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2013 Law & Public Policy, Commentaries

VMT: The real solution to Massachusetts’ transportation funding crisis?

Schmid_smBy Paul A. Schmid.  Download as PDF.  In January, Governor Deval Patrick unveiled an ambitious budget for fiscal year 2014.  The media has focused primarily on one of the budget’s cornerstones: the Governor’s plan to spend $1 billion more per year on transportation.  However, there is an innovative proposal buried deep within the transportation plan that deserves more attention.  The Governor’s proposal to launch a vehicle miles traveled (VMT) pilot program in Massachusetts is essential to long-term sustainability of state transportation funding.

The Governor’s plan to spend $1 billion more per year on transportation underscores the Commonwealth’s current transportation crisis.  Underperforming sales tax revenue and political failure to raise the gas tax since 1991 have caused chronic underfunding of our transportation infrastructure.  As a result, the system is actually crumbling beneath our feet.  One in four roads are in poor or mediocre condition.  Fifty-nine percent of MBTA subway and commuter rail cars are at the end of their useful life.

In an effort to prevent the system from completely falling apart, the Commonwealth has accumulated significant debt.  As a result, Massachusetts holds the unfortunate distinction of spending the highest percentage of transportation funding on debt service in the nation.

The Governor’s transportation plan recognizes the importance of tackling this problem head-on.  The plan devotes $1 billion more per year for the next ten years to repair the existing system and make strategic investments in new projects.  To fund the plan, the Governor proposes raising the state income tax while decreasing the sales tax.

Tax increases are politically sensitive, and this part of the Governor’s transportation plan has naturally dominated the media’s attention.  However, it is not the only component of the plan that deserves scrutiny.  More attention should be paid to the Governor’s proposal to initiate a VMT pilot program.

The purpose of this VMT pilot program is to test a new way of funding state transportation programs.  For decades, federal and state transportation programs have relied on the per-gallon gas tax for funding.  The gas tax is a user fee that charges drivers based on the amount of gasoline consumed and reinvests the proceeds into the transportation system.  This funding source worked for many years.  However, rising vehicle fuel economy is making it increasingly unreliable.

The problem is that vehicle fuel economy will surge even further ahead in future decades.  For example, under Obama Administration standards, average fuel economy will rise to 54.5 miles per gallon by 2025.  As a result, Americans will consume 12 billion fewer barrels of oil.  While this change might be good news for Americans’ pocketbooks, it is bad news for the transportation programs that rely on funding from gasoline sales.

The recent increase in fuel economy has already created inequities in how drivers contribute to transportation funding.  Today, a gas guzzling Dodge Ram pickup truck can drive alongside an electric Nissan Leaf.  Despite utilizing approximately the same amount of space on the highway, these two vehicles pay significantly different amounts for their use of the system.  In Massachusetts, the Dodge Ram contributes 41.9 cents per gallon to improve transportation.  The Nissan Leaf pays nothing.

A user fee that charges drivers based on the number of miles that they travel, known as a vehicle miles traveled (VMT) fee, is the best alternative to replace the gas tax.  As fuel economy grows, a VMT fee will become a more accurate measurement of highway usage.  By charging drivers based on the number of miles traveled, the Nissan Leaf owner will no longer freeload off the contributions of other drivers.  And, the Dodge Ram owner will no longer have to contribute an uneven share of transportation funding.

There is no question that a VMT fee raises significant policy concerns.  Proposals to calculate VMT through GPS devices in every car elicit questions about privacy.  However, GPS devices are not the only mechanism capable of measuring VMT.  Once a year, every Massachusetts car owner goes to a certified mechanic for a vehicle inspection.  A simple odometer check would allow the mechanic to record the miles traveled over the previous year. Other unresolved issues include how to account for miles driven outside of Massachusetts and how to minimize the administrative costs of the new system.

It will take time to resolve these issues.  For that reason, the Governor’s proposal to create a VMT pilot program is an essential first step.  The pilot program would allow Massachusetts to research various options that minimize implementation costs and maximize privacy.  It would also allow a select group of drivers to test the system before it goes “live” throughout the Commonwealth.  During the pilot program, Massachusetts can learn best practices from other states that have already conducted VMT tests, including Oregon and Minnesota.

Because of the erosion of gas tax revenue, Massachusetts cannot afford to ignore the VMT option.  To provide long-term sustainability to transportation funding, the Legislature should authorize a VMT pilot program as part of this year’s transportation legislation.

Paul A. Schmid is a second-year student at Suffolk University Law School.  He received his B.A. from Kenyon College in 2004.  Prior to law school, he served as a legislative assistant in the U.S. House of Representatives and the U.S. Senate.  Currently, Paul is interning at the Massachusetts Land Court.  

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