Earlier this month, Oregon joined nine other states in meeting a goal to get 3.3 million electric vehicles on the road by 2025. That number is set to grow under a rule that requires all new passenger cars, SUVs, and pickup trucks sold in Oregon to either be fully electric or plug-in hybrid electric by 2035.
But adopting cleaner, more fuel-efficient vehicles also means that Oregon and other states are grappling with reduced revenues from gas taxes. Electric vehicle owners also don’t pay any gas tax, which has led states like Oregon to explore launching programs that charge motorists a fee based on how much they travel instead of how often they refuel.
In 2015, Oregon became the first state in the nation to launch a voluntary, pay-by-mile program for motorists. Roughly 800 people are currently enrolled in OReGO, which charges participants 2 cents for every mile driven in the state.
Joining us to talk about the OReGO program is Travis Brouwer, assistant director for revenue, finance and compliance at the Oregon Department of Transportation.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. A few years ago, Oregon established a rule that requires all new passenger cars and trucks sold in Oregon to either be fully electric or plug-in hybrid electric by 2035. But the transition to more fuel-efficient vehicles means that Oregon and other states are grappling with reduced revenues from gas taxes, something that lawmakers are talking about right now. One solution is to go from a gas tax to a per mile fee. In fact, that system has been in place in Oregon for a decade now. In 2015, Oregon became the first state in the nation to launch a voluntary pay-by-mile program for drivers. Roughly 800 people are currently enrolled in OReGO, which charges participants 2 cents for every mile driven in the state.
Travis Brouwer is the assistant director for revenue, finance and compliance at the Oregon Department of Transportation. He joins us now to talk about all of this. Welcome back to the show.
Travis Brouwer: Thanks, Dave. Great to be here.
Miller: Can you just first give us the big picture version of the transportation revenue problem that we are facing as a state in the coming years?
Brouwer: Yeah, Dave, it is a big challenge for us and for all the transportation agencies, including cities and counties that really rely on the state highway fund. What we’re seeing is that increasing fuel efficiency as vehicles electrify, as they become more fuel-efficient, is projected to reduce our gas tax revenue by a total of about $3 billion between 2012, when we really started seeing those fuel efficiency increases, and 2033. So that is going to have a significant impact on the ability of ODOT, cities and counties to be able to maintain the roads that we have.
We’re starting to see vehicles become much more fuel-efficient. Last year, the average new vehicle on the road got about 37 MPG, which means on average they pay only about $100 a year in gas tax. That’s our main funding source for roads in Oregon, and that’s about half of what the average vehicle paid just a decade or so ago.
We’re also seeing that our funding sources like the gas tax, the driver and motor vehicle fees you pay at the DMV, as well as our other sources are all eroded by inflation. So really between fuel efficiency and inflation, it’s a one-two punch. We’re expecting to see our fuel tax revenue start to decline next year. This really is the peak year for the fuel tax.
Miller: Where are we on that plan that I mentioned, that by 2035 all new passenger cars, SUVs, light duty pickup trucks, either have to be battery-powered or plug-in hybrid electric? Are we on track?
Brouwer: Yes, we are making great progress in that. Oregon has now over 100,000 electric vehicles, about 75,000 pure battery electric vehicles, and another 30,000 that are plug-in hybrids. So we’re making good progress on that. We’re still seeing a large number of EVs sold. We may be seeing that slow down just a little bit, but we are making pretty good progress.
Miller: Trump administration’s recent actions, or ones that could follow, including cuts in federal rebates for EVs – do you think they’re going to impact EV adoption in Oregon?
Brouwer: It’s going to be hard to say. We’re still in the early days of that. ODOT and other state agencies are working on two fronts really to get more EVs on the road. One is building out the charging infrastructure, to help make sure that EVs can roam far and wide across the state. Some of those funds have been put on hold, but we’re still pushing forward as much as we can with that. We’ve also seen that they may be walking back a little bit from the federal tax credits that have been helping people make EVs more affordable. We still have an Oregon tax credit, though, that has admittedly not had enough funding in order to provide incentives for everybody who buys an EV.
But even with some of those things on hold, we have still seen pretty robust adoption of electric vehicles. So we’re hopeful that as more people learn about electric vehicles and as more people test them out, as the prices come down, as battery prices in particular come down, we’re seeing that EVs are becoming more and more cost effective over time.
Miller: All of this is the necessary background to understand the OReGO system, which, as I mentioned, was a kind of nationwide pioneer, now 10 years ago. Can you explain the basics of how it works?
Brouwer: Yeah, it’s a pretty straightforward system in a way. People who have a passenger vehicle that gets at least 20 MPG can voluntarily sign up to pay for every mile they drive rather than for every gallon of gasoline they burn. So you can go online and you can see the options. We have multiple account managers that you can sign up. You get to choose how you want to report your miles to that account manager. There are options for using a GPS-based device that makes sure that you’re not paying for out-of-state miles. You can also just take a photo of your odometer and send that in on a quarterly basis. And there’s also options to use, for newer vehicles that have telematics in them, to access that data and have your miles that you’ve driven in the state reported through that.
We get that data through those account managers, and people pay through their account managers. You pay 2 cents for every mile. And then we subtract out the estimated amount of fuel tax that you paid, and you pay the net. So for example, I have my Prius in the program. And I pay probably about $8 a month on average, in addition to the fuel tax that I already pay at the pump when I buy gas. And I have it set up on an autopay system, so it’s really seamless. I honestly don’t even notice the bill. It just goes to my credit card and pays on a regular basis.
Miller: But my understanding is that you are paying more per mile under this per mile tax than you would be with your highly fuel-efficient vehicle.
Brouwer: Yeah, that is really in some ways the goal of the program, to ensure that all vehicles that are using the road are paying their fair share. So for those highly efficient vehicles that are paying very little … I own an electric vehicle as well, and you pay nothing in gas tax. So the choice really is for folks [to] either choose to pay the supplemental registration fees, which is $35 for a hybrid that gets over 40 MPG, or $115 a year for an electric vehicle. Or, you can sign up and join the OReGO program and then you don’t have to pay those supplemental registration fees.
We see that for some people that might be a good idea. They actually pay a little bit less in an EV that doesn’t drive a lot. Or for other folks, it may just be a little bit easier to not have to pay that registration fee all at once, especially because there’s a two-year registration cycle. They may not want to cut a check for $200. They may instead want to pay on a monthly or quarterly basis.
Miller: Who, in general, has opted into this? Again, it’s worth saying that this is 100% voluntary. What do you know about the people who’ve said, “yes, in some cases, I want to pay more than I would otherwise for this voluntary program”?
Brouwer: Well, right now we have just under 800 current enrollees. And more than three-quarters of those, 606 as of the end of February, are electric vehicles. So what we’re seeing is a lot of folks who say, “I think I’d rather pay by the mile than pay that big supplemental registration fee.” So there is a little bit of an incentive for those folks to join OReGO rather than pay that.
The majority of our participants are in the tri-county metro region. But we have people from all across the state, so it is not just something that is concentrated only in the urban areas. It really is something that people from across Oregon are participating in.
Miller: Would a per mile fee disadvantage rural Oregonians, who often have to travel much greater distances to work, to shop or to pick their kids up from school?
Brouwer: Yeah, that’s a great question that we get all the time, Dave. And I think what we’re seeing is that rural Oregonians are actually realizing that they wouldn’t be disadvantaged by this. Rural Oregonians typically drive a little bit more and they drive older, less fuel-efficient vehicles. So we estimate that they pay about one-third more than urban residents in the gas tax. They’re already paying more.
Generally, what we see is that the folks who would pay a little bit more under a road usage charge are the ones who are driving more fuel-efficient vehicles, and there’s not nearly as many electric vehicles and hybrids out in rural Oregon. You see a lot more F-150s and whatnot. So I think this is actually something that could be more fair for rural Oregonians. If we don’t shift how we pay for transportation, we continue to rely almost exclusively or highly on the gas tax, then rural Oregonians may be bearing a larger and larger share of that funding as people in urban areas particularly snap up those highly efficient vehicles.
Miller: So the big question for lawmakers, once again, is whether or not they should make this voluntary and pretty small-scale program mandatory. Do you think there’d need to be any significant changes to what I think of as a pilot program if it were rolled out mandatory and statewide?
Brouwer: We have built this program over the last 10 years, and gradually expanded and improved upon it with multiple iterations, so that we think it is pretty much ready for an expansion. There’s a group called the Road User Fee Task Force that was chartered by the legislature more than two decades ago, and they recommend to us and the legislature policy options. What they have recommended generally is a gradual expansion, starting with new highly efficient vehicles over time, so that we would see a gradual uptake of those vehicles coming into the program. We think we can accommodate them. We’ll obviously have to do some things to make it easier. We’re working right now with the auto dealers to figure out how we could enroll people when they buy a vehicle as opposed to having to do that after the fact. So we’re going to continue to work on making this more seamless for our customers. But we think it is pretty much ready to go if the legislature were to make that decision.
Miller: Do I understand correctly that one possibility would be that, say, if somebody buys a Tesla, or some other EV, or maybe some other highly fuel-efficient hybrid, that it would be mandatory for them based on the status of their vehicle, if they bought, say, a new Tesla or a new ID.4?
Brouwer: Yeah, that’s correct, Dave. The legislation that was introduced back in the last couple sessions of the legislature would focus on new vehicles that get more than 30 MPG. So starting in a couple of years we’d start working them into the system, enrolling them in the programs so that they would be required to pay by the mile. But then they wouldn’t be paying those supplemental registration fees or paying the gas tax.
There’s been some other conversations … some folks have talked about maybe putting all electric vehicles in. And so really it’s going to be a policy decision by the legislature who should come into the program and when, if they decide to go this way.
Miller: One issue that has been brought up in the past is about data security. If there’s GPS data knowing that I’m crossing the I-5 Bridge, and I’m in Vancouver now and I’m happy to not be paying per mile there, I don’t necessarily want state bureaucrats to know where I’m going all the time. What happens to that data?
Brouwer: Yeah, it’s a great question, Dave, and one we get a lot. We’re glad to be able to answer that. Because we, as state bureaucrats, really do not want to know where you travel. So the program design and the law that created OReGO do contain strong protections for privacy. So the first, most important element of this is GPS reporting options are not required. The only reason that those are available is that people don’t have to pay for out-of-state miles. I chose that option for my Prius. I go to visit my parents who live in Bellingham, Washington fairly regularly, so when I cross the Interstate Bridge or the Glenn Jackson Bridge, I stop paying. So that to me is a good deal.
But it’s really important to note that there are low tech, non-GPS options available that you can report through sending in a photo of your odometer or using the in-vehicle telematics that is already there. Last time we had a conversation with the legislature, they expressed an interest in a flat fee that would allow people to opt out from reporting completely. Even if you do use GPS though, ODOT never gets any data on where you drive. All we get is the number of miles you drive. And even the private partners that are collecting that data have to destroy the location data 30 days after account settlement. So we think these are pretty good privacy protections, because frankly we want to protect the privacy of users as well.
Miller: Travis Brouwer, thanks very much.
Brouwer: Thanks, Dave. Good to be here.
Miller: Travis Brouwer is the assistant director for revenue, finance and compliance at the Oregon Department of Transportation.
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