California Testing 'Pay-Per-Mile-Fee' For Drivers

Thomas Murray | July 11, 2016

California may soon have another way to squeeze money out of their drivers, as the Golden State is looking at replacing its gas tax with a pay-by-the-mile-fee.

The state already has one of the highest gas taxes in the nation, and according to Forbes is already one of the priciest places to own a car.

Right now, California gets most of its road upkeep funding from its high gasoline tax, which buyers pay at the pump. But that money has not been enough to keep up with the state's crumbling infrastructure. Some blame the funding deficit on the rise in popularity of more fuel efficient cars, while others point to the fact that the tax has not been adjusted for inflation since 1994.

California currently has the most registered cars of any state in the nation. If electric cars become even more popular, the deficit could become even larger.

The pay-per-mile fee assuems those who drive the most use more state infrastructure, and therefore should be the ones who pay for its repair. Proonents say gasoline consumption is no longer the best method for determining who uses the roads the most due to the rise in hybrids and other fuel-efficient cars.

Over the next nine months, up to 5,000 volunteers will be testing the California Road Charge to determine the best method for tracking data and to see what concerns arise. During that time, the volunteers will be tracking their miles and then receiving “simulated monthly statements” at the end of every month, which will tell them how much they would pay if the fee went into effect. No volunteers will pay any road fee during the test period. The testing price is set at 1.8 cents per mile.  

There are some potential problems that may stop the road fee from actually getting out of the test stage, including how to actually track the miles that are driven in the car. In the testing phase, volunteers can just send in photos of their odometer and receive their fake bill in the mail, but that is a very easy system to cheat.

Another way to track the mileage is to attach a government GPS to the car, which raises many questions into the possibility of California tracking its residents' movements.

There are also options that allow drivers to prepay for the number of miles they expect to drive over a certain about of time, or they can buy an unlimited week, month, or year-long pass. This raises practical questions like how mileage driven in California would be differentiated from the miles driven in other states.  

Further, the only other state program that is similar to the California road fee has not fared so well since its introduction. Oregon's OReGO is a voluntary program in which drivers pay a 1.5 cent per mile road fee instead of paying the state’s fuel tax. It was launched back in 2015; reportedly, only about 1,000 people have signed up for the program.   

It will still be a long time until this system can be put into effect. But if you live in California, keep your eyes out for a possible drop in gas prices, and for every road to become a toll road.