The Legislature saw the beginnings of a potential road crisis, knowing that the well of available revenue earmarked for state highway repairs would soon dry up. To fund repairs, Oregon relies on the state gas tax, which costs drivers 24 cents for every gallon purchased.
This used to be a sufficient revenue stream for road maintenance, but the proliferation of fuel-efficient vehicles combined with the increasing popularity of hybrid-electric vehicles has created a gas-tax crunch that is not improving. This vehicular conundrum, though great for the environment, has become the bane of not only Oregon's road budget, but also of road budgets across the nation.
Oregon's Legislature passed House Bill 3946, mandating creation of the Road User Fee Task Force (RUFTF) to examine revenue sources for road maintenance. The RUFTF eventually hit on using GPS devices and wireless technologies to track the distance a car drives on state roads. Drivers would then pay a tax on the miles driven when they fill their gas tanks.
Oregon Department of Transportation (ODOT) consulting researchers spent more than 14 months developing the technological underpinnings for the mileage tax, and on May 14, 2004, the technology was demonstrated live for the first time to RUFTF members on the Oregon State University (OSU) campus in Corvallis.
The RUFTF enlisted the help of professors David Kim and David Porter of OSU, and after analyzing the situation, the researchers proposed a combined device for cars.
"One was GPS, for not only determining when a vehicle's inside the state or not, but also the number of miles," said James Whitty, manager of the ODOT Office of Innovative Partnerships and Alternative Funding, and administrator for RUFTF. "The second device was an odometer tag, which would count miles through contact with the speed sensor."
Whitty said GPS's ability to locate a vehicle in a particular zone -- one of which will determine state boundaries -- allows the state to know whether a vehicle is inside the state so miles driven outside the state are not included in the mileage fee. Smaller zones will be defined by a geographic area and a time period.
State and local policy-makers will determine smaller zones --downtown Portland between 4:00 p.m. and 6:00 p.m., for instance -- that include pricing strategies based on peak-period pricing in congestion areas.
Any legislation would have to grant local governments this authority, or if the Legislature prefers, the state could be granted this authority, he said, noting that it's highly unlikely the state would ever act without approval from the local government.
"Since the local gas tax initiatives are always sent to the voters for approval, and voters can demand a vote under a voter referral process anyway, as a practical matter, peak-period pricing will in most cases be put to a public vote," he said. "The Legislature could determine otherwise, but this is difficult to imagine happening in this state."
GPS devices aren't completely dependable at counting miles, he said, because tall buildings, weather, mountains and trees interfere with signal reception. This is where the odometer tag comes in.
"The tag would count miles, and then the GPS signal would help us determine which bucket to put the miles in," Whitty said. "Charging for miles driven out of state would be against [the mileage fee] policy directive. Thus, no fee would be applied to the miles placed in the out-of-state bucket."
Once a plan was in place, the RUFTF and OSU searched for devices to make it work, but found nothing on the market that would meet the state's needs. Researchers developed specifications for the necessary technology, and the RUFTF looked for partners to design the technology based on those specifications, awarding a contract to AFX Technology Group International, and Digital Consulting and Software Services.
Live Demo
The live demo in May is a small part of a much larger pilot that will last more than a year.
"We ran four former litter-pickup vehicles in Corvallis across the zones, and then back to a simulated service station where we did the transaction," Whitty said. "The mileage number was transmitted and added to the bill. The gas tax was subtracted from the bill and a receipt was presented. It worked."
But the May test merely illustrated that mileage collection is possible, he said, and more pilots are being planned to test the devices. In November, the RUFTF was scheduled to meet and discuss the logistics of the pilot program.
"In February, we will choose 20 volunteers to have these devices installed on their cars and run around for a few months to make sure everything works as needed, and do any tweaking if we needed to," Whitty said. "These devices have to work every time."
The task force will enroll volunteers and install the devices in their cars during summer 2005, and plans to begin testing in October 2005. It's hoped as many as 250 volunteers will participate. From now until the pilot's completion, the department will consider ways to install the devices in cars if and when mass production begins.
Retrofitting was an option, but the RUFTF realized the financial burden would be too much.
"To install those devices in retrofit would be outrageously expensive," Whitty said. "It is going to cost probably about $200 [per device]. Because we have 3 million existing vehicles in Oregon, that would be a very expensive proposition. Nobody would want to fund that."
The devices currently cost $209, but Whitty estimates mass production will drop the price to less than $100. Another reason not to retrofit older cars, he said, is those cars are not designed to carry the devices, making the devices difficult to use and more likely to be tampered with.
Besides, installing the devices on older cars wouldn't solve the problem. It's the fuel-efficient vehicles that cost the state revenue, so the state will concentrate on those cars.
Developing the Technology
The system had to meet two challenges: collecting miles traveled through specific zones and transmitting that data to a centralized database, which stores the information until it's time to calculate a fee.
The GPS device collects information as soon as it recognizes the vehicle is within a designated zone. The odometer tag takes the information gathered by the GPS device, calculates the miles traveled and allocates it to zones. A radio-frequency-based reader located at the gas station then downloads the mileage data stored on the odometer tag and sends it to a host computer.
"The mileage information is sent via modem to a central database to match it against the last transaction recorded for the vehicle that is fueling," said David Kim, a professor in OSU's Department of Industrial and Manufacturing Engineering. "Once the miles traveled since the last fueling have been calculated, these are used again by the POS [point-of-sale] system to calculate a VMT [vehicle miles traveled] fee."
Officials from the RUFTF and OSU acknowledge not all drivers will have the technology installed in their cars, and in such instances -- if an out-of-state vehicle refuels -- a per-gallon tax is collected instead.
The per-gallon tax will be retained as the default tax for those motorists driving vehicles not outfitted with the necessary technology for the mileage fee or where such technology is disabled for some reason. This default system will be important not only as the mileage fee is phased in (because the technology would only be required for new vehicles) but also as a backup system should the mileage fee technology experience system difficulties at any time, Whitty said.
Interested Observers
Because decreasing revenue in gas tax is a national problem, other states have contacted ODOT to discuss the state's efforts.
Whitty said he has spoken with officials from Washington, Utah, Texas and New York. The California Performance Review raised the possibility of the Golden State pursuing a similar course of action.
"Other states are concerned about the falloff of gas tax revenues too, and they're looking at answers," Whitty said. "We're actively doing something, and so that's why they call. All of them have been quite supportive and interested."
If Oregon's pilot succeeds, states will have something concrete to refer to when considering their own solutions. Whitty said the RUFTF went through 28 potential revenue sources before coming up with a workable number.
"The task force came up with a combination of four [sources], two of which are relatively insignificant from the national perspective," Whitty said. "One is a studded tire charge. The second one is tolling for new facilities. The other two relate to this pilot program: the mileage fee, otherwise known as VMT, and congestion pricing."
The question then became one of accurately collecting miles traveled, doing so cheaply and without inconveniencing the citizenry. Perhaps more importantly, how could the state do this without invading people's privacy?
"We went through a number of analyses about [drivers] collecting it manually or self-reporting, those kinds of things," said Whitty. "We started to reject them because they would result in either evasion or bad reporting, or they'd be too expensive."
Big Brother in the Back Seat?
While the task force resolves the logistical and technological issues arising during testing, other less technological issues have emerged and could demand attention. Some see this as an invasion of privacy.
In anticipation of citizens' concerns about their movements being tracked, the task force mandated complete anonymity in the process. As part of the development contract with the university, Whitty said the technology will have no ability to track motorists' movements.
He said he is not overly concerned because he believes simply communicating the device's purpose will calm fears. But despite these efforts, the state must still contend with a rocky political climate and ignorance.
"Privacy is really interesting because there are certain people who don't hear," Whitty said. "They just don't believe. They figure with the use of GPS, 'That's it. They're tracking us.' They don't look deeper into that. They don't understand that a GPS device is a glorified compass. I think these people watch a lot of spy shows on television. You add a little healthy dose of paranoia, and there you go."
