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Complexity dogs mileage-fee concept

Even overcoming technical difficulties, drivers’ laziness, privacy concerns, system hackers and high costs won’t push mileage fees into the end zone.

Even overcoming technical difficulties, drivers' laziness, privacy concerns, system hackers and high costs won't push mileage fees into the end zone.
Courtesy of MnDOT

It seemed like such a simple, smart idea at first. With fuel taxes paralyzed over decades of inflation, cars going farther on each gallon of gasoline (or none at all) and roads and bridges still deteriorating under traffic’s wear and tear, why not switch user funding for this vital infrastructure from a levy at the pump to one based on miles driven?

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Proponents argued that it would be fair, adaptable to future automotive technologies and able to support other policy objectives such as reducing congestion, pollution and accidents. Pilot testing began in 2006 in Oregon, not coincidentally the first state to implement a user-pays principle for driving by assessing a gas tax back in 1919. After more trials, Oregon plans to roll out a live mileage fee system for up to 5,000 motorists next July.

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Minnesota authorized its own $5 million study of mileage fees in 2007 at the recommendation of Gov. Tim Pawlenty, who opposed raising fuel taxes. Difficulties immediately surfaced as a first attempt at scoping the research was rejected and a second finally approved. Testing with 478 volunteer drivers from Wright County began in 2011 but was soon interrupted by a state government shutdown brought on by Minnesota’s first Legislature fully controlled by conservatives in 40 years.

‘Real world deployment’

The Minnesota Road Fee Test quietly wrapped up last year and now is gathering dust. Findings were mixed, some positive, some discouraging, but most of all the study pointed up the danged complexity of the whole concept. Here’s the evaluation report’s  list of “some of the activities expected to be present in a real world deployment” of mileage fees:

  • Scheduling appointments.
  • Capturing vehicle mileage.
  • Process user agreements.
  • Installing equipment.
  • Training drivers.
  • Preparing equipment kits.
  • Uninstalling equipment.
  • Processing on-site payment.
  • Receiving and documenting a service request.
  • Providing guidance for a known technical issue.
  • Providing guidance for a new technical issue.
  • Escalating issue to a specialist.
  • Generating and mailing paper invoices.
  • Processing payments received.
  • Managing late payments.
  • Developing and testing the application.
  • Developing operational procedures.
  • Establishing fees.
  • Managing data.
  • Managing hardware and software.
  • Developing messages to drivers.
  • Developing training materials.
  • Developing and maintaining a participant portal.
  • Coordinating across organizations.

Holy Moly, Rocky! That’s a lollapalooza of flies in the ointment. And it doesn’t even include actual problems uncovered by the test, including “hardware or software issues [that] hindered the system’s ability to reliably capture trips” and the preference of 48 percent of participants polled afterward just to keep paying the fuel tax versus 37 percent who liked the newfangled plan and 15 percent who were too mystified by the entire exercise to offer an opinion.

Concerns about misuse of data

Using smartphone GPS technology, the system tracked 500,000 trips covering 4 million miles with 660 million data points. Interestingly, privacy, a hot issue in the wider mileage fee debate, wasn’t a big concern for the self-selected participants. They believe “that they give up their privacy regularly (e.g., to mobile phone service providers). Instead, participants worried that their data would be vulnerable to access by wrongdoers (e.g., ‘hackers’) who would seek to misuse the information,” the report noted.

And that ought to be a worry for any state that tries to rely on automated mileage tracking to assess user fees for roads, although I’ve not seen it addressed in reports from testing in Minnesota or Oregon. Even without any high-tech looting, more than 4 percent of the mileage bills sent to the Minnesota test participants — who got stipends for their service and reimbursement of state fuel taxes — went unpaid.

Another cash drain is the basic cost of collecting mileage fees, estimated at four times that for the old-fashioned way at the pump. University of Minnesota Prof. Zhirong Zhao, who made that estimate three years ago, added that improved technology could bring it down to just three times as much. I wonder. The Minnesota test went through eight software versions and three generations of hardware upgrades, boosting help line calls from participants — 175 or fewer of them active at any one time — to 4½ a day.

On top of all that, “challenges exist with the ability to collect fees from out-of-state drivers,” the Minnesota report acknowledges.

To be sure, you can do some neat things with a GPS-powered mileage fee system. Fees can be tailored to peak congestion times and locations or to vehicle weights and emissions. One add-on in the Minnesota test was speed safety alerts transmitted to drivers both visually and audibly when they got too heavy on the gas pedal. The audible alerts worked best, researchers found, with average speed reductions of up to 9 miles per hour. 

Simplicity of current fuel tax noted

However, the report notes that “it may be wise to phase these elements in later, so as to not complicate the public acceptance issue.” And complexity may be the biggest hurdle of all. Test participants who still preferred the fuel tax often cited its simplicity. “The current fuel tax requires very little thought and … no work on the part of the driver,” the report notes, stating the obvious.

Even overcoming technical difficulties, drivers’ laziness, privacy concerns, system hackers and high costs won’t push mileage fees into the end zone, though. Although a 25-member Minnesota policy task force issued several encouraging recommendations along with a call for further study, a minority report from three participants said the majority overstated the benefits of mileage fees, understated their shortcomings and made no compelling case for “wholesale changes” in the transportation funding structure, “which can in fact continue to serve the state well, probably for decades to come.”

The dissenters represented important interest groups in any transportation policy discussion: the Minnesota Chamber of Commerce, the Minnesota Trucking Association and a rural county board. They said the equity problem with hybrid and electric vehicles can be solved with increased annual registration fees and motor vehicle sales taxes. 

Sounds simple to me. The hard part is, and will be, mustering the political will to keep those fuel taxes on the majority of motor vehicles in line with growing costs. And that’s one problem even a technically perfect mileage fee system can’t solve.

Conrad deFiebre is a Transportation Fellow at Minnesota 2020, a progressive, nonpartisan think tank based in St. Paul. This commentary originally appeared on its website.

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