Date of Award
Master of Science (MS)
William F. Shughart II
The United States is currently facing a highway funding crisis. Both federal and state transportation budgets are under mounting duress as road maintenance and construction costs continue to outpace revenues each year. While a number of factors contribute to this problem, one of the primary causes is the inherently flawed nature of gas taxes, which provide the vast majority of revenues for the nation’s surface transportation system.
In response to growing budgetary shortfalls and the increasingly apparent shortcomings of gas taxes, state and federal policymakers have begun searching for an alternative approach to funding and financing roads. Recently, a concept known as a vehicle miles traveled (VMT) fee has gained popularity among transportation policy experts and policymakers as a potential replacement for the gas tax. Under a VMT fee system, drivers pay for their actual road use instead of, as now, for the motor fuel they consume. Although the concept is new and there exists very little real-world experience with a VMT fee, several pilot studies conducted within the last decade in the United States have demonstrated their potential as a viable, long-term solution to the nation’s road funding challenges.
In this paper, I examine the concept of VMT fees and evaluate specific VMT fee systems that have been proposed as alternatives to the gas tax. I begin with an overview of the current gas tax system in the United States and then discuss its advantages and disadvantages as well as why it is not a sustainable funding mechanism going forward. In the second section, I examine the general concept of a VMT fee, including its potential benefits, costs, and the challenges associated with transitioning from the gas tax to a VMT fee. Section three outlines seven essential criteria that specific VMT proposals should meet in order to be considered a viable alternative. In the fourth section, I evaluate four different VMT fee proposals that have been 2
tested in pilot studies in the United States based on the six criteria spelled out in Section 3. In section 5, I compare and contrast the four proposals and discuss their relative advantages and disadvantages. Section 6 concludes with recommendations for implementing a VMT fee in the United States.
Hansen, Heath, "A More Perfect User Fee: Examining the Viability of a Vehicle Miles Traveled Fee as an Alternative to the Gas Tax" (2015). All Graduate Plan B and other Reports. 672.
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