematics technology. Scott Boardman, a policy adviser for the transportation department overseeing the state’s decade-old voluntary road usage charge program, emphasized that while plug-in GPS devices were an option, officials anticipate a gradual shift away from them due to higher costs and ease of removal. Hawaii’s program, which commenced its phased implementation last month, allows EV drivers to pay $8 per 1,000 miles, capped at $50, or an annual fee of $50, with all EV drivers mandated to enroll by 2028.
Despite the perceived necessity of these modern funding mechanisms, public acceptance remains a significant challenge. Past surveys commissioned by Oregon’s transportation department have consistently revealed strong public concerns regarding privacy, the use of GPS devices, and data security associated with road usage charges. While Oregon’s existing voluntary program has attempted to mitigate these fears by deleting mileage data 30 days post-payment, the broader debate over personal data continues. In a notable development, Arizona voters are set to decide next year on a ballot measure, referred by the Republican-majority Legislature, that seeks to outright ban state and local governments from implementing any tax or fee based on miles traveled.
Critics also raise concerns that road usage charges, particularly if they exceed what drivers of traditional internal combustion engine vehicles would pay in gas taxes, could inadvertently discourage the adoption of electric and hybrid cars. Brett Morgan, Oregon transportation policy director for Climate Solutions, highlighted that many individuals are unaware of the extensive data already collected by their vehicles and cellphones regarding personal driving habits. This debate unfolds as federal tax incentives for electric vehicles are also set to expire, potentially adding another barrier to EV adoption and further complicating the landscape for sustainable transportation and clean energy initiatives.
