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Sunday, March 3, 2024
March 3, 2024

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Washington’s long road to replacing the gas tax

For over a decade state officials have studied a mileage fee. A citizen panel says it’s time to slowly roll it out, but lawmakers and the governor aren’t ready.

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Washington lawmakers embarked in early 2012 to learn if charging drivers for the miles they travel could eventually replace taxing them on every gallon of fuel they buy.

The concern then, and now, is gas tax receipts are in a slow decline as passenger cars get more fuel efficient and electric vehicles become more prevalent. Other sources of revenue will be required to cover the ever-rising cost of maintaining the state’s roads and bridges.

Eleven years later, after $16 million worth of research, testing, modeling and a full-scale pilot with 2,000 drivers, a thick dossier of data on deploying a road usage charge has been compiled.

But lawmakers and Gov. Jay Inslee have yet to embrace the idea. And it’s almost certain they won’t act in the 2024 session, punting the decision to the next governor and Legislature.

“It’s complicated. We still need a lot more feedback,” Sen. Marko Liias, D-Edmonds, chair of the Senate Transportation Committee, said on Monday. “I’m not saying ‘hell no’ but given the complexity of the task, we need to work through it.”

The Washington State Transportation Commission, the citizen panel entrusted with steering the yearslong effort, concluded the Legislature should “begin a gradual transition” from taxing motor fuels to per-mile assessments.

After delivering that recommendation in 2020, the commission used federal funds to do additional research and survey Washington drivers on their concerns should a road usage charge, or RUC, be launched. Commission leaders shared some findings at a legislative hearing Monday and will submit a full report due by the end of the year

“We’re ready to go. The investments made to date are critical to supporting a successful transition away from the gas tax to a new paradigm, the complexity of which cannot be underestimated,” said Reema Griffith, the commission’s executive director, following the presentation to the bicameral Joint Transportation Committee.

“This is why we are working through all the details now rather than taking a “learn as you go” approach,” she said. “There is simply too much at stake to not get this right.”

Too big for a short session

The commission recommends launching a voluntary road usage charge program on July 1, 2025 with the ability to be a full-scale, mandated program by 2035.

Initially it would be open to any vehicle rated for 25 miles per gallon or higher at a cost of 2.5 cents per mile. Owners of battery-powered electric or hybrid vehicles would not pay annual electric vehicle fees if they participate.

A road usage charge would not be in addition to gas taxes. Drivers would get a credit for gas taxes paid which could be used to cover RUC charges. Washington drivers could obtain exemptions for out of state driving. Those from other states would pay the gas tax.

The most recent financial modeling, shared with legislators, estimates Washington drivers pay an average of $146.40 per year in gas taxes. With a RUC, they would owe $29.64 in road user charges after getting credit for their gas tax expenses.

Rep. Jake Fey, D-Tacoma, leader of the House transportation panel, did introduce a bill last session containing many of the transportation commission’s suggestions. He held a hearing on it but the legislation didn’t advance.

“My goal this session is to identify what the key problems and issues are for people,” he said following Monday’s presentation. “I am not going to try to run a bill in a short session in the last year of a governor.”

Meanwhile, Inslee isn’t pushing for a resolution before his tenure ends.

He vetoed a provision in the transportation budget passed in April directing the Department of Licensing to study the feasibility of implementing and administering a per-mile fee program.

“This work pre-supposes a per-mile fee program will be adopted despite the need to consider broader options for alternative funding sources for transportation,” he wrote in his veto message.

At the time, his action surprised lawmakers. Some wondered if the governor’s concern was less about a lack of options and more about the potential of such a program to deter people from buying electric vehicles.

An Inslee spokesman said that’s not correct.

“The governor is not opposed to a RUC but there has not been a clear legislative approach to how a RUC would work,” wrote press secretary Mike Faulk in an email. “The veto did not stall or in any way stop the [transportation] commission’s work on this.”

A global view

The commission forecasts that revenues generated from the state’s 49.4 cents a gallon gasoline tax – one of the highest in the nation – will drop from $1.3 billion in 2026 to under $1 billion in 2035. That’s when all new cars sold in the state are supposed to be zero emission.

Washington is not alone. Any state reliant on fuel taxes to pay for building, maintaining and preserving their roads is facing a similar dilemma.

“Based on the numbers, there will need to be an alternative or states will have to become comfortable with having to rely on general fund dollars for transportation,” said Garett Shrode, policy analyst with the nonprofit Eno Center for Transportation.

And the federal government isn’t immune either.

Shrode pointed to a 2009 report by the National Surface Transportation Infrastructure Financing Commission calling for a new approach to paying for transportation projects because of expected declines in gas tax revenue.

That threat is not only still present, but “magnified” by federal policy prioritizing electric vehicles,” Shrode and two colleagues wrote in a July paper.

The answer, he said in an interview this week, will be for states to look for multiple revenue sources. He said a road usage charge, also referred to as a vehicle-miles traveled fee or mileage-based user fee, will get the attention of many.

Oregon, Utah, Hawaii, and Kansas are among states now or soon to be operating some variation of a RUC. A national pilot is planned for later this decade.

Other possibilities to raise funding include electric vehicle registration fees, which Washington has, fees on electric vehicle charging and fees on retail deliveries.

“We’re going to need this patchwork of revenue sources and solutions to really solve the problem,” Shrode said, adding that a road user charge “would definitely be more sustainable than a fuel tax.”

There are obstacles. The charge would cost more to administer than a gas tax. Concerns about privacy and how mileage is reported must be alleviated.

And then there’s politics.

“It is hard for any politician to get near a new tax, even a user fee as a replacement,” Shrode said. “It is easier to kick the can down the road for a decade, even though there is not enough money in the pot, and let the next generation deal with it.”

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