By CLAIRE RUSH
Associated Press

Oregon could become the second U.S. state to require electric vehicle owners to enroll in a pay-per-mile program as lawmakers began a special session Friday to fill a $300 million transportation budget hole that threatens basic services like snowplowing and road repairs.

However, the special session got off to a rocky start: The state Senate met as scheduled at 9 a.m., but the state House failed to reach the two-thirds quorum required to conduct business, leaving the session in limbo as of late Friday afternoon.

Legislators failed earlier this year to approve a transportation funding package. Hundreds of state workers’ jobs are at risk, and the proposal for a road usage charge for EV drivers was left on the table.

Hawaii in 2023 was the first state to create a mandatory road usage charge program to make up for projected decreases in fuel tax revenue due to the growing number of electric, hybrid and fuel-efficient cars. Many other states have studied the concept, and Oregon, Utah and Virginia have voluntary programs.

The concept has promise as a long-term funding solution, experts say. Others worry about privacy concerns and discouraging people from buying EVs, which can help reduce transportation emissions.

“This is a pretty major change,” said Liz Farmer, an analyst for The Pew Charitable Trusts’ state fiscal policy team, noting “the challenge in enacting something that’s dramatically different for most drivers.”

Oregon’s transportation woes

Oregon’s transportation department says the budget shortfall stems from inflation, projected declines in gas tax revenue and other spending limits. Over the summer, it sent layoff notices to nearly 500 workers and announced plans to close a dozen road maintenance stations.

Democratic Gov. Tina Kotek paused those moves and called the special session to find a solution. Republican lawmakers say the department mismanaging its money is a main issue.

Kotek’s proposal includes an EV road usage charge that is equivalent to 5 percent of the state’s gas tax. It also includes raising the gas tax by 6 cents to 46 cents per gallon, among other fee increases.

The usage charge would phase in starting in 2027 for certain EVs and expand to include hybrids in 2028. Should the gas tax increase be approved, EV drivers either would pay about 2.3 cents per mile, or choose an annual flat fee of $340. Drivers in the program wouldn’t have to pay supplemental registration fees.

Drivers would have several options for reporting mileage to private contractors, including a smartphone app or the vehicle’s telematics technology, said Scott Boardman, policy adviser for the transportation department who works on the state’s decade-old voluntary road usage charge program.

Republican lawmakers, who have opposed the tax and fee increases, unveiled a different proposal Friday that largely focuses on lifting funding restrictions to allow the transportation department to spend more money on maintenance operations, including by redirecting dollars earmarked for public transit and efforts to combat climate change toward such operations. It does not include a road usage charge.

As of May, there were over 84,000 EVs registered in Oregon, about 2 percent of the state’s total vehicles, he said.

Questions about privacy and fairness

In past surveys commissioned by Oregon’s transportation department, respondents cited privacy, GPS devices and data security as concerns about road usage charges.

Oregon’s voluntary program has sought to respond to such concerns by deleting mileage data 30 days after a payment is received, Boardman said. While plug-in GPS devices are an option in the program, transportation officials anticipate moving away from them because they’re more expensive and can be removed, he added.

Still, not everyone has embraced a road usage charge. Arizona voters will decide next year whether to ban state and local governments from implementing a tax or fee based on miles traveled after the measure was referred to the ballot by the Republican-majority Legislature.

Many people don’t realize that “both your vehicle and your cellphone capture immense amounts of data about your personal driving habits already,” said Brett Morgan, Oregon transportation policy director for the nonprofit Climate Solutions.

Morgan added that road usage charges exceeding what drivers of internal combustion engines would pay in gas taxes could dissuade people from buying electric and hybrid cars. Already, federal tax incentives for EVs are set to expire under the tax and spending cut bill recently passed by the GOP-controlled Congress.

“We are definitely supportive of a road usage charge that has EVs paying their fair share, but they should not be paying extra or a penalty,” Morgan said.

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From a technical standpoint, Oregon’s long-awaited road usage charge program is ready for prime time.

But the program, which is intended eventually to supplant the state’s gasoline tax as a primary source of funding for transportation projects, remains in a limbo of sorts. Dubbed OReGO, the state’s groundbreaking road fee scheme remains voluntary for drivers even though it has passed the pilot stage and is a fully-established program that now is branching out into an interstate initiative with Washington.

“The complexity doesn’t have to do so much with technology as it does with state policy,” Oregon Department of Transportation spokeswoman Michele Godfrey said. “It’s about meeting the taxation needs of each state; that’s part of the bigger challenge.”

Introduced as a pilot program in 2015, OReGO tracks participating drivers’ mileage using a GPS-enabled device that plugs into a vehicle diagnostic port. In turn, drivers get a rebate on the current state gasoline taxes they pay at the pump. Currently, more than 5,000 drivers are taking part in the nation’s first statewide road usage charge (RUC) system.

Now, a new branch of Oregon’s program has been extended into Washington. The two states, along with Idaho and the city of Surrey, British Columbia, are exploring an interstate RUC system that will track drivers’ mileage from state to state and levy the appropriate fees. It is envisioned as a seamless system that will allow each state to receive appropriate tax revenue from both in-state and out-of-state drivers.

“The bottom line for us on a multistate level is that, absent a federal law or mandate, states are going to have to figure this out if they fully start shifting to this,” said Reema Griffith, executive director of the Washington State Transportation Commission. “The interoperability aspect between states is going to be the hardest to lift. The technology is there, but the public acceptance is another story.”

San Jose, California-based Azuga is the private vendor in charge of the electronics behind both Oregon’s and Washington’s RUC programs.

Azuga Vice President of Innovation Nate Bryer said it’s now a matter of integrating the different states into a coherent digital community, along with their varied requirements. This, he added, will take a lot of work, patience and skilled coding.

“There’s a lot of oversight and analysis of data,” he said. “And building up the monitoring for that data is not a trivial task. In terms of the device and collecting miles, that was already done; we were already using something that was built for the insurance industry and leveraging it for this industry.”

The key to allowing an effective RUC system to operate across state lines is found in a virtual computer hub, or web of servers, that allows secure, encrypted communication and coordination between participating states. Part of the ongoing RUC pilot program between Oregon, Washington and Idaho, at least, involves a simulation of this hub that will involve the movement of real money as volunteer drivers move across state lines.

“We really want to see, once they’ve driven real miles,” Griffith said, “how it will go up to this hub system that will sort those miles and apply what’s new and try to simulate as close as we can. And that’s when we’re really going to learn the things we haven’t thought of and how we’re going to solve them.”

While current OReGO and Washington pilot program drivers may choose to use a non-GPS enabled plug-in mileage device, tracking interstate drivers may well make GPS mandatory to ensure accurate billing, said Godfrey, who likened it to a mobile phone plan.

“I don’t know we’d be able to do it without the GPS,” she said. “We need to be able to determine when they are in Oregon and Washington so the appropriate state can receive the revenue and they can be charged the appropriate amount. It would be similar to your cellphone; each state has different taxes for your bill and you cross state lines without even thinking about it.”

Griffith agrees.

“For seamless travel to occur it will require some kind of GPS mechanism to provide the data and make sure you only pay for what you use,” she said.

In Oregon, account managers Azuga and Emovis are responsible for managing the mileage and user data generated by the former’s proprietary GPS and non-GPS mileage reporting devices. In Washington, Azuga has sole responsibility for this.

Each state will charge a different fee in the same way each now levies a different gasoline tax. Collection of that fee promises to be no less complex, particularly when existing gas taxes are likely to remain in place where they are funding debt repayment.

“We are collecting the money,” Bryer said. “And how do we make sure it reconciles with the miles we’re collecting? How are we transparent? What if we’re audited? It sounds easy at first, but we start to dig under the surface and you realize you can’t leave things to ‘Well, we’ll figure it out.’ You need code for every rule, and you need rules for situations you didn’t even account for at first.”

On the ground, RUC programs don’t need extensive networks of monitors, cameras, sensors or anything of that nature. Each plug-in device simply connects with a vehicle’s diagnostic port and tracks mileage and other vehicle data, which is then sent securely to Azuga’s servers. In addition to mileage and billing, this allows participating drivers to be sent alerts for needed maintenance and such via a mobile app.

The plug-in device also can be GPS-enabled to allow for accurate tracking of interstate mileage, as well as other services like locating a parked car, trip logging and carbon usage.

Despite each state’s requirements, Bryer said each RUC program ultimately seeks to achieve the same thing: collecting money cost-effectively rather than uniquely.

“They want to be autonomous, and they want to have sovereignty over their own budgets and taxes and things like that,” he said. “But generally speaking, there are only so many ways you can skin a cat when you’re collecting miles and paying for them. It may not be trivial, but there are only so many ways you can do it.”

Not a new concept

The Oregon Legislature in 2001 created a Road User Fee Task Force to explore funding alternatives for road maintenance and improvements. This came in response to ever-increasing fuel efficiency in modern vehicles, as well as federal standards demanding continuing improvements.

Oregon launched its first road usage charge (RUC) pilot program six years later using a pay-at-the-pump model. A second pilot program took place in 2012 with participants from Oregon, Washington and Nevada. The third and current program, OReGO, kicked off in July 2015 with 5,000 volunteer drivers taking part in the nation’s first statewide RUC program.

Washington followed suit last year. Oregon and Washington now are engaged in a joint pilot program along with Idaho, and the city of Surrey, British Columbia, to explore interstate possibilities.

California, meanwhile, ran its own pilot program from June 2016 through March 2017.

In Oregon, participating OReGO drivers are charged 1.7 cents for each mile they drive, and they receive a rebate on gas taxes paid at the pump. Oregon’s gas tax currently stands at $0.34 cents per gallon; Washington’s is at $0.49 cents a gallon and drivers are charged 2.4 cents a gallon to compensate.

In Washington, the charge comes out to just over $288 per year for a vehicle driven 12,000 miles and achieving 2.5 miles per gallon fuel efficiency. By comparison, that same driver would pay $289 in gasoline tax. In Oregon, a similar fee-to-tax ratio for drivers has been experienced.

In both states, users will receive a credit on their resulting bill for the gasoline tax they pay at the pump. – Josh Kulla

What happens to the data?

What has proven tricky is the notion of privacy when attached to a person’s driving habits. Some pilot program participants have opted out of using a GPS-enabled version of Azuga’s plug-in device. But in Oregon, at least, roughly 90 percent have opted in, Bryer said. In California, however, CalTrans figures show that number fell to 62 percent during that state’s pilot study.

The states, Bryer said, don’t really want or need location data from drivers. In addition, data from devices cannot be transmitted to external parties and is locked into a single, secure channel of communication.

“All they need is the mileage and the fact that you’ve paid for it,” Bryer said. “They don’t really care where you’re driving.”

On the other hand, states are not regulating what can be done with that data once it is used for calculative purposes. For instance, Bryer said, insurance companies are already interested in using driver-generated data in to calculate premiums. In fact, some states’ pilot programs already allow drivers to share data in exchange for insurance discounts.

“Companies don’t have it up and running yet because there are too few vehicles in the RUC program now,” he said. “But once it becomes a mandate, it will become a hot topic overnight.” – Josh Kulla

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