What is it about mileage taxes Obama doesn't understand?

The vehicle mileage tax, taxing vehicles by miles traveled, is gaining speed in Congress, but Team Obama is in the slow lane.
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An icon for the American road trip. (Julie Van Pelt)

The vehicle mileage tax, taxing vehicles by miles traveled, is gaining speed in Congress, but Team Obama is in the slow lane.

During his successful campaign for the presidency, Barack Obama embraced the cause of surface transportation, arguing with gusto for improvements to inter-city high speed rail, for research and development to advance the mainstream adoption of alternative fuels, and for other green transportation initiatives. In contrast, John McCain trilled one note on the evils of transportation funding earmarks. To those who follow surface transportation policy, the difference between the two was stark: Obama won big points as the more knowledgeable, engaged, and passionate of the two. McCain appeared to be either out of his depth, disinterested, or constrained by poor political counsel.

Now flash forward to our current and befuzzled times. While a disappointingly scant $50 billion of the $787 billion federal stimulus bill was allocated to transportation, Team Obama seemed again to be warming to transformation when newly-appointed Transportation Secretary Ray LaHood in a wide-ranging recent interview told Joan Lowy of the Associated Press the country needs to take a good hard look at taxing vehicles by the mile, and more regional tolling. The White House brusquely and publicly notified LaHood that in mentioning a mileage tax he had wandered far off the reservation.

That's hardly where the story ends, as I will explain below. But first, just what is this beast, anyway?

The vehicle-miles-traveled tax, or VMT, is seen by backers as a better way for drivers on our nation's worn out highways, bridges, and roads to pay as they go, resulting in a more sustainable surface transportation system. A VMT is also meant to make choices such as transit, ride-sharing and tele-commuting more attractive than peak-hour solo driving, while helping to fund those alternatives, too.

Why do some believe a VMT is needed? Even if raised, the by-the-gallon federal gas tax will fail to deliver over the long haul, as vehicle fuel efficiency continues to increase. The big federal Highway Trust Fund that tax feeds is already on last-gasp life support. Meanwhile, VMTs have already been successfully beta-tested in, of all places, Central Puget Sound, and the state of Oregon, which is widely seen as a national leader in evaluating the policy's possibilities.

What about common criticisms of a mileage tax? The answer is to design it well. A VMT can be designed to protect privacy. It can also be calibrated to give discounts to drivers of more fuel efficient vehicles and those who travel during off-peak hours and on less-congested roads.

By 2020, Congress willing, GPS trackers could be built into all new cars sold in the U.S. and added to older ones. Cross-state coordination would be required, as would inter-operability between a federal roads VMT and state or regional tolling systems. Regional systems, in addition to imposing time- or congestion-sensitive electronic tolls on certain bridges and stretches of highways, could extend the VMT concept to major arterials or even all streets and roads. Such a bold step is all but unthinkable today, but could help make maintenance of county and local roads and funding of regional transit less dependent on endless ballot measures and special pleadings to the Legislature.

To be sure, the costs and benefits of the current versus the new approach would have to be convincingly detailed to win voter approval for anything so radical as a mileage tax on arterial and sub-arterial roads. The political risks would be considerable at the front end, but could diminish sharply over time as turmoil around surface transportation funding eases and user benefits steadily accrue.

For Washington state, a national VMT on federal-aid roads would mean a steady funding source for the $2 billion worth of mostly-orphaned work needed on Interstate 5 between downtown Seattle and Northgate, and for the nearly $2 billion needed to fix fatality-plagued U.S. 2 which runs east from Snohomish County. That same VMT could be divvied up in such a way as to help fund more transit in those corridors, too. A regional or state VMT could provide a steady share of funding for all manner of languishing pavement repair, interchange re-design, Active Traffic Management, Intelligent Transportation Systems and life safety projects on roads, plus high-capacity corridor transit enhancements.

Some politicians intuit the game-changing possibilities. That's why the VMT has been gaining momentum in recent years and months, despite visceral reactions from the general public. Recent news reports show the VMT concept being advanced, at various stages and in various ways, in Nevada, Oregon, Colorado, Ohio, North Carolina, Georgia, Minnesota, Michigan and Massachusetts. The head of Missouri's state transportation department says a VMT is probably inevitable there within several decades. Even Idaho's Republican Governor Butch Otter has voiced support for taxing vehicles by the mile. In Washington, the state transportation commission's 2009 policy platform suggests a closer look at a VMT tested across state lines on the West Coast.

So the VMT's prospects are considerable, though we're only in the early innings of this contest.

Yet no sooner had the mention of a mileage tax escaped Secretary LaHood's lips to Web news sites, than Obama spokesman Robert Gibbs issued a sharp rejoinder, saying a VMT was not, and would not, be a policy of this administration. A predictable barrage of stories immediately ensued, declaring the mileage tax dead, sunk, history, D.O.A.

But Gibbs' curt smackdown of LaHood was itself quickly overtaken by events. First came the reaction of U.S. Rep. James Oberstar (D-Minn.) who chairs the House Transportation and Infrastructure Committee. ABC News Senior White House Correspondent Jake Tapper describes it, at the blog Political Punch:

In an interview with Congressional Quarterly, Oberstar said that LaHood "had the temerity to think...and what did he get? Slapped down. He's a good man. A decent man. Don't let him get slapped down by know-nothings." Oberstar then suggested that Gibbs ought to stay out of the conversation on transportation policy. "I've got news for you," Oberstar said, "transportation policy isn't going to be written in the press room of the White House."

"Oh, it's on," Tapper concluded with relish. That it is. For then came the velvet hammer: the issuance last week of a long-awaited final report of the Congressionally-created National Surface Transportation Infrastructure Revenue Financing Commission, titled "Paying Our Way" (executive summary here). An earlier version had already favorably highlighted the VMT option.

In its final report, the commission first noted the troubling backdrop. There's been a doubling of U.S. auto and truck traffic from 1980 to 2006 while growth in highway lane miles was virtually flat and maintenance of roads and bridges lagged. Real spending per highway mile traveled is down by nearly half since the Interstate system was established in the late 1950. Total highway and transit outlays as a percent of gross domestic product are down one-quarter over the same span, to 1.5 percent today. Because it has been unadjusted for inflation, the federal gas tax has lost one-third of its purchasing power since the last time it was hiked, 16 years ago.

The price of inaction is high. With resulting lost time, squandered fuel, and vehicle deterioration, congestion in the U.S.'s 437 urban region costs upward of $78 billion annually. The commission reported the feds ought to be providing half of the $200 billion required per year to maintain and improve the nation's highways and transit systems, but that currently all levels of government are generating only one-third the needed funding. The commission took pains to point out (quite properly) that state, regional and local governments must shoulder the burden too, finding new resources to boost capacity and make other improvements.

What to do, then? The 15-member commission in its unanimous report said the gas tax — buried in a per-gallon price that is shaped by other factors — sends poor price signals to motorists, and that a mileage tax would clarify the linkage between driving and the needs of a poorly maintained, underpriced system.

The commission emphasized that a VMT could be calibrated by time of day, type of road, vehicle weight, and fuel economy, and could be implemented nationally in 2020 after a decade of thorough research and development, and demonstration programs. To meet the base-case goal of providing sufficient federal funding for maintenance and improvement of highways and transit, the rate would need to be set at about 2.3 cents per mile for cars, if a VMT was charged on all roads. If the charge were restricted to federal-aid roads only, it would need to be somewhat higher, according to the report.

In its report, the commission also pinpointed variable tolling as a key approach at the state and regional levels and identified a slew of effective federal revenue-generating measures complementary to a VMT, such as a tax on auto and truck tire purchases, a 10 cent per gallon hike in the federal gas tax to help meet near-term needs, a 15 cent per gallon hike in the federal diesel fuel tax, and a federal carbon tax.

Major national dailies weighed in thoughtfully after the release of the commission's final report, drawn to the flame of the VMT debate. The Christian Science Monitor editorialized:

Gas taxes — at both the federal and state levels — must inevitably go the way of the gas guzzler. As vehicles become more fuel-efficient, they'll drink less gas, and thus produce less revenue to maintain and improve America's aging roads and mass transit. Add electric cars to the mix, and this revenue stream turns to a trickle.... Financing for transport infrastructure can no longer depend on indirect fees hidden in the overall cost of a gallon of gas but must rely more on direct user fees, such as tolling and congestion pricing.

Gasoline taxes may have sufficed to build the highways of the 20th century, but they've done little to influence vehicle use of roads. Changing behavior is the key to 21st century transport that must unclog crowded highways and reduce dependence on fossil fuels. Taxing miles alerts drivers to the real cost of using roads and can better motivate them to drive less.... Last week, the US Department of Transportation secretary spoke favorably of the VMT, but the White House press secretary quickly dismissed the idea — odd for an administration interested in innovation.

Members of Congress, which commissioned the panel in the first place, can drive the VMT idea when they reauthorize the surface transport bill, which expires this year. Well they know the fragility of the federal Highway Trust Fund, which last year neared bankruptcy and needed an $8 billion infusion because the gas tax couldn't keep up with repair and improvement needs. A VMT is the more reliable and efficient way to pay for transport. Its time has come.

The Washington Post editorialized:

A mileage tax could be tailored so that Hummer drivers, for example, paid more per mile than Prius owners. The tax could also be levied at higher rates during rush hour or on congested highways, discouraging people from driving at times when they would spend the longest on the road. It's no surprise, then, that groups such as the Environmental Defense Fund have praised the proposal.

Most mileage tax proposals call for a tracking device in vehicles that, according to the commission, would "function like the GPS devices that million of Americans have already installed in their cars without worry of privacy loss." There are potential privacy pitfalls, but, as the commission wrote, "such systems can and should be designed to fully protect travelers' privacy." The trackers could be designed so that the government would only receive information about how much a driver owes, not where the driver has traveled. Reassuringly, a successful mileage tax pilot program in Oregon protected drivers' privacy.

Among other dailies that have editorialized in recent months for going forward with more VMT testing are the Denver Post, the Yakima Herald-Republic, The Columbian of Vancouver, Wash., and the Los Angeles Times.

In leaping to quash any further discussion of a mileage tax, Obama spokesman Gibbs was more likely than not doing the bidding of some higher-up adviser wary of blowback from the political Right. But Team Obama's Old School move has had exactly the opposite of its intended effect, as indicated by the reaction from Chairman Oberstar and the national dialog that has ratcheted up following the issuance of commission's final report.

If Oberstar is as serious as he sounds about continued examination of a VMT, the next logical step would be for Congress to include robust funding in the reauthorized surface transportation bill this autumn for several VMT demonstration projects. The I-5 corridor — crowded and worn, but vital to freight and passenger vehicle mobility — is an especially suitable candidate.

As it happens, in April a national symposium on VMTs will be staged by the Texas Transportation Institute. Leaders of the completed Oregon and Puget Sound pilot projects will be among the featured presenters, as will a representative from Germany, where a VMT for heavy trucks has already been instituted. Perhaps the White House should send an envoy to listen, and learn.


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