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California Expands Road Mileage Tax Pilot Program

California Expands Road Mileage Tax Pilot Program
Traffic flows past construction work on eastbound Highway 50 in Sacramento, Calif., Thursday, Aug. 12, 2021.
Traffic flows past construction work on eastbound Highway 50 in Sacramento, California. Democratic Gov. Gavin Newsom signed into law a bill that expands a pilot program that tests whether a tax on miles driven might work better to fund road construction and repair than a tax on fuel purchases.
Rick Pedroncelli The Associated Press

California Gov. Gavin Newsom, a Democrat, signed legislation Friday expanding a pilot program that charges drivers a fee based on the number of miles they drive instead of a gasoline tax.

Oregon and Utah launched similar pilot programs in 2015 and 2020, respectively, that yielded mixed results. Few people volunteered for the programs initially because of privacy and equity concerns, but the states have since seen more participation after addressing some of those problems.

Federal and state gasoline taxes fund road construction and repair and have been consistently declining. Drivers increasingly are turning to more hybrid, electric and fuel-efficient cars.

Between 1993 and 2020, average fuel efficiency improved by approximately 26%, according to a 2020 report by the Institute on Taxation and Economic Policy, a liberal think tank, meaning drivers on average can go an extra 75 miles between fill-ups. “Those 75 extra miles of driving are generating wear and tear on the nation’s roads, without requiring any offsetting gas tax payment to cover the cost,” the report found.

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As the revenue from gasoline taxes decreases with the rise of fuel-efficient vehicles, many states are looking for alternative sources of money to build and maintain their roads, bridges and other infrastructure.

Under the new California law, which Newsom signed last week, volunteers for the program will get bills for the number of miles they drove in the state and be refunded for any gasoline taxes they paid. The plan relies on odometer measurements or GPS tracking to determine the number of miles. The earlier version of the program used mock bills that simply showed how much a driver would owe.

Studying the real thing will give both the state and drivers a taste of the true experience. The move comes as an executive order by Newsom will ban internal combustion vehicles statewide by 2035.

“This extension is a crucial step and will help better equip the state with the necessary information regarding the potential for a road charge system to replace the gas tax to fund transportation infrastructure and maintenance,” state Sen. Scott Wiener, a Democrat from San Francisco, who sponsored the bill.

“We need to plan for a future without gasoline consumption, and we also need to increase our funding for transportation infrastructure,” Wiener said in a statement emailed to Stateline.

But opponents decried the experiment as a backdoor method to raise more money.

“Commuting is a necessity in my district and a per mile tax would be a huge blow to middle class families,” state Senate Republican leader Scott Wilk wrote in a Facebook post. “Californians already pay the highest gas prices in the US, why make life more unbearable?

But Wiener suggested a mileage tax is a way to make road taxes more equitable, since wealthier people are the ones who generally buy electric or hybrid cars, which tend to be more expensive than ordinary, gas-powered vehicles. Those folks save on gas taxes now and should be made to pay for the roads they use, he said.

“The current tax structure also causes an inequitable burden that has an outsized impact on low-income communities,” he said. “A road charge program would allow for funding to be based on how much a person is using the road, rather than how much gas they purchase, more equitably distributing the costs of road and transportation maintenance.”

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