Will a mileage tax replace the gas tax?by Dan Olson, Minnesota Public Radio
One of the main sources of money for Minnesota road and bridge construction is slowly running out of gas. Literally. Money collected from the 20-cents-a-gallon state motor fuels tax has flattened out after decades of steady increases. Gov. Tim Pawlenty and other elected officials say the state needs to explore an alternative funding source called a mileage fee.
St. Paul, Minn. — The party ended in 2005. After years of stellar increases, the money collected from Minnesota's gasoline tax declined that year. It rose slightly last year, but the trend, officials say, is clear. The gas tax can no longer be counted on as a steadily rising source of revenue for transportation costs.
Part of the reason for that is because of what's under the hood of Emily Whebbe's little red car. The St. Paul resident's four-cylinder engine is a fuel sipper.
"Gets about 45 to 55 miles per gallon," she says.
The real news is -- a gallon of what?
"It's 99 to 100 percent biodiesel, and then in the winter you can actually do a 20 percent biodiesel," Whebbe says.
There's no fuel tax on biodiesel in Minnesota.
Gov. Tim Pawlenty told reporters at a recent briefing that part of the fix for slumping gas tax revenue is something called a mileage tax or fee.
"We will have a pilot project or a demonstration project to start the project of replacing the gas tax," he says.
Pawlenty wants the pilot project to begin this year.
Even though Minnesotans are driving more vehicles more miles, a growing number of them are beating the state gasoline tax in two ways -- they're driving vehicles that get better mileage, and more of them burn fuels that aren't taxed or are taxed at lower rates.
This is not welcome news for people concerned about maintaining and replacing Minnesota's aging road and bridge system, and there's a lot it.
Minnesota, with only five million people, has the fifth-largest highway system in the United States, the Minnesota Department of Transportation says. That's 135,000 miles of roadway and more than 20,000 bridges.
It's too late to debate whether it was a good idea to build all that infrastructure. Advocates say the vast road system makes it relatively easy to move goods and people around and gives the state an economic edge over other areas of the country.
Even people without ties to road and bridge interests say the state is billions behind in keeping up with repair and replacement.
Officials say finding an alternative to the slumping gas tax is at least 10 years away, but planning needs to start now.
Here's how a mileage fee system would work.
Instead of paying a tax for each gallon of fuel burned in Minnesota, vehicle drivers would pay a tax for each mile traveled.
The mileage fee idea is being tested in Oregon. Jim Whitty, who directs Oregon's Office of Innovative Partnerships and Alternative Funding, says the test vehicles are fitted with a device that measures miles traveled.
Gas stations where drivers refuel are fitted with instruments to download the measurements.
"When they drive up to a fueling station, they can have their miles read. We're doing it electronically here now," he says.
Whitty says the idea of a mileage fee is a replacement, not an addition to the gasoline tax.
"They only pay the mileage fee in our pilot project. They're not paying the gas tax," he says.
Minnesota House Transportation Finance Committee Chairman Bernie Lieder has supported the idea for years. Lieder, DFL-Crookston, is an engineer by training.
He says the technology to measure where drivers rack up their miles, whether in state or out of state, is mostly ready to go. Where the politics come in is what to charge.
Lieder and other mileage fee advocates say it's not fair for drivers of four-cylinder fuel sippers to have to pay the same rate as eight-cylinder guzzlers or the same as huge freight vehicles.
The solution, Lieder says, is different mileage rates.
"Units like a light car, a heavier car, a truck, an 18-wheeler, each one would have a different mileage rate," he says.
Fifteen states and the federal government are already experimenting with the mileage fee idea. Like states, the federal government has major transportation funding worries. The federal highway trust fund, the big cookie jar for federal road and bridge spending, is projected to run out of money by 2009.
- Morning Edition, 01/16/2007, 7:25 a.m.