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Oregon considers subbing mileage tax for gas tax

The governor endorses the program, which would install GPS devices in every new car and free the state from the problem of falling gasoline tax revenue. Some drivers worry about privacy.

January 04, 2009|Kim Murphy

PORTLAND, ORE. — For years, Oregon has been diligent about reducing the state's dependence on fossil fuels, but its environmental consciousness has come at a stunning price -- gas tax revenue is down $4.8 million a year compared with 2006.

That drop, caused by lower fuel consumption and a slowing economy, has prompted Oregon to consider a new way to pay for road repairs: Democratic Gov. Theodore R. Kulongoski's upcoming budget calls for a highway tax based on mileage, not gasoline purchases.

A state task force will look at equipping every new vehicle in Oregon with a Global Positioning System to record every mile driven and where. Motorists would pay at the gas pump based on how much they drove, no matter how fuel-frugal their vehicle.

The plan still requires legislative endorsement and the full details could take several years to work out, but state analysts said the governor's endorsement is a crucial step toward solving what has become a problem in many states: dependence on a gasoline tax.

"This is a way to try to develop a fair funding mechanism that we're going to have to have if we're going to be aggressive in terms of looking at electric cars and hybrids and plug-ins and all those options, and at the same time continue to invest in our roads and infrastructure," said Rem Nivens, the governor's deputy communications director.

Oregon plans to spend $650 million on transportation projects next year, a smaller version of President-elect Barack Obama's proposal to stimulate the economy with infrastructure spending. Here, it will be financed in part by a 2-cent-a-gallon tax increase.

Jim Whitty, manager of the state transportation department's office of innovative partnerships and alternative funding, said the state already faces a $10-billion shortfall in financing transportation projects, and the number will climb unless the decline in gas tax revenue is addressed.

Only a major rethinking of highway finance can keep Oregon from running seriously short of transportation funding as early as next year, state officials say.

While Oregon appears to be out in front in looking at a mileage fee, several other states, including Ohio, Pennsylvania, Colorado, Florida, Rhode Island, Minnesota and Texas, have also expressed an interest in phasing out the gas tax in favor of charging motorists for how much they drive.

In Oregon, some drivers protest that the plan would discriminate against rural residents who may have to drive several miles just to get to the grocery store; create potential inequities compared with drivers from out of state; and raise privacy concerns, with Big Brother keeping a satellite watch over where everyone is driving.

"What's next? Tattoo numbers on your forearm?" wrote one commenter at Oregon Catalyst, a conservative website.

Jason Williams, executive director of the Taxpayer Assn. of Oregon, said: "This is just another wide-eyed government experiment that's going to fail and cost the taxpayer a lot of money. We basically see it as the next big boondoggle of 2009."

While the GPS mileage-counters could be programmed not to regularly report a vehicle's location, that wouldn't entirely eliminate privacy concerns, Williams said. "The fact that they tag your car to a certain place at a certain time means they're tracking your movements. So what happens in a divorce court when the wife tries to track where her husband was, or a boss tries to make sure you were where you were supposed to be?"

Some Oregon businesses have been eager to take advantage of the state's substantial tax credits for shifting to energy-efficient vehicles. The governor's proposal to expand the tax credit for electric cars to up to $5,000, combined with new federal subsidies, could allow Oregonians to save up to $12,500 on the purchase of an all-electric car.

Portland's Hot Lips Pizza already has converted five of its 14 delivery vehicles to all-electric, "and we're looking at definitely increasing that number," in part because some customers now specify that they want their pizza delivered in an electric car, said Lou Hijar, director of operations.

He said the company has not calculated how a mileage fee rather than a gas tax would affect its expenses, but is ready to look at the proposal. "We're always looking for the better mousetrap," he said.

State officials say they are committed to minimizing concerns about privacy and about inequity before implementing any mileage-based idea.

In a Portland trial program in 2006 and 2007, about 300 cars were equipped with GPS devices and every time drivers bought gas, they were charged 1.2 cents a mile -- about equivalent to the state's 24-cents-a-gallon tax assuming a vehicle that averages 20 miles per gallon.

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