Courier Journal: Want to Fix Kentucky’s Highways? Charge Drivers a Mileage-Based Fee

An old idea is new again, which could one day benefit drivers in Louisville and across Kentucky.

In 2005, amid growing concerns that the nation’s fuel-reliant highway funding mechanisms were becoming outdated, Congress created the National Surface Transportation Infrastructure Financing Commission to investigate alternative ways of generating transportation revenue.

The commission’s report concluded that a “federal funding system based on more direct forms of ’user pay’ charges, in the form of a charge for each mile driven has emerged as the consensus choice for the future.”

Of course, little has changed in the decade since, costing Kentucky drivers unnecessary costs and time stuck in traffic. As government fails to raise needed dollars, policymakers are unable to alleviate bottlenecks – like Interstate 71 north of Louisville – improve any number of the 1,110 structurally deficient Kentucky bridges or even conduct basic maintenance to the roads. According to the Kentucky Department of Transportation, “driving on roads that are in poor or mediocre condition, congested or lack adequate safety features, costs Kentucky motorists a total of $4 billion annually.”

The American Society of Civil Engineers gives Kentucky roads a grade of a D-plus. The flaws of the current system that derives the overwhelming majority of its revenue from taxes imposed on motor fuels have become glaringly obvious.

The average car built in 2017 could travel 5.5 miles farther on a gallon of gas than one built just a decade earlier. Since 1980, even though the number of miles Americans drive has doubled, fuel consumption has increased by just half.

Since 2008, chronic funding deficits have forced Congress to add $143 billion in general taxpayer dollars to the Highway Trust Fund (HTF), which still faces insolvency by 2021 unless lawmakers such as Congressman Thomas Massie approve another infusion of cash.

Recently, lawmakers from both parties have expressed renewed interest in the idea of adopting a nationwide user charge based on vehicle miles traveled (VMT). Since the amount people drive will continue to rise faster than fuel consumption, a VMT charge would protect against further improvements in fuel economy and shifts to electric vehicles.

A VMT system would offer other benefits as well, as a recent analysis I conducted at the American Consumer Institute shows. Rates could be adjusted based on the type of road traveled, vehicle weight, time of day and other factors to better reflect the real costs drivers impose on our transportation system. VMT charges in urban areas, for example, could be increased to reflect the higher societal costs of congestion, as London and other cities have done successfully. Similarly, vehicles that cause more wear-and-tear to roadways – like heavy trucks – would pay more.

By aligning drivers’ payments to the actual costs of their behavior, a VMT charge would encourage greater efficiency and achieve far more equity than the current system. For one, rural residents who generally drive longer distances and own less fuel-efficient vehicles could be charged lower rates. VMT charges could even be set on an income-based scale to reduce the burden on lower-income drivers who currently pay about 10 times more in gas taxes, as a share of their income, than wealthier households.

On the national level, economists estimate that replacing the federal gas tax with a VMT charge could increase highway funding by $55 billion per year while generating 20% more social welfare than an equivalent increase in the gas tax.

That means better roads, less congestion, cleaner air and a financing system where everyone pays their fair share. This is something Kentuckians can and should support.

Published in the Courier Journal.

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