BALTIMORE — Maryland, like many other states, is working to establish a new transportation funding source as revenues from the fuel tax continue to decline.
The fuel tax is the largest source of revenue to fund state transportation projects, but over time, it's been impacted by improved fuel economy, increased ownership in electric and hybrid vehicles, and changes in driver behavior. To get in front of this budget shortfall, Maryland turned to the Eastern Transportation Coalition to learn more about an alternative. It’s called a mileage-based user fee (MBUF).
“So, we did a four-month demonstration pilot in Maryland, and Maryland is one of eight states right now along the East Coast that's trying to explore what would happen if we replace the fuel tax with a distance based approach,” said Trish Hendren, executive director of the Eastern Transportation Coalition (TETC).
Pilot progam findings
Over 170 drivers participated in Maryland's pilot. And their mileage was measured in one of four ways.
“People could either take a picture of their odometer, they could have an app on their phone, they could plug a device into their car, and then people have super fancy cars, there's some in-vehicle telematics they could use,” Hendren explained.
What they found is that, in general, drivers would have paid the same amount with an MBUF as they do in the fuel tax.
“Twenty-three dollars per month is, in the pilot, what people on average paid. And that is what people on average pay in Maryland every month in fuel tax,” said Hendren.
Participants received a printout showing how far they traveled, the taxes they currently pay, and the net difference between the fuel tax and a mileage-based user fee per month. In one example provided by the TETC, the driver of a 2004 Saab 9-3, who traveled 263 miles in a month, would've saved $0.66 with an MBUF. The full results from the pilot program in Maryland and seven other states, will not be available until later this year.
And while drivers' mileage is logged, Hendren said their whereabouts aren't tracked.
“Hawaii just passed a program that they're going to use an odometer read in order to link that payment for using the roads. So, there is no GPS on your odometer. So that is a way that we can make sure that we're hearing people's concerns [about privacy],” said Hendren.
Aside from privacy, another concern is that Marylanders in rural areas would pay more under this model. The Coalition has found that many rural households have less fuel-efficient vehicles and therefore pay more in fuel taxes. MDOT and the Coalition also researched the potential impacts for rural communities during the pilot program. According to their findings, rural communities could experience a 9 percent payment decrease by transitioning from gas tax to MBUF.
Hawaii, Virginia, Oregon, and Utah now offer voluntary MBUF programs where a distance-based approach takes the place of an annual flat fee.
“For example, in Virginia, they have a highway use fee. You can choose to pay it as a flat fee one time, or you can pay based on the miles you drive, and that could be a monthly payment,” Hendren said.
She added that 30,000 drivers in Virginia registered for this program and it could be a model for Maryland.
“The issue is here now, and it will just continue to grow. So that's why we want to do the work to figure out a solution that is cost effective, that really addresses privacy and is fair, and so we can implement it slowly over time and make sure we don't go off that cliff,” said Hendren.
A spokesperson with the Maryland Department of Transportation said MDOT supports the Eastern Transportation Coalition’s work to better understand the long-term sustainability of the motor fuel tax and the potential options to replace it in the future.
“In November 2024, the Maryland Department of Transportation issued its Climate Implementation Plan, charting its course to help make Maryland a leader in clean energy, creating jobs, saving consumers money, and building an economy to win the future. The transportation sector is the largest contributor to greenhouse gas emissions but provides one of our largest opportunities to lead in one of the world's fastest growing industries. At the same time, Maryland’s pathways to reducing emissions requires lowering the consumption of fossil fuels and reducing trips by single occupancy vehicles.
Transportation funding across the country is built on a broken business model that relies on continued increases in the usage of gas-powered vehicles as the preferred transportation option. Changing this business model won’t happen overnight but the work that the Eastern Transportation Coalition is doing ensures that we are thinking deliberatively and inclusively about the future of transportation funding.’’
In the interim, Maryland recently raised car registration fees and implemented an annual surcharge for hybrid and electric vehicles that ranges from $100 to $125.
Bill would bar mileage-based user fee
There's also opposition to an MBUF model. A group of Republican lawmakers are supporting a bill in the Maryland General Assembly that would prohibit the state or a local jurisdiction from charging a fee based on vehicle mileage.
WMAR-2 News Mallory Sofastaii reached out to the sponsors of SB 557/HB 1008 to learn more about their opposition to an MBUF. Senator Justin Ready (R-District 5), who represents Frederick and Carroll Counties, said there are two main reasons he's in favor of prohibiting an MBUF model. In an email, he wrote:
"First, some states have looked at it as an alternative to gas taxes or as a way to get electric vehicles to pay their fair share. Unfortunately, in Maryland, our General Assembly would try to force this on top of gas taxes - which would crush drivers. Already, nearly all the costs associated with our Transportation Trust Fund fall on drivers even though over 50% of the TTF goes to mass transit. Transit riders contribute only about 7-8% of the total cost of the system. People cannot afford additional costs placed on them by Maryland's state government. Second, I believe there are real concerns about personal privacy if the government intends to track miles driven on individual’s privately owned vehicles."
He added that making it a voluntary program could have appeal for some, but "in this state what we've seen with other types of taxes, charges and programs is that 'voluntary' quickly becomes 'mandatory'." Even with an odometer reading, which lacks GPS, Senator Ready said the state knowing how much someone is driving still violates privacy. "It should not be any of the state government's business," he wrote.
Instead of an MBUF, he believes mass transit needs to pay for more itself. "Currently our gas tax is indexed to the CPI (an inflationary consumer tool). Unfortunately the General Assembly got rid of indexing transit fares to inflation in 2023. Over the last two decades, mass transit systems have gotten worse and worse in "farebox recovery", meaning how much of the cost of the transit systems are recovered by fares. We are now down to under 10% recovery. Last year, I sponsored SB 841, which, among other things, would have required the MTA to recover at least 35% of their total operating costs through farebox revenues by 2029. There is similar legislation in this year," wrote Senator Ready.
TETC sent this statement in response to SB 557:
“In terms of SB 557, we are aware that there is discussion and consideration among MD legislators on the topic of distance-based fees. We hope that lawmakers are open to learning more about the options for the future of transportation funding, and TETC would welcome any opportunity to share what we have learned through our work. We have MD-specific data as well as a breadth of work from TETC states and around the US to share ranging from revenue projections, to public opinion surveys, to urban-rural impact analyses of a shift to a distance-based fee.”
MDOT has not yet taken a position on this bill. A spokesperson said, "MDOT continues to partner with the Eastern Transportation Coalition on the work that the Coalition is doing to learn more about the feasibility of MBUF as a sustainable transportation funding option for the future but has no next steps planned at this time."
TETC created a calculator where drivers can put in details about their car, how many miles they drive, and receive an estimate of how much they’d pay with a mileage-based user fee versus the fuel tax. Click here to try it out.