Pawlenty wants Minnesota to test mileage tax

Pumping gas
Satellite-based mileage fees may some day raise funds for roads in lieu of gas taxes.
David McNew/Getty Images

The cost of each gallon of gas includes 18.4 cents to fund federal highway programs, and another 25.5 cents for roads in Minnesota.

But as cars and trucks get better mileage, the gas tax isn't keeping pace with the need for roads and road work. So another option is gaining traction in Minnesota -- a high-tech mileage-based user fee.

"We realize that in the future, cars aren't going to be powered by fuel, probably," said Gov. Tim Pawlenty, who signed into law $5 million for the current biennium to study the mileage tax.

How the mileage tax is collected
This diagram shows how the state of Oregon keeps track of mileage for taxing purposes. A transponder in the vehicle records the mileage, and when the driver goes to a gas station the mileage tax is added to the bill.
Image courtesy of the Oregon Department of Transportation

Pawlenty said the state is now working on a pilot program to try it out, with an eye toward cars that aren't even on the road yet.

"They're going to be powered by different things, perhaps including hydrogen fuel cells, potentially plug-in electrics, potentially other sources of energy," Pawlenty said. "So we need to think about how we're going to pay for transportation down the road."

Minnesota's pilot program could also incorporate real-time information for drivers on road conditions and road work, according to assistant state traffic engineer Ray Starr. The system might even use satellite locations to interact with approaching road signs or traffic lights.

"Another one of the applications would be the vehicles could report back, 'It took me this long to travel from the last exit to this exit,' and that would be information that could be combined with other things to help come up with good traveler information," said Starr.

The idea is still in the planning stages for now, but the state Department of Transportation will likely ask for proposals on the technology this summer. Satellite technology and computers could turn literally turn every vehicle in Minnesota into a smart car.

"We realize that in the future, cars aren't going to be powered by fuel, probably ... so we need to think about how we're going to pay for transportation down the road."

In the meantime, several other states are already headed in the same direction. They include Idaho, Texas and Rhode Island. North Carolina is mulling a quarter cent per mile fee, the equivalent of about a nickel a gallon if you were driving in Minnesota and getting 20 miles per gallon.

In Oregon, the state put 280 satellite receivers on cars in the Portland area three years ago, to test the practicality of charging by the mile.

The mileage information was collected at a small number of specially-outfitted gas pumps, but the state didn't try to replace the gas tax with a mileage fee.

Jim Whitty with the Oregon Department of Transportation says nine out of 10 drivers said they would be willing to use the device, although that might change if the fee rose.

"We had to design this so that they wouldn't lose money on it, because otherwise they wouldn't have volunteered," said Whitty.

His department is now weighing a $10 million test to see if the program can work on a wider basis.

Oregon's experience is getting a lot of attention right now, as transportation funding reaches a crisis point.

The federal highway trust fund required an $8 billion cash infusion from Congress last September, as spending outpaced fuel tax revenues.

A federal commission called for raising the gas tax, possibly by indexing it to inflation. Other ideas include expanding the use of toll roads and new carbon and truck taxes.

But a mileage fee is getting the most intense interest.

Federal Transportation Secretary Ray LaHood pitched the idea earlier this month. A spokesman for President Obama later said the president wouldn't consider it, but Rep. Jim Oberstar, D-Minn, who chairs the House transportation committee, said he might include a vehicle mileage tax, or VMT, in an upcoming highway bill.

The technology is maturing, and satellite locating devices are already common in cars, such as General Motors' vehicles with OnStar service.

At the same time, though, privacy advocates fear the data could eventually be used against drivers. They worry satellite records could be used by police or in lawsuits.

Drivers expressed those worries in the Oregon test, too, although officials said the devices used there simply counted odometer miles traveled inside the state.

"We didn't use what are generally referred to as GPS units," Whitty said. "They were simply passive receivers that could pick up satellite signals, so that the device could locate itself. There was simply no history of travel kept, or even developed."

Planners counter that detailed records could be used to double-check mileage data. They say drivers could also gain by getting discounts for staying off the busiest highways or driving during off hours.

That's still a long way off, though. State officials hope Minnesota will have a prototype for the devices later this year, and may have them road ready by 2010.

Editor's note: This story initially reported that Gov. Pawlenty unsuccessfully pitched the idea of a mileage tax to the Legislature several years ago. We corrected this story to clarify that Pawlenty signed into law $5 million for the current biennium to study the mileage tax.