BALTIMORE — Faced with a $3.3 billion transportation budget shortfall, the Maryland Department of Transportation had to make tough funding choices. State leaders scrambled to balance the deficit by pausing certain improvement projects and raising registration fees. They’re also considering a new way of collecting revenue from drivers.
Earlier this year, MDOT, in partnership with The Eastern Transportation Coalition, launched a pilot program testing the mileage-based user fee (MBUF).
“So, it's pretty simple in concept. If you use the roads, you pay for the roads. You use the roads more, you pay for the roads more, so it's really creating that link between use and payment and getting away from the fuel tax as being the way we fund transportation,” said Trish Hendren, executive director for The Eastern Transportation Coalition (TETC).
As cars become more fuel efficient and drivers switch to electric vehicles, less gallons of fuel are being sold. In addition, the fuel tax rate in Maryland declined from 47 cents per gallon to 46.1 cents per gallon, due to an inflation adjustment. MDOT expects this to further impact the amount of fuel tax revenue generated adding that the fuel tax revenue is the “largest source of funding for transportation in Maryland, comprising nearly one-third of annual revenues to the Transportation Trust Fund. The Transportation Trust Fund funds the operation and maintenance of transit, road and bridge, port, and airport facilities across Maryland,” a MDOT spokesperson wrote in an email to WMAR-2 News Mallory Sofastaii.
“This is not a Maryland issue, this is a transportation issue that every state needs to really think about how we're going to close that gap,” said Hendren.
Hendren’s coalition of 19 states plus D.C. was awarded federal grant money to explore the feasibility of the mileage-based user fee. In Maryland, around 150 drivers participated in the pilot program that ended on May 31. Drivers had their mileage tracked through odometer readings, a plug-in device, vehicle reporting data, or a phone app.
Hendren said the cost to drivers is comparable to the state’s fuel tax, which she said averages around $27 per month.
One concern they’ve received is how the fee might impact rural commuters.
“Right now, rural communities are actually paying more than some of their urban counterparts in fuel tax. And you're thinking, why is that? It’s because a lot of those vehicles in rural communities, on average, are larger and a bit older. So right now, it’s not necessarily a fair situation. So, if we moved to a distance-based approach, what the data is showing us is that rural communities may pay less,” Hendren said.
The results of the pilot program are expected to be released in August.
Currently, four states have enacted legislation authorizing the collection of per-mile fees: Oregon, Utah, Virginia, and Hawaii. These are voluntary programs for drivers with fuel-efficient and/or alternative fuel vehicles. In exchange for paying by the mile, they’re exempt from paying an annual registration surcharge on their vehicles.
Meanwhile, Maryland has increased its registration fees by 64 percent from $135 to $221 for two years and a 73 percent increase for heavier vehicles upping the two-year rate from $187 to $323.
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EV drivers will eventually have to pay an annual surcharge between $100 to $125, most likely starting July 1, 2025.
“The challenge with a flat fee is really about fairness, and we need to have that discussion in the transportation field with the general public, with elected officials. So, somebody only drives, I don’t know, a thousand miles a year, versus someone who's driving 12,000 miles a year, but they're paying the same annual flat fee. Is that how we want to fund transportation?” asked Hendren.
She understands it's a challenging road ahead trying to navigate from a 100-year-old system, but she said her organization is focused on finding a fair and sustainable solution.
To see how much you’d pay under the mileage-based user fee model, TETC created an online calculator. Drivers input details about their car and how far they drive per month. It'll then show the estimated difference between the fuel tax and MBUF.
And for answers to frequently asked questions on the MBUF, click here.
WMAR-2 News received many questions from viewers about how this program would work. Here are some of the responses from the Eastern Transportation Coalition.
How would Maryland collect the MBUF from out-of-state drivers that work in Maryland or visit often (i.e. Pennsylvania/Virginia/D.C. residents)?
This issue is certainly a challenge for any MBUF program, and to date no existing state program collects from out-of-state drivers. A focus of the Coalition’s work has been on out of state travel because people and goods in our region so often travel across state lines. The easiest way to do this this is to use a mileage reporting option that collects data on trip location. However, we understand the need to balance giving individuals non-GPS choices against ensuring that non-residents are contributing to the roads they are using outside of their home state. More research on this area is needed.
Would the MBUF be an annual fee? Monthly statement?
Looking at the three volunteer programs that exist around the country (VA, UT, OR), they offer options to pay annually or monthly. Many people are opting into these distance based programs as to have the option to pay over time, in lieu of VA's highway use fee that requires a one time payment at registration. Offering options to the public is always a good idea.
Does the MBUF factor in the age of someone's vehicle and fuel efficiency or is it strictly based on mileage?
MBUF rate setting will likely be determined by each state with the objective of replacing the funds lost due to improved fuel efficiency and EV adoption, but there are many approaches to this.
If there's a self-reporting option for the MBUF, how will the state verify the driver is accurately reporting their mileage?
Existing programs are exploring the use of odometer capture (e.g. a photo taken and submitted at a point in time) to verify the information submitted, but still need to figure out enforcement and compliance challenges.