To Toll or Not to Toll: That is the Question
A first-rate quality of life requires a first-rate transportation infrastructure. Building and rebuilding roads, bridges and other pieces of infrastructure can transform economies, strengthen social connections and improve a region’s overall quality of life.
Cities and states understand that major infrastructure projects are likely to last for decades, shaping the regions far into the future. But a first-rate transportation infrastructure is not cheap. The four major projects facing the Portland metro area today – Abernethy Bridge/I-205, Interstate Bridge Replacement, Rose Quarter and the I-5 Boone Bridge – will collectively cost billions of dollars. That’s billions with a b.
The impact of these projects will be transformative. Of that there is no doubt. But how best to pay for them? In 2017, the state Legislature – through House Bill 2017 – authorized tolling on stretches of both I-5 and I-205, with a focus on congestion. In 2019 House Bill 3055 enhanced the focus on revenue. There is, however, a better way forward: eliminate the gas tax, institute a vehicle-miles travelled tax, and only toll the two interstate bridges. Tolling the I-205 Glenn Jackson bridge will require Federal approval which may be difficult.
In Oregon, the legislature through the Oregon Department of Transportation (ODOT) funds projects through three major sources of revenue: gas tax revenues – which are still increasing but will likely decline in the future; motor carrier charges, which are already at the high end relative to other states; and Department of Motor Vehicle Fees. In addition, there are a variety of lesser fees/charges. Needless to say, the funding issue is complicated, with lots of moving pieces. But at its core is the question of revenue, congestion, equity and mitigation.
Now on the table are two significant additional sources of revenue: tolling, which has and continues to have significant analysis; and a vehicle-miles-travelled (VMT) fee which is not as well analyzed.
Tolling is the practice of charging a fee for the use of certain roads. That has both benefits and costs, with the specific impact based on factors such as the purpose of tolling, the type of infrastructure and the specific type of implementation. On the plus side tolling generates revenue, helps congestion management, operates on the user pays principle, encourages public transit (if public transit is in place), has environmental benefits and can provide funding for maintenance. The costs, however, include the impact on low-income users, new administrative costs, impacts on business, regional equity concerns, diversion without mitigation and enforcement challenges.
Vehicle-miles-travelled fees are a bit more complicated. In Oregon in 2001, long before Tesla’s and other EV’s became something more than a dream, legislators reviewed a variety of funding mechanisms including a tire tax, a battery tax and numerous other options before concluding Oregonians should be charged by how many miles they travelled. In effect, it is the equivalent of a gas tax – if you drive more, as in rural areas, you pay more gas tax.
The benefits of a vehicle-miles-traveled fee are a facilitation of economic activity, personal mobility and job creation. The costs include no change to existing congestion, continued environmental impacts and maintenance costs. In addition, basing fees on miles driven requires either periodic odometer readings or a tracking device in every car, and Oregonians – like most Americans – tend to worry about electronic monitoring of our daily activities. Of course, there is an alternative for collections already in place: the biennial checks in with the Department of Motor Vehicles for license renewal.
Let’s do a financial comparison.
The ODOT budget from the gas tax is about $350 million a year. The Oregon state gas tax is $0.38 per gallon (scheduled to increase to $0.40 in 2024). If a person drives 12,000 miles a year in a vehicle that gets 20 miles to the gallon, that equals 600 gallons of gas. Therefore, the Oregon gas tax for a vehicle per year is about $228 (12,000 / 20 * $0.38).
Vehicle miles travelled in Oregon (auto and trucks weighing less than 26,000 pounds) in 2022 was about 20 billion miles. That is the equivalent of about $0.0175 cent per mile to equal current ODOT gas tax revenue (20 billion miles * $0.0175/miles = $350 million). For a person driving 12,000 miles a year that is $210 per year per car (12,000 * $.0175).
A VMT fee does mean that gas guzzlers get an incremental benefit and fuel-efficient gas-powered cars get an incremental cost. True enough. But cars wear out, and gas guzzlers will represent a decreasing per cent of the total number of cars on the road as they wear or phased out and as the change to EV’s continues.
The other new piece of the funding puzzle is tolling, which has been used before: the I-5 interstate bridge was tolled until bonds for its construction were paid off. The current proposal includes tolling the I-5 bridge. Proposals are under discussion for tolling for up to 17 locations along stretches of I-5 and I-205.
I believe a better plan is to toll the I-5 and Glenn Jackson I-205 interstate bridges (Glenn Jackson will require federal action) to avoid what otherwise could be a significant diversion of traffic onto I-205.
Tolling requires a new collection infrastructure. A VMT does not, however, since Oregon can build on the existing DMV collection infrastructure for most Oregon registered cars when license renewal is done every two years. Certainly, challenges need to be worked out in this process. Vehicles that are 4 years old or newer, EV’s and any vehicle registered outside the Portland or Medford designated areas do not participate in the 2-year program. As well as the challenge of sales during the two-year period.
In addition, it is important to note that the current state sharing of gas revenue (50% goes to the state, 30% goes to the counties and 20% goes to the cities) can be applied to a VMT, while the current tolling proposal does not provide revenue sharing.
There is no perfect tolling or VMT structure. There are always trade-offs between congestion, revenue, equity and diversion. Tolling will increase diversion for example, while a VMT will not. However, an effective combination of the two could be the best possible funding option.
Make no mistake, if tolling is introduced at up to 17 potential locations on I-5 and I-205, the rest of the freeways in the metro area as well as state highways will get tolls (think I-84 and I-405 and well as state highways 217 and 26). The 2019 Legislature all but said so, providing for the opportunity to toll state roads as well as additional freeways.
If Initiative Petition 4 it makes it to the ballot, as seems likely, it is possible Oregonians will vote to stop tolling without a public vote completely. If that happens, then as a region we will be worse off when it comes to funding the four major transportation infrastructure projects under discussion. Since Governor Kotek has paused tolling until 2026, isn’t it better to stop the tolling work now, implement a VMT, eliminate the gas tax, toll the two intestate bridges and then decide about the need for new additional sources of revenue in the future?
Jeff Gudman is a former member of the Lake Oswego City Council and a candidate for state treasurer in 2024.
He can be reached at JGudman7150@msn.com