ANNAPOLIS, Md. — As revenue from the fuel tax declines, legislators are grappling with how to fund transportation projects. One proposed solution is to charge drivers by the mile.
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Recently, Maryland completed a four-month pilot program to test the feasibility of this approach. Now, a bill is under consideration in the General Assembly that would establish a highway use fee while offering drivers the option to participate in a voluntary Mileage-Based User Fee (MBUF) program.
“This legislation would replace the newly passed EV registration fee, that surcharge, and would also include those vehicles that are considered high efficient vehicles, which is above 25 [miles per gallon],” explained Trish Hendren, the executive director of the Eastern Transportation Coalition.
To address funding shortages, lawmakers passed an annual $125 surcharge for electric vehicles last year. The proposed bill, HB1457, aims to repeal this surcharge and replace it with a highway use fee.
Virginia has already adopted a similar model. In addition to annual registration fees, drivers of vehicles with a fuel economy exceeding 25 mpg pay a highway use fee based on their vehicle’s efficiency. This fee ranges from $6 to $128 annually.
Using data from Maryland's passenger fleet, Hendren’s team estimates that 42 percent of passenger vehicles achieve 25 mpg or higher.
“If you have an older, less fuel-efficient vehicle, it may just be a couple dollars. But if you have a newer, very fuel-efficient car, it could be at that higher end of that scale,” she noted.
As currently proposed, HB1457 assumes that Maryland drivers average 11,245 miles per year so the highway use fee would range from $5.83 to $182, according to Hendren.
But drivers can opt out of paying this fee if they participate in the mileage-based user fee program.
READ MORE: Ditching the gas tax and charging per mile; Maryland testing new way to fund transportation needs
“And that choice is, do you want to pay an annual flat fee, or do you want to just pay for the miles you drive? And a lot of people maybe don't drive as much as the average Marylander, and so they're thinking, maybe I'll do that. If I drive less, I'll pay less,” said Hendren.
Senator Justin Ready remains firm in his stance on mileage-based fees or taxes.
“If it was ever enacted, it would not be in lieu of a gas tax but would be on top of. That's because that's what Maryland tends to do, is add taxes on top of other taxes,” said Senator Ready.
If HB1457 is passed, the highway use fee would be in addition to the fuel tax, but only for drivers with a fuel economy of 25 miles per gallon or more.
Ready also raised concerns about privacy.
During the pilot program, participants had four options to track their mileage, including odometer readings without GPS capabilities.
“I don't want the government knowing how far I'm driving. I don't think that's any of the government's business,” Ready argued.
He has sponsored SB557, which would prevent the state or any local jurisdiction from imposing a vehicle-miles traveled tax.
WMAR-2 News Mallory Sofastaii asked Ready about alternatives.
“The Transportation Trust Fund has a problem with funding, because over half of it goes to subsidize mass transit systems that nobody uses and that don't recover their fare,” said Ready.
“So you want to see transit riders pay more?” Sofastaii asked.
“They used to have an automatic escalator on transit fares, just like we have on our gas tax, but the General Assembly in 2023 repealed the automatic escalator on fares, but not on the gas tax, so I would like to see fares keep pace, not 100% because you do have some subsidization that's necessary for mass transit, but for us to be recovering less than 10 percent of the cost with fares is ridiculous, and that needs to change,” Ready replied.
Hendren knows the concept of a mileage-based user fee is unfamiliar, and no one wants to pay more, but it comes down to use and fairness, and she believes this may be the way forward.
“I think the end goal is acknowledging that the fuel tax after 100 years is not going to be our sustainable, reliable transportation funding source, so this legislation is a step towards a new way of funding transportation,” said Hendren.
A hearing on SB557 is scheduled for Thursday at 1 p.m. in the Senate Budget and Taxation Committee, while the hearing for HB1457 took place on Tuesday.
Currently, four states offer a voluntary mileage-based user fee program, with approximately 30,000 drivers enrolled in Virginia.
To estimate how much you would pay under a mileage-based user fee, click here.
You can also find your vehicle’s fuel economy here. Once you know your MPG, you can check how much you would owe in Virginia under the highway use fee. For fiscal year 2025, Virginia’s highway use fee is projected to generate $91 million. Revenue estimates for HB1457 range between $47 million and $67 million annually.