EVs and more fuel-efficient vehicles are hurting Michigan’s ability to fund road and infrastructure work, according to Patricia Hendren, executive director of The Eastern Transportation Coalition.
Hendren spoke in March at the County Road Association of Michigan (CRA) 2024 Highway Conference and says gas taxes and license plate fees are the top two contributors to road funding. Increasingly they are insufficient to keep up with and restore Michigan’s crumbling road and bridge network and need to be replaced.
More fuel-efficient vehicles are the main reason for decreased fuel tax revenue, she says. The growing popularity of electric vehicles also contributes to the ineffectiveness of the traditional gas tax. A recent CRA study found that Michigan must allocate an additional $2.4 billion in funding annually to restore the county road and bridge network to modest goals.
The coalition is a partnership of transportation agencies spanning 18 states and the District of Columbia. Hendren says over the last 25 years, vehicles have become much more fuel-efficient, reducing the gas purchased per mile driven and accordingly less gas tax collected. Michigan revenue from gas tax collected reached a high point in 2001 and has been in decline since.
One solution being contemplated by states across the US is implementing a mileage-based user fee (MBUF), which restores the link between miles driven and drivers’ contributions to the road network, says Hendren.
In a typical MBUF pilot, voluntary participants choose how they want to report their mileage and may receive reports showing how much they would have paid in gas tax versus MBUF for their travel that month or quarter.
Options for MBUF mileage tracking include self-reporting, in-vehicle telematics, phone apps, or vehicle diagnostic devices to download mileage only, with or without GPS. Some states with MBUF programs offer drivers the option of a flat fee based on average annual miles driven in lieu of reporting mileage.
In 1994, US motorists were paying about 0.94¢/mile driven in federal gas tax; by 2019 federal gas tax had dropped to 0.81¢/mile driven, Hendren says. The purchasing power of the 1993 federal gas tax dollar has dropped 45 percent rather than increasing with inflation.
“There is no doubt Michigan’s gas tax has declined due to fuel efficiency and lost purchasing power because of inflation,” says Denise Donohue, CEO of the CRA. “Add to that the headwinds of electric and hybrid electric vehicles not paying their fair share for using Michigan’s transportation infrastructure. This is why road agencies in Michigan cannot keep up with needed repairs.”
Hendren says passenger vehicle pilot participants consistently express reduced concerns about privacy after experiencing MBUF firsthand. People in rural areas are often less receptive to MBUF because they travel more miles, but Hendren said drivers in rural areas on average would pay less than they do now because they tend to drive older and larger (less fuel efficient) vehicles.
Three states already have implemented a voluntary MBUF program — Oregon, Utah, and Virginia — and Hawaii has adopted a mandatory MBUF. Hendren says any successful MBUF implementation strategy must address public education, privacy concerns, administrative costs, and the effect on residents living in different geographies.
