Transportation: Road Usage Charging

Transportation: Road Usage Charging

ISSUE

For nearly two decades, gas tax revenues have declined significantly as a result of less driving, increasing fuel efficiency and decreasing purchasing power for construction-related materials.  Many states, including Utah, cannot keep pace with the costs of operating, maintaining and improving their vital transportation system.  Many western states are exploring additional funding sources, including Road Usage Charging (RUC), a pay-by-mile system that would replace the gas tax.   The gas tax may not be able to meet our current and long-term transportation funding needs because, arguably, it is ineffective and outdated, continuing to generate less revenue as cars become increasingly fuel-efficient. 

BACKGROUND

Utah has a funding gap in transportation.  With the emergence of electric and fuel-efficient vehicles, plus revenue erosion due to inflation, the gas tax no longer produces enough revenue to support the demand for transportation maintenance and improvement projects. 

Drivers pay two main forms of gas tax that are dedicated to maintaining and improving public roadways.  The federal tax – a flat tax that does not increase with inflation – was set at 18.4 cents per gallon in 1993 and remains at that rate today.  Utah’s state gas tax is also a flat tax set at 29.5 cents per gallon.

Studies show most people don’t understand how they contribute to funding roads, bridges and tunnels.  The gas tax is included in the price of gas and generally not shown on the receipt, so it is a somewhat hidden tax. 

Many believe rural drivers would pay more under a RUC system versus a traditional gas tax because of the miles driven.  In a recent study titled “Financial Impacts of Road Usage Charge on Urban and Rural Households,” researchers concluded rural residents tend to drive older and less fuel-efficient vehicles more often than their urban counterparts resulting in costs savings to rural drivers.  The research concluded that Utah rural drivers would save, on average, 5.5% using RUC while Utah urban drivers would spend 0.6% more, on average. 

The 2018 Utah Legislature passed Senate bill 136 which creates a stakeholder task force charged with developing a framework for an alternative fuel vehicle RUC system that potentially supports sustainable transportation funding into Utah’s future.   Utah Farm Bureau is a member of the task force representing rural Utah and production agriculture interests. 

UTAH FARM BUREAU POLICY

Utah Farm Bureau policy supports:

  • funding rural transportation needs.
  • local option by individual counties to take over maintenance of selected state roads.
  • motor fuel taxes expressly for construction and maintenance of Utah’s highways and a system that will minimize interest costs. 

For more information, contact: Sterling Brown, UFBF Vice President – Public Policy at sterling.brown@fbfs.com