Highway Trust Fund: Pilot Program Could Help Determine the Viability of Mileage Fees for Certain Vehicles
Highlights
What GAO Found
Mileage-based user fee initiatives in the United States and abroad show that such fees can lead to more equitable and efficient use of roadways by charging drivers based on their actual road use and by providing pricing incentives to reduce road use. Mileage fees for passenger vehicles, however, continue to face significant public concerns related to privacy as well as cost challenges. Privacy concerns are particularly acute when Global Positioning System (GPS) units are used to track the location of passenger vehicles. Reliable cost estimates for mileage fee systems are not available, but implementing a system to collect fees from 230 million U.S. passenger vehicles is likely to greatly exceed the costs of collecting fuel taxes. Commercial truck user fee systems in Germany and New Zealand have achieved substantial revenues and benefits such as reduced road damage and emissions with fewer privacy concerns, but ensuring compliance in a cost effective manner presents trade-offs. Few commercial truck mileage fee pilots have been conducted in the United States, but efforts in two states suggest such fees pose fewer privacy and cost challenges than passenger vehicle fees.
Mileage fee rates could be set to replace or supplement current Highway Trust Fund revenues. GAO calculated average mileage fee rates for passenger vehicles and commercial trucks needed to meet three federal revenue targets ranging from $34 billion (replace current federal fuel tax revenues) to $78 billion (increase spending to maintain existing system conditions and performance). To meet these targets, drivers of passenger vehicles with average fuel efficiency would pay $108 to $248 per year in mileage fees compared to the $96 these drivers currently pay in federal gasoline tax. These fees would affect users' costs differently based on each vehicle's fuel efficiency, because drivers of less efficient vehicles now pay more in fuel taxes than drivers of vehicles with greater fuel efficiency. However, like federal fuel taxes, mileage fees would comprise a small portion of users' overall fuel costs and thus only marginally increase users' overall transportation costs. A mileage fee for commercial trucks could also increase users' costs, particularly for larger trucks that log more miles. In 2000, the Federal Highway Administration (FHWA) estimated that heavy commercial trucks generally pay less in federal taxes than the road damage costs they impose. Adjusting mileage fee rates to account for vehicle road damage costs would increase rates for commercial truck users. However, FHWA's estimates may not reflect current conditions. Setting rates to cover these costs would require updated estimates of vehicles' responsibility for road damage.
State departments of transportation (DOT) recognize the need for an alternative funding mechanism to meet future revenue demands, and many would support federal actions to evaluate mileage fees. Few states reported that they are likely to introduce such fees in the next 10 years, but more than half would support federally-led field tests of mileage fees for commercial trucks and electric vehicles. Although few electric vehicles are on the roads today, their numbers are expected to increase, and they do not contribute to the Highway Trust Fund. Without a federal pilot program to evaluate (1) options to more accurately charge commercial trucks and electric vehicles for their road use and (2) the costs and benefits of such systems, Congress lacks critical information to assess whether mileage fees for these vehicles could be a viable and cost-effective tool to help address the nation's surface transportation funding challenges.
Why GAO Did This Study
Federal funding to build and maintain the nation's highways and bridges comes primarily from highway users through federal fuel taxes. These revenues have eroded due to improvements in vehicle fuel efficiency and other factors contributing to shortfalls in the Highway Trust Fund. Experts have proposed alternative means of raising revenues by charging drivers fees based on their miles traveled. Several states have tested systems that gather vehicle mileage and location data, which has raised privacy concerns. GAO examined (1) the benefits and challenges of mileage fee initiatives in the United States and other selected nations, (2) mileage fee rates necessary to replace and supplement current Highway Trust Fund revenues and the effect these fees would have on users' costs, and (3) state DOTs' views on future revenue demands and mileage fees. GAO reviewed five domestic pilot projects and programs in Germany, New Zealand, and the Netherlands; modeled mileage fees for passenger vehicles and commercial trucks; and surveyed 51 state DOTs.
Recommendations
Should Congress further explore mileage fees, it should consider establishing a pilot program to test the viability of such fees for commercial trucks and electric vehicles. FHWA should update its estimates of road damages imposed by all vehicle types compared with the tax revenues generated by each. The Department of Transportation took no position on GAOs recommendation but provided technical comments which GAO incorporated as appropriate.
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Should Congress wish to explore mileage fees as a mechanism for funding surface transportation, it should consider establishing a pilot program to evaluate the viability, costs, and benefits of mileage fee systems for commercial trucks--to ensure that fees paid by the owners of these vehicles cover the costs of their use of the nation's roads and bridges. | In December 2012, we reported that the current U.S. fuel tax system does not reflect the costs of road use and that although commercial trucks represent 4 percent of the U.S. vehicle fleet, they are responsible for 40 percent of the costs that the federal government spends on highway maintenance. In addition, commercial trucks contributed less than 33 percent of revenues into the Highway Trust Fund in fiscal year 2010 and would need to contribute 40 percent to cover the costs they impose on the nation's roadways. We also found that Germany and New Zealand have demonstrated that mileage-based user fees for commercial trucks can generate substantial revenues linked to road damage costs, but few field tests of mileage fees for commercial trucks have been conducted in the U.S. We reported that, in the absence of a federal pilot program exploring options to more accurately charge commercial trucks for their road use, Congress lacks critical information to assess whether mileage fees could be a viable and cost-effective tool to begin to address federal surface transportation funding challenges. We recommended that should Congress wish to explore mileage fees as a mechanism for funding surface transportation, it should consider establishing a pilot program to evaluate the viability, costs, and benefits of mileage fee systems for commercial trucks to ensure that fees paid by the owners of these vehicles cover the costs of their use of the nation's roads and bridges. On December 4, 2015, the President signed into law the Fixing America's Surface Transportation Act (FAST Act) which established a program for the Department of Transportation (DOT) to award grants to states to demonstrate user-based alternative revenue mechanisms that utilize a user fee structure to maintain the long-term solvency of the Highway Trust Fund (Pub. L. No. 114-94, Title VI, 129 Stat. 1582, 1583). The program provides $15 million in fiscal year (FY) 2016 and $20 million annually from FY 2017 through FY 2020 for grants to states to test the design, acceptance, and implementation of user-based alternative revenue mechanisms. On March 29, 2016, DOT issued a notice of funding opportunity soliciting grant applications in which it stated that DOT is most interested in funding larger scale pilots of user-based revenue mechanisms and that while prior demonstrations to date have focused on light vehicles, heavy vehicles are also of interest. States must also demonstrate how they would minimize administrative costs. GAO's work encouraged the Congress to establish a pilot program to evaluate the viability of mileage fee systems for different users of the transportation system, including commercial trucks. As a result, the federal government will have the information it needs to assess whether mileage fees for commercial trucks could be a viable and cost-effective tool to begin to address federal surface transportation funding challenges. | |
| Should Congress wish to explore mileage fees as a mechanism for funding surface transportation, it should consider establishing a pilot program to evaluate the viability, costs, and benefits of mileage fee systems for electric vehicles--to develop a mechanism through which the owners of these vehicles can contribute to the Highway Trust Fund for their use of the nation's roadways. | In December 2012, we reported that the current U.S. fuel tax system does not reflect the costs of road use and the anticipated future changes in the U.S. vehicle fleet. In particular, we found that although electric vehicles can help to reduce emissions and limit U.S. dependence on foreign oil, these vehicles do not use gasoline or diesel fuel or contribute to the Highway Trust Fund through any other federal fees or taxes. Although two states have tested "pay-at-the-pump" mileage-based user fee approaches, these systems are not compatible with alternative fuel or electric vehicles that do not use gas stations. Moreover, two-thirds of state DOTs (34 of 51) reported they would support federally-led field tests of mileage fees for electric vehicles. We reported that in the absence of a federal pilot program exploring options to more accurately charge electric vehicles for their road use, Congress lacks critical information to assess whether mileage fees could be a viable and cost-effective tool to begin to address federal surface transportation funding challenges. We recommended that should Congress wish to explore mileage fees as a mechanism for funding surface transportation, it should consider establishing a pilot program to evaluate the viability, costs, and benefits of mileage fee systems for electric vehicles to develop a mechanism through which the owners of these vehicles can contribute to the Highway Trust Fund for their use of the nation's roadways. On December 4, 2015, the President signed into law the Fixing America's Surface Transportation Act (FAST Act) which established a program for the Department of Transportation (DOT) to award grants to states to demonstrate user-based alternative revenue mechanisms that utilize a user fee structure to maintain the long-term solvency of the Highway Trust Fund (Pub. L. No. 114-94, Title VI, 129 Stat. 1582, 1583). The program provides $15 million in fiscal year (FY) 2016 and $20 million annually from FY 2017 through FY 2020 for grants to states to test the design, acceptance, and implementation of user-based alternative revenue mechanisms. On March 29, 2016, DOT issued a notice of funding opportunity soliciting grant applications from states in which it stated that DOT is most interested in funding larger scale pilots of user-based revenue mechanisms that will be viable, sustainable, and scalable to other jurisdictions, and that minimize administrative costs. GAO's work encouraged the Congress to establish a pilot program to evaluate the viability of mileage fee systems for different users of the transportation system, including electric vehicles. As a result, the federal government will have the information it needs to assess whether mileage fees for electric vehicles could be a viable and cost-effective tool to begin to address federal surface transportation funding challenges. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Transportation | To ensure that up-to-date data are available on the road damages imposed by all vehicles types compared with the revenues each contributes to the Highway Trust Fund, the Secretary of Transportation should direct the FHWA Administrator to revise and publish the agency's Highway Cost Allocation Study and update it periodically as warranted. |
DOT neither agreed nor disagreed with this recommendation. The Infrastructure Investment and Jobs Act of 2021 (P.L. 117-58) directed DOT, in coordination with State departments of transportation, to conduct a highway cost allocation study to determine the direct costs of highway use by various types of users. In February 2024, DOT officials told GAO that they plan to begin the study by the end of 2024, and complete it by 2028. GAO will continue to monitor both DOT and FHWA efforts to implement GAO's recommendation.
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