Tuesday, February 27, 2007

Think outside the pump

Posted by Craig Westover | 3:08 PM |  

I'm interested in reaction to the talked about VMT system and the proposals in this PiPress editorial. Thanks.

Think outside the pump

In his budget proposal, Gov. Tim Pawlenty set aside $5 million to study technologies that could move Minnesota off a per-gallon gas tax and onto a "vehicle-miles-traveled" (VMT) tax — for good reason.

As in many states, gas tax revenue in Minnesota is flattening out — even though more people are driving more miles. That's because we're driving cars that are more fuel-efficient. So, from a tax standpoint, a gallon of gasoline purchased — and the tax it produces — doesn't relate to wear and tear on our roads in the way it used to.

Under a vehicle-miles-traveled system, instead of a tax-per-gallon system, drivers would pay a set amount for each mile driven on state roads. With GPS and wireless technology, a special odometer would measure in-state miles driven and the total would be transmitted to a reader on a gas pump when the driver refueled. The reader would calculate the amount owed the state, which would be included in the total purchase. Drivers would, as they do today, "pay at the pump."

The miles-traveled system removes gas-mileage variability from the revenue equation. The state would collect the same revenue from you whether you drove 1,000 miles and burned 50 gallons of gas in a midsize vehicle or you burned 20 gallons of gas in a 50-miles-per-gallon gas-electric hy-brid.

The current system, the tax-per-gallon one, does have a limited life span. We need to figure out a new, effective way to raise enough money to pay for roads. But the vehicle-miles-traveled system could well be a bureaucrat's dream and a consumer's nightmare. It will be expensive. It raises serious privacy issues. And it invites well-intentioned fine-tuning that ultimately confuses and frustrates consumers.

• Equipping new cars with necessary GPS and mileage reading devices will not be cheap. One suggested method is requiring the equipment to be pre-installed on all new cars shipped for sale in Minnesota. Ultimately, consumers would pick up the cost.

• Unless there's mandatory retrofitting, Minnesotans with older cars would pay the per-gallon tax while those driving new vehicles equipped with GPS and special odometers would pay the VMT tax. The per-gallon tax would need to be maintained indefinitely to collect revenue from out-of-state drivers and interstate truckers.

• In initial implementation, the VMT system would track only in-state miles traveled. It wouldn't stick its electronic nose into such personal details as exactly where or when the driver drove. However, once such technology is in place, the temptation is there to use it "for good" — in case of an Amber Alert, for example.

And when the door between your privacy and government's nose is opened, it's hard to close. Think wiretaps.

• The VMT system is prone to "project creep." The first obvious "improvement" in the system would be to charge a higher per-mile rate for larger, less fuel-efficient vehicles that emit more greenhouse gases and inflict more wear and tear on the roads.

From there it is a short leap to numerous "congestion-rate" schemes; charge a higher per-mile rate on westbound I-394 and eastbound I-94 during the 7 to 9 a.m. rush hour, for example. The more the system is tweaked for a false sense of precision and fairness, the more confusing it becomes for consumers, the more expensive and difficult to manage, and the more it will be perceived as unfair.

Given roads as a public good, our ideal road revenue system would distribute the public costs of driving and commercial use of roads across all who benefit, tie the cost of harmful effects of driving (pollution, for example) to those responsible, and create a transparent link between the amount we pay in taxes and actual road construction and maintenance.

With a little creative thinking and a lot less cost, it may be possible to eliminate the state gas tax for Minnesota residents and create a road revenue system that achieves those objectives. Our suggestion consists of four elements:

• Eliminate the pay-at-the-pump gas tax for all Minnesota residents.

• Reinstate variable vehicle license fees — with higher fees for larger vehicles (justification: more wear and tear on roads) and higher fuel consumption (justification: more pollution).

• Establish a uniform road revenue tax that reflects the universal value of roads to every Minnesotan.

• Require that the sum of vehicle licensing revenue and the road revenue tax cannot exceed the budget for state road construction and maintenance. That's the key to providing transparency. And it ties the dollars taxpayers pay for road construction and maintenance to the concrete and asphalt they get in return.

Indeed, the devil is in the details — as well as in the concept. We recognize a compelling state interest to move away from a per-gallon gas tax, but we don't see the VMT approach as a desirable alternative. We urge the governor and legislators to think outside the pump.