Funding roads like public utilities — through user fees

The fuel tax has long been the preferred method of funding road building and repair in the United States, as this brief history outlines. That has been the case in Michigan for nearly a century, with fees for registering vehicles also contributing to the funding pool.

A recent study on mileage-based user fees (MBUF) observes that the gas tax was a benefits tax based on the users-pay/users-benefit principle, meaning the tax is paid in proportion to the benefits received. Someone who drives a lot receives more benefit from the roads than someone who drives less frequently. People who drive more also put more stress on the pavement. The study, completed by the Reason Foundation and the Michigan-based Mackinac Center, provides an outline for how to rethink road funding, in light of diminishing returns from fuel taxes as fuel economy improves and major automakers shift to building more electric vehicles.

On this week’s Talking Michigan Transportation podcast, Baruch Feigenbaum, senior managing director of transportation policy at the Reason Foundation, talks about the study. Later, Aarne Frobom, a senior policy analyst at the Michigan Department of Transportation, offers his perspective.

Among discussion points: 

·      Is it time to rethink transportation funding and treat roads as public utilities with a similar rate-making process?

·      Would an MBUF be subject to periodic increases when justified by increased operating and capital costs, via a public process? 

·      What’s in it for the driver? 

·      How many old systems of assessing fees and taxes would this alleviate?

·      Could this finally separate road-user fees from fuel prices?

The discussion comes as Section 615 of House Bill 5791 asks MDOT to conduct a study of the feasibility of vehicle miles traveled (VMT) as a basis for transportation funding in replacement of motor fuel taxes.