Congressman Earl Blumenauer on Replacing the Federal Gas Tax with a New Cents-Per-Mile Funding Mechanism

VerdeXchange: Congressman, last session you introduced HR6662, a bill to direct the Department of the Treasury to study alternatives to the existing gas tax for raising federal highway funds. Could you elaborate on what inspired you to author this bill? 

Congressman Earl Blumenauer: The State of Oregon gave the nation the first dedicated gasoline tax for road construction in 1919, and for the last two years, we’ve been working on an experiment to get rid of the gas tax and replace it with a vehicle-miles-traveled mechanism to cover the cost of the Highway Trust Fund. During this time, we’ve had one pilot project in Oregon and we just started a second pilot project where people paid their obligation to the trust fund with a fee of about 1.5 cents per mile in lieu of the gas tax. 

This is inspired by the fact that the mechanism we’ve historically used for financing highways and transit in this country has been based on the volume of fuel consumed.  We currently collect 18.4 cents per gallon at the federal level for every gallon of gasoline—that hasn’t, by the way, increased since 1993. Since that time, the cost-per-mile in today’s dollars has been cut in half as we increasingly see fuel-efficient vehicles added to the nation’s inventory. We’re going to see revenues fall sharply, while demand is going to increase. 

VerdeXchange: What have you learned from Oregon’s experiment with an alternative to the gas tax? 

Congressman Earl Blumenauer: First and foremost, the second pilot program that’s currently underway in Oregon is giving people choices to keep track of distance traveled. We learned that people have privacy concerns with the vehicle-miles-traveled fee. We don’t need to know the exact location of a vehicle—it could be measured via an odometer. There are navigation devices built into cars right now that can easily be adapted. It’s a little amusing that people who are concerned about ‘the Man’ knowing where they are, or have been, also own iPhones. ‘The Man’ already knows where they are. But we’re giving choices to people and designing the program to protect privacy. 

There’s also the option of just having a flat fee, giving people a chance to select their own application and approach. There are four, currently, but we’re open to other technologies as long as they are accurate and verifiable forms of distance measurement. 

VerdeXchange: Obviously, an advantage of the current gas tax is it’s at-the-pump collection mechanism. What’s the collection method being tested in Oregon?

It’s very easy for us to keep track of this at the point of purchase, and that’s what’s happening now in Oregon when people fill up at appropriate stations. But the technology will enable us to bill people monthly, for instance, based on miles traveled. They can purchase precredits, and there’s an opportunity for us, when this is brought to scale with the technologies already available, to keep track of the miles traveled through a bank account or debit or credit card, and to load into the system the easy pass for tolls or bridges. It’s possible to program this so that people can use the same system in paying for their parking. We’re looking at applications to streamline the system, to make it easier for the motorist and for governments looking at payment methods. 

I can envision a situation where the technology will permit us to provide a signal preemption feature. Right now, as you know, it’s common for cities to have devices that synchronize traffic lights for emergency vehicles or for transit. It’s not farfetched to envision people driving in small town America, at 2 AM, with this feature—why should they have to stop at a traffic light for 40 seconds when there’s no traffic in either direction and this device could synchronize the lights for them? There are lots of ways to make this a real buoy for the motoring public. 


VerdeXchange: Congressman, who opposes a change in how we fund our federal highway programs? What are the politics of moving away from a gas tax collected at the pump?

Congressman Earl Blumenauer: Well, there are some people who don’t want to monkey with anything that smacks of new revenue. Is this objection part of the drama that is being played out in our nation’s capital, as we are having this conversation, surrounding the fiscal cliff.                      Grover Norquist gets a lot of headlines because people signed his pledge not to raise revenue—219 House Republicans, and I think, 39 Senators. But there was another pledge that President Obama gave in 2008: not to raise taxes on people who made less than $200-250 thousand, and that’s been part of their reluctance. So you’re involved with some sensitive issues when you’re talking about revenue. 

There are also two other areas of opposition. One comes from people concerned that their movements will be tracked by Big Brother. They worry that it’s an unwarranted invasion of their privacy, and they don’t want ‘the Man’ to know about their individual movements. 

The second area of opposition comes from people who are concerned that if they live in areas where they drive lots of miles, especially in rural and Western America, they will end up owing lots of money. 

There are answers to those areas of opposition, which I think are the three major areas: sensitivity to taxation, generally; privacy concerns; and impact on the high-mileage driver, especially in rural America. 

The concerns around the impact on rural and Western America, I think, are a little misplaced. Right now, if we are going to rely on funding the Highway Trust Fund by somehow getting more revenue by raising the diesel and gasoline taxes to keep it solvent, people in Montana, and about 40 of California’s 58 counties, are much less likely to have a Prius than a great big Diesel Suburban, so it actually is very likely that it would work against them if we relied exclusively on increasing the gas tax itself. There’s also an opportunity for this to be calibrated to reflect, for example, congestion, or to give a break to people who travel many miles on very lightly traveled roads—you could adjust the system to do that. You can’t do that currently with just a straight-up gas tax. 

VerdeXchange: Isn’t it true that some critics believe that if you think our Federal Highway Trust Fund needs more funding for highways and infrastructure, why not just do the simple thing and raise the gas tax?  

Congressman Earl Blumenauer: Three reasons. One, raising the gas tax is not simple. It’s one of the most reviled taxes in America. Part of that is because there is so little information about the gas tax. Surveys show that about half the public thinks the gas tax goes up every year, and, as I mentioned, it’s not been increased since 1993. Another component here is that gasoline is one of the few regular purchases (perhaps the only family purchase in America) that has real-time pricing. People see the price of gas 50 times a day if they’re driving through the city. It’s posted at every-other intersection in LA. So there’s a sensitivity to it. 

The second problem is that the base for the gas tax is eroding. I mentioned that the average cost-per-mile that people pay to the federal government via the gas tax has been cut in half due to improved mileage efficiency and inflation. In inflation adjusted terms, people are paying half of what they paid per mile in 1993. That is not going to be reversed; it is accelerating.

The third problem is that if you just raise the gas tax, even if you could do it, and even if you could settle at a high enough level that it stabilizes the gas tax for a little while, the higher gas tax is actually going to accelerate the erosion. If you adjust the gas tax for inflation, you would be adding over 20 cents a gallon, and that makes the differential in terms of the cost-per-mile between someone who drives a Prius or any other hybrid or an electric car. 

So not only are you watching money fall out of the Highway Trust Fund, but you are providing an incentive that will further accelerate that. Raising the gas tax is no longer a viable approximation of the impact that that vehicle user has on the system, even if you could do it politically. 

VerdeXchange: Congressman Blumenauer, you have often spoken about the difficulty of introducing new ideas to the public arena. How was Oregon able to garner public and legislative support for testing alternatives to the gas tax? 

Congressman Earl Blumenauer: We were able to get some support from the federal government to do the pilot project. Oregon is facing this situation in terms of having a real problem with our trust fund keeping track with the transportation needs. We had keen interest in our metropolitan area, where we’ve really been an incubator for innovative transportation initiatives, from bikes, to streetcars, to integrating land-use with transportation. 

Congestion pricing was part of this movement. We’ve seen it work spectacularly well in Singapore. This is something that other parts of the world are not just experimenting with, but are implementing on a metropolitan-wide basis, and we’re interested in doing this here—congestion pricing to help influence behavior and to make sure that it’s an equitable mechanism to use transportation resources. 

People will discover that it actually does affect behavior. We found in the first test in Oregon that when people became aware of how much they were driving and the fact that they were paying, even the modest payment, driving on average decreased by twelve percent, or about three miles a day. If we are able to achieve some modest downward adjustment in vehicle miles traveled, that’s going to pay huge dividends in terms of not having to pay for congestion, wear and tear on the roadways, public safety, and improved efficiency. 

We think that this is the time to engage with technology. If we do this right, I’m absolutely convinced we will be able to enact this and will be able to abolish the gas tax, or at least give people an alternative.  

VerdeXchange: President Obama will deliver his inaugural marks at the end of January, and you’ll be speaking at VerdeXchange’s VX2013 the first week of February. What would you like to hear in the president’s remarks about infrastructure and reform of the gas tax? 

Congressman Earl Blumenauer: I’m pleased that the president continues to put an infrastructure component in every one of his proposals. In my ideal world, the president will acknowledge that our infrastructure deficit is every bit as serious as our fiscal deficit, and the fastest way to put millions of Americans back to work, to improve business efficiency, the environment, and the quality of life for families, is strategic investment in infrastructure. 

Bowles-Simpson suggested a 15-cent-per-gallon gas tax increase. The last two gas tax increases on the federal level—the 1993 one that I mentioned with President Clinton, and prior to that, in 1982, with President Reagan—were a nickel per gallon increase, back when that was real money. This should be part of addressing the financial deficit and the fiscal deficit. It’s part of the president being forceful about his legacy term in office.

VerdeXchange: Lastly, please restate why you believe HR6662 should be adopted by the new Congress.

Congressman Earl Blumenauer: David, we’ve talked about this on several occasions in The Planning Report and during our recent Rail~Volution Conference in LA. I will just say parenthetically that people around the country were really impressed with what has happened in your metropolitan area. You put on a good show, and the difference between 2004, when Rail~Volution was last in Los Angeles, and what you had in 2012, was extraordinarily impressive. 

Now we are trying to tie these elements together.  The way—the only way—we were able to do this 25-month extension of the transportation bill is a travesty.  You know, it was kind of an extension plus. The only way we’ve been able to get through since the expiration of the last six-year bill was through transferring 70 billion general fund dollars. It’s a drain on the general fund right now, it’s not adequately funding our transportation needs nationally, and we’re in a death spiral going down. We have to revisit the transportation reauthorization over the course of the next 21 months. It expires September 30, 2014. 

I’ve been lobbying to have this pilot project extended so that other states can have the experience of understanding how it works. The more people use it, the more they see that it’s not onerous, has powerful advantages, and takes care of freeloaders. Now, in most states, the electric car and plug-in hybrid pay very little in actual cost, and they are reaching the point where they’re no longer novel. They already get tax credits and subsidization, should they be exempt from the responsibility for paying impacts on congestion and the wear and tear of the roadways? We think not.  

Another quick application could occur with the trucking industry.  80 percent of the trucks in the US are equipped with technology such that we could do this within six months. It’s not beyond their capacity, and it has advantages. There may be a way to build on the pilot project, and there may be some incentives for early adopters—pay the gas tax or the appropriate vehicle tax for the truck.•••