In the years ahead, you may be paying a monthly VMT fee along with your power, telephone, water and garbage bill. VMT stands for “vehicle miles traveled” and it would replace the current gas tax.
For the last 60 years, government levied taxes at the pump to fund highways and bridges. It is relatively easy to administer because service station owners collect it and pass it along to the government. The money was put in highway trust funds and then apportioned to state and local governments for freeways, streets, roads and rail crossings.
The system worked well as long as cars averaged around 10 miles a gallon. But as cars became more fuel efficient, gas tax revenues started flattening even as traffic steadily mounted. Now our highway and freeway network is not only woefully inadequate, but funding to maintain it is slipping farther behind.
The culprit is us. We demanded more fuel-efficient cars as gas prices rose from 30 cents a gallon in 1973 to over $3 a gallon in the wake of Hurricane Katrina.
Current projections show that in 10 years, if we rely on gas taxes, we will be $500 billion short of what we’ll need just to maintain the system now in place. To improve transportation to meet growing demand, the gap grows to $1.1 trillion.
The proposed VMT, which has been endorsed by the U.S. Chamber of Commerce, is a user-fee concept that has been around for a while. For example, on the East Coast there have been toll roads for years; and in the 1950s, Washington Gov. Albert Rosellini successfully used tolls to build key bridges, most notably the Hood Canal and Seattle’s 520 floating bridges near the University of Washington.
But the VMT has its problems.
Collecting the VMT will be more difficult than collecting tolls and gas taxes. Tolls and gas taxes are collected at specific points of service.
And questions about the VMT may make it politically unpopular. For example, how will the government track your miles driven? How will the state ensure that drivers pay? How will the government track your car, but still protect your privacy?
There is an old saying in politics: “People would rather deal with the devil [or tax] they know rather than the one they don’t.” In this case, they know the gas tax; they don’t know the VMT.
Second, the VMT would face a rough transition. People are used to taxes included in the price at the pump. It is more obscure than a monthly VMT statement for $50 or $100.
Third, it will cost billions to develop reporting and billing systems to collect the VMT. It shifts the tax collection from point of sale to a system similar to assessments for workers’ comp and unemployment insurance coverage.
Finally, it shifts the tax enforcement from the private sector. So if motorists don’t pay, the government swallows the loss.
There is a long, bumpy road ahead if we shift from consumption to a usage-based transportation funding system like tolls or a VMT. But it may not matter if we like it or not. As we continue the shift to hybrid cars and alternative fuels, it may be the only system in the future to build the roads and bridges we need.
Don C. Brunell is president of the Association of Washington Business.