Kentucky hears from other states on transportation funding model based on miles driven as long-term solutions are considered

In legislative meetings on Monday, lawmakers and other state officials heard about the struggles of Kentucky’s Road Fund and potential solutions used in other states to address the rise of fuel-efficient vehicles as well as an update on the state’s Road Fund.

Officials from Oregon and Utah spoke with the Mileage-Based Transportation Funding Task Force about the decisions made in their state to move to the road usage charge (RUC) model to ensure residents are paying a rate based on how many miles they drive rather than just paying at the pump with a gas tax.

The Kentucky task force heard this testimony as options are being considered to ensure increased infrastructure investment as revenues remain stagnant from the current road funding formula and important projects are not being funded. Many have said simply increasing the gas tax in Kentucky will not do enough to serve as a long-term solution to the funding issues and are looking at other models to consider for reform.

Both states have a program where residents can opt-in to have a device placed on their car to track their mileage. If someone is enrolled in the program, they would pay the RUC rate rather than a gas tax and it is a monthly charge.

Oregon was the first to implement the system and continues to grow it and make changes based on lessons learned. Utah followed Oregon’s model in many ways in order to build their program.

The RUC charge in each state varies very slightly with Oregon charging 1.07 cents per mile and Utah charging 1.05 cents per mile. The Oregon program stops tracking the mileage once a resident leaves the state (according to the GPS in their device) whereas Utah does not plan to stop charging for out of state miles but will offer users the option to pay an annual charge instead.

Both programs have relatively low participation rates.

Oregon has seen a total of 1,500 participants but currently has only 600 active users out of the 4 million registered vehicles in the state. The state uses an outside firm to help with the program and pays 40% of the revenue collected to that group. In the future, they hope the program will have a million users once the program is “to scale” and at that point, the percentage will go down.

Utah will be launching their program in January and expect to see 500-1,000 users in the first year and hope the program will continue to grow in the coming years. Their program is primarily only focused on fuel-efficient and electric vehicles.

In the Interim Joint Committee Meeting on Transportation, Robin Brewer, executive director of the Kentucky Transportation Cabinet’s Office of Budget and Fiscal Management, explained to lawmakers that the state’s Road Fund ended up with a small amount of additional revenue than was expected but noted the decline in overall funds in recent years.

The loss of federal toll credits coming into Kentucky and the need to address that issue in 2020 was stressed as it will require more revenue to be generated at the state level to ensure transportation projects are completed.

Brewer explained that because federal transportation projects require a 20 percent state funding match to the 80 percent of federal funding, the money from toll credits has often been allocated to that 20 percent match. Without these funds, Brewer said, the state will either have to come up with the money elsewhere and potentially take away from other areas or not do the project at all as the federal government will pull their funding if the match is not met.

Discussions will continue on these issues over the interim as lawmakers are expected to present a package to address infrastructure investment during the 2020 legislative session.

Categories: Kentucky Competitiveness

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