White House praises Oregon program of mileage tax for infrastructure funds

The White House is touting a pilot vehicle mileage tax program in Oregon as a reasonable means to fund infrastructure investment, suggesting a potential revenue stream for public works.

The administration’s Council of Economic Advisers (CEA) in an outlook report released Wednesday highlighted Oregon’s OReGO program, which charges its volunteers 1.7 cents for every mile they travel on the state’s public roads. The program then awards its participants with credits for the state’s fuel taxes.

“Oregon officials have a program that allows consumer choice, is based on an open technological platform, and is administratively feasible,” the report states.

{mosads}The administration argues that programs like the one in Oregon “increase efficiency and raise needed revenues to pay for infrastructure improvements and additions to capacity.”

The suggestion provides a window into the administration’s thinking for possible funding sources after President Trump last week unveiled his long-awaited infrastructure framework, which would focus on public-private partnerships and the use of state and local government funds. 

The plan proposed $200 billion of direct federal investment over the course of 10 years with the goal of generating an overall package of $1.5 trillion. While the idea is that the private sector and state and local governments will foot the rest of the bill, Democrats have denounced the $200 billion as too low a number to have a meaningful impact on a rebuilding initiative.

Meanwhile, lawmakers on both sides of the aisle have questioned revenue sources for the proposal.

Industry leaders have long pushed for an increase to the federal gas tax as a means to help the struggling Highway Trust Fund, which pays for road projects. The fund receives revenue from the 18.4-cent-per-gallon gas tax, which has not been raised in 25 years. As a result, the fund’s purchasing power has eroded over time and the fund is heading for another shortfall at the end of 2020.

Trump, during a bipartisan meeting with lawmakers at the White House last week, supported a 25-cent increase to both the gas and diesel taxes, according to Sen. Tom Carper (D-Del.), who is the top Democrat on the Environment and Public Works Committee. 

But the administration’s economic report alludes to concerns over an increase to these levies, a move that also remains deeply unpopular among Republican lawmakers. 

“[T]hese taxes are imperfect because they fail to encourage efficient use of existing roadways and to signal the value of any potential additional capacity,” the report says of the diesel and gas taxes.

The White House also noted that the use of electric vehicles is making fuel taxes less efficient and instead emphasized the potential for a vehicle mileage tax to create “sustainable” income sources.

“Although the design and implementation of such taxes has many challenges, VMT taxes can raise needed revenues in a sustainable way while providing the right signals regarding the value of consumption and supply, helping public officials to understand the value of current uses of roads and highways and to plan for the future,” the report says.

In addition to the pilot program in Oregon, the White House noted that California has tested a simulation program for a tax on vehicle miles traveled.