This week’s comment came in six days ago, in response to our short post about Governor Kotek ditching regional tolling plans. Jonathan’s post didn’t read any tea leaves or probe the deeper reasoning behind the Governor’s decision—abandoning tolling just seemed like another change flying in on the whirlwind.
(Offhand, to me, it seemed one of a piece with her urban growth boundary loosening, part of her push to incentivize a market-based approach to getting more housing built—let ‘em live further away, and don’t charge ‘em for it!)
WRF, who self-describes as a rare “transportation professional … against tolling in our region,” offered up some some hope in the form of alternatives to tolling, and also a critique of it.
Here are WRF’s ideas:
I honestly feel like I’ve been in the minority the last few years as a transportation professional being against tolling in our region.
While I’m all in favor of finding ways to reduce trips by SOVs and improving modal options through better infrastructure for transit, biking and walking, I’ve felt that tolling as proposed just incentivized finding alternative routes using the region’s arterials and collectors. For those that need to drive, I would much rather find ways to keep them on our interstate than to have them in the mix with vulnerable users on bikes and on foot.
If the goal is to make driving more expensive, there are better and more equitable ways.
A road-usage charge would be my first choice to replace an aging gas tax. Let’s go back to charging people for how much they drive on whatever road they choose to go on. Let’s tie it to inflation so we don’t end up where we are currently with funding not keeping pace with the costs of construction. Place a road tax on tires (and tie it to inflation as well). The larger the tire, the more the tax. Also, tax studded tires heavily. This will hit vehicles that buy oversized tires and will make EVs pay just the right amount more, since they tend to go through tires more quickly than lighter vehicles.
The revenue from these fees should be split with cities and counties, similar to the gas tax.
I also feel that registration and titling fees need to be reassessed when the 2025 legislature looks into transportation funding. Right now, EVs are charged almost twice as much as a pickup truck for titling and over 2.5 times as much for registration. Let’s quit incentivizing older, less fuel-efficient vehicles while at the same time punishing people that buy EVs. Let’s charge all vehicles the higher rates. Also, keep the road maintenance funds coming from a road-usage charge and make the fees at the DMV pay for the operation of the DMV.
Thank you WRF! There were many good comments in this thread, and WRF’s comment inspired some interesting responses, enjoy reading them all.
Thanks for reading.
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It is problematic to assume that the number of car trips is fixed or inevitably growing and that all of the other variables are elastic and must be adjusted to accommodate car trips. This is also the fallacy that underlies fears that limiting highway travel will result in gridlocked surface streets. The fact that “transportation professionals” are basing their positions on these ideas is a clear line to the miserable corner that we have paved ourselves into.
Can’t price traffic correctly because we lack the competence of leadership to correctly manage cut-through traffic on neighborhood streets and also choose to preserve deadly stroads (because our traffic Engineers use car-counting to justify keeping the lanes which induced that demand) instead of doing a bus lane road diet everywhere yesterday, as needed to reach our Climate Action or Vision Zero goals.
It’s not just a lack of competence in managing negative impacts of car use, it’s also a lack of will or desire. Most of our elected leaders are unabashed car enthusiasts. Even if promotion of car culture isn’t central to their platforms or talking points, it’s implied, because car centric living is the water that they all swim in.
I do like the road use fee concept. Gov. Kitzhaber proposed this once upon a time and it died a swift ignominious death.
Road usage charging is still running as a pilot program. There has been no political will to move it beyond a pilot program (about 800 participants). But if it becomes politically feasible, ODOT has shown it can be done.
As a former transportation policy analyst, I concur with what WRF is saying. The people using the system should be paying.
Tolling brings in too much complexity when people try to make it “equitable” where everyone pays a different amount despite using the same services.
I don’t necessarily disagree with this assertion, but… why? Other government systems for the general public aren’t typically fee-for-use, so why should roads be?
Why not treat gas tax as another revenue stream, and road maintenance as another government service?
I’m struggling to think of other services that people use regularly and don’t pay for? We pay for water by usage, although in Portland’s past before water could be effectively metered it was charged per head in the household.
I wouldn’t expect to pay to use the sidewalk, but I’m also not damaging it as I walk on it like a car does a road.
Schools, libraries, police/fire/911/rescue, and parks all come immediately to mind on the local level, lots more on the federal level.
People typically pay for both ambulance service and SAR.
Ambulance yes, search and rescue varies by jurisdiction, but is usually free. At Mt. Hood, there is no charge.
Uh, a lot of government services are fee-for-use. Water, sewer, power, transit, permitting, camp sites, Parks classes, the Zoo, and the Dump all come to mind.
Yes, many government services, including utilities and attractions, do cost money.
The question remains about why streets should be operated under a pay-to-use model. Not that I object to it necessarily, just trying to find an underlying principle that suggests it is the right way to go, especially one that does not open cyclists to the “you didn’t pay your share” BS.
Unless roads are funded by users paying the cost there is ZERO incentive for anyone not to use a car.
If general funding is used for highway construction and maintenance there is also ZERO reasons not to build like crazy.
Just move those funds around in Salem for any pet project.
The Zoo is publicly funded but there is still an entrance fee because there are large maintenance costs associated with running the Zoo.
Much like the highway system.
Why shouldn’t people pay to drive on roads?
It is my belief that gas tax (the main user fees currently imposed on roads) represents approximately zero deterrent to anyone from driving. Replacing that with a similar “user fee” would achieve the same.
That is, if you want to deter people from driving by imposing a cost, it would have to be much higher than what we charge today (which I’m personally fine with, but would be a political nightmare for any politician tempted to champion it).
There is no reason why the legislature could not fund road building from the general fund today, and yet, somehow, they refrain from building like crazy. This may be because the state is not rolling in money that it doesn’t know how to spend (outside of drug treatment money, that is).
I can totally see why we’re unlikely to impose a straight up user fee for driving: it would be difficult to collect without tracking people (expensive, and would probably require devices installed in cars, which would not be popular, and would be subject to malfunction and sabotage). We could use odometers, of course, except for those driving out of state, but reading them would be logistically difficult.
Another drawback might be that getting a big annual bill (or a monthly statement) would make the road fee very visible, and it would become a political liability.
And what if I don’t pay? Confiscate my car over a $30 bill? Arrest me?
These are purely practical/political considerations, but those often win out over arguments based on policy views shared only by a small minority.
Tolling works thru out the world, It’s not a difficult concept and easy to collect fees.
So typical that Oregon thinks it has to do something different.
Easy in other places, perhaps. ODOT’s tolling planned tolling system would have consumed most of the money collected.
Oregon — where even easy things are hard.
Roads have some negative externalities, especially when compared to libraries, schools, parks, public safety, ems, firefighting. To a degree, these externalities should be internalized: the user should pay.
Perhaps that is sufficient justification for the government to tie the funding to citizens’ usage?
Mobility seems to me to be a pretty unalloyed good, but when the modes are compared, SOV users come out at the bottom. Maybe the best incentive/funding structure is something like a gas tax or mileage tax.
The current roadway payment system is definitely in line with basics of fair taxation. General fund revenues get used on freeway projects all the time, despite plenty of Oregonians not using them. And gas taxes are absolutely not a fair user fee either, since heavier vehicles damage roads more than lighter ones thus paying less than their share (though weight is negatively correlated with fuel economy at least). More fuel efficient automobiles also pay relatively less than their “fair share” of gas taxes. Not to mention that even if it was working as designed, lower income people would pay disproportionately more of their income towards gas taxes/user fees.
If I made $50k a year, drove 5,000 miles a year, and paid $500 a year in gas taxes I would spend 1% of my income on gas taxes for 5,000 miles of driving. If someone who made $100k a year, drove 2,500 miles a year, and paid the same $500 a year (owing to having a half as fuel efficient car), they would spend 0.5% of their income on gas tax – but would you say that we both had paid our fair share of gas taxes since we paid the same amount? Or that they paid more than their share based on how much they drove? Or that they paid less than their share based on how much they earned?
What about differences in our economic behavior? Maybe the person making $100k has a penchant for ordering things online, while I do most of my shopping at budget stores in warehousing areas. Sure, the delivery companies also pay gas taxes (and weight-mile fees most likely) but that just raises further questions about the fuel efficiency of those vehicles.
The larger point is that discerning how much “use” someone gets out of something like public roads is not easily quantifiable – and the relationship to the existing quasi user fee is tenuous. A toll has lots of downsides, and the inequitable nature of user fees is one of them. But I think the existing funding structures are almost just as inequitable, so perhaps making those better should be a focus as well.
In Oregon? Could you cite an example?
As for the questions of “fair share”, I really don’t know how to begin quantifying what that even means. How do you define “fair” in this context?
Abernethy bridge project? ODOT planned to cover half the construction costs with toll revenue. The toll program has been cancelled. How are 50% of the construction bonds going to repaid?
If you look at the ODOT budget you will find that bond repayment is part of it on the expenditure side. Use of bonds does not mean that the funding comes from the general fund.
Probably by delaying/canceling other projects, which is the usual practice. Maybe a bake sale.
The possibility of some future event is not the same as “all the time”.
https://friends.org/news/2023/7/despite-concerns-1-billion-general-funds-allocated-interstate-bridge-replacement
In the past, transportation related general obligation bonds have been repaid out of ODOT’s budget. Why would that change?
That said, its clear that the ODOT funding model needs a revamp, and what that looks like in the future is anyone’s guess.
Once again: The possibility of some future event is not the same as “all the time”.
There are going to be something like $1 billion in General Fund bonds issued for the Interstate Bridge Replacement. Those are repaid out of the state General Fund, which everyone pays into roughly by share of income (income tax is the biggest piece of the General Fund).
Additionally, per the 2023-25 Legislatively Adopted Budget the State Highway Fund revenue is a little less than $1 billion (this is the gas tax). Not only do expenditures exceed revenues from this fund (meaning the state has to fill that particular gap elsewhere), but the biennial budget for the Delivery and Operations Division (née Highway Division) is just under $4 billion – so $2 billion/year, which is more than double the annual revenue from the State Highway Fund. Some of this money almost certainly comes from the feds, but it’s unclear to me exactly how much that is. There’s also the weight-mile tax, but this only brings in ~$450 million/year.
If you want to get into the weeds of exactly how ODOT is funded, refer to page 155 of the LAB. Things that stand out to me as General Fund style revenues (they aren’t necessarily that literally) are Business License Fees (~$6 million/year), Lottery Funds (~$70 million/year), Lottery Bonds (~$22 million/year), and General Fund bonds (~$125 million/year). There’s an open question as to where the transfers from the Department of Revenue are actually coming from too (~$175 million/year). So that adds up to ~$225 to $400 million/year, something like 10% of the ODOT budget (very roughly).
I don’t think it’s a huge issue to fund ODOT through non-transportation fee means (I might even prefer it based on the regressivity of user fees), but it’s definitely true that the vast majority of ODOT’s budget goes to highways/freeways, and that a substantial portion of that money comes from revenue sources that are broadly paid for by everyone in the state equally – regardless of how much benefit they get from the state highway system.
I addressed many of these points in my post above.
It’s definitely not true. Transportation related bonds are repaid by ODOT, and lottery funds pay for things like seatbelt safety campaigns. Even accepting your generous assumptions (which I do not), 10% doesn’t qualify as “substantial”. And even if it did, the vast majority of that 10% is paid for by drivers or other direct users of the road system.
And finally, everyone benefits from the highway system, not just those who directly drive on it. Without good commercial vehicle access and employee mobility, we would not have nearly the amount of economic activity we do. If you benefit from having a grocery store, you benefit from highways.
The General Fund bonds being issued for the IBR are not being repaid by ODOT, and are different type of bond than a gas tax revenue bond (which is backed and repaid by ODOT from revenues from motor vehicle fuel taxes). A General Obligation Bond is backed by the Department of Revenue, and is repaid from the state’s General Fund. That is why the state promising $1 billion in General Obligation bonds for the IBR is a big deal. More reading on the IBR specifically, and how Oregon governs bonding if you are interested,
Lottery Funds pay for more than just safety campaigns, though it is unclear to me exactly how that is tracked from my brief skim of the budget – the only place where Lottery Funds are explicitly mentioned in budget overviews in the 23-25 LAB is 650k to the public transit division (out of $135 million biennial). I don’t see anything specific on the Lottery’s website.
And yes, everyone benefits from a good road system but some people very obviously benefit more. A trucking company could not exist without the state highway system, but someone like me would probably be just fine. Sure, I enjoy second order economic benefits, but it’s unclear as to how large that effect is – especially considering that things like grocery stores and cities predate state highway department by tens of thousands of years. And some non-road logistics are directly hurt by public road investment – particularly rail. How much relative benefit does having my groceries shipped by truck as opposed to by rail really give me?
So long as you didn’t depend on things brought in by trucks, or have a job making things that were exported by trucks.
Grocery stores have not existed for thousands of years, and even if they had, surely you recognize that commerce is different now than it was then.
A lot, apparently. Shipping by truck costs more and yet most organizations who are not shipping giant quantities of relatively time insensitive goods are willing to pay for the advantages of shipping by truck. Barges would be even better!
I’ll look at your bonding documents later, and reply again if appropriate.
The bond article describes State Highway Bonds as one form of General Obligation bonds, so something being a General Obligation bond doesn’t tell you how the repayment will be budgeted.
The OPB article says ODOT will be paying $700M of that $1B. Time will tell how the remaining $300M will be repaid.
But regardless of how it will be repaid, we agree that dedicating $1B for this project is a big deal.
I’m not sure if we agree on the significance of which bucket of money repayment comes from. My opinion is that it doesn’t really matter in the end. Oregon has revenue streams and financial obligations. The two need to be balanced somehow, and it doesn’t seem important exactly how that happens. If we spend $1B on a bridge, then that’s $1B we’re not spending on something else (like making our pathetically short school year longer), and that’s what should matter.
Maybe we should use general fund money to pay people to use transit, instead of subsidizing big car thoroughfares.
Maybe if transit was actually safe and more convenient it might get a few more riders. Maybe that’s what the money should go for??
Of course, people can ride on TriMet free as bus drivers (MAX too!) routinely let riders board without paying.
If TriMet worked better, you wouldn’t need to pay people to use it.
Well just how much is a “fair share”? And why is there the assumption that it has to vary between people?
If we both go to a ballgame and sit in the same section, we pay the same price. Is that not fair?
It’s hard to quantify specifically for roads, but surely different people get relatively more benefit from roads based on how often they use them. Gas taxes are a user fee that correlates with how often people use them, but have previously outlined problems.
For your ball game example, clearly two people who sit in the same section to watch the same game get the same benefit. An equal price is generally fair; though with very high prices, people’s differential ability to pay may make some view this as not entirely fair – not so much of an issue with the Blazers this year.
On the topics of roads, the state’s maintenance obligation also means that different types of vehicles cause different costs for the state (and is why the weight-mile tax is levied on heavy duty trucks). If we insist on having a user fee, it’s most fair to have everyone pay based on both distance traveled and weight hauled – so something akin to a universal weight-mile tax. Evidently, this is not straightforward to operationalize but it gives us a baseline of how to outline a taxation structure.
Though we haven’t touched on the ability to pay aspect of tax fairness either. Unless we index a road user fee/weight-mile tax to personal/household income, we will inevitably run into tax burden inequities based on income. Maybe this isn’t a big problem to you, but it’s something that ought to be considered when we talk about if a tax is fair or not.
Someone who drives a very light, but fuel inefficient car (like an old Toyota Camry) pays absolutely more in our current road user fee system (the gas tax). Someone who drives a very heavy, but very fuel efficient car (like a new hybrid SUV) pays absolutely less. This is unfair on its face, and its also made more unfair based on the likely income spread between these two hypothetical people (rich people don’t tend to drive a 1999 Toyota Camry)
You still haven’t really explained what “fair” means in this context.
Different people can have wildly different definitions of this, so you really need to define it in any policy discussion where you leverage it as a concept. And once you do that, your definition will become the main topic of conversation.
Personally, I’ve concluded “fair” has very limited value in contexts like this, and is usually best avoided.
exactly – things will never be “fair” but it is a concept people routinely try to leverage in discussing the topic.
That’s kind of my point – the idea of “fair share” should be thrown out since it can’t really be quantified on the individual level – or assessing fees based upon that level.
BTW, I appreciate you analyzing this in-depth. Most people don’t understand transportation economics well enough to do so.
Re: “market-based approach to getting more housing built—let ‘em live further away, and don’t charge ‘em for it!”
That’s not market based. If it was market-based people would be charged a fair price for use of roads. Expressways and motorways which are expensive to build and maintain, they decrease the value of adjacent land, and currently they pay no property tax since they are owned by the State.
Now imagine if the State sold all the ODOT roads to private companies (if these seems far-fetched, consider that almost all railroads are privately owned). The owner would need to pay property tax and cooperate taxes on profits, and they would need to charge enough to repave the roads an repair bridges as well. That would be a market-based solution.
There are still costs associated with living further away from places, which tend to be capitalized into the housing market itself (part of why living close to interesting things is expensive – lots of people want to do it). That wouldn’t change under a tolling regime, it would just add more costs. And given that the state already charges a (broken, poorly designed, and inequitable) gas tax for use of public roads by automobile, it’s worth asking if adding another user fee is worth it.
“Part of why living close to interesting things is expensive – lots of people want to do it.”
Part of the reason that many interesting things are concentrated in certain areas is because it is so easy to drive to them. Sure, there are events and venues that require thousands of people, but other interesting things that require the patronage of hundreds of people would be better served by driving being more costly. Driving and the zoning that accommodates driving creates culture deserts and perpetuates generational poverty.
Tolling is being both very regressive and avoidable makes it a less than ideal tax. But it’s regressivity (and corresponding inequity) is shared with every other idea anyone has for paying for roads that doesn’t involve some kind of income or wealth tax. The gas tax is also regressive and inequitable, and so would the proposed road user fee.
That said, I’m also not totally on board with tolling (or congestion pricing if you prefer) as a catch all solution for the issues facing road safety. There’s a much broader set of cultural narratives surrounding who can use and access our public right of way space, and for what reasons that I think are a better place to start. If we just focus on tolling/congestion pricing, the message that is sent is that roads are for rich people driving cars.
I think ideally we would raise income taxes while lowering/removing as many user fees as possible. Rather than try to price our way out of traffic, we should design our physical rights of way around what traffic we collectively want to use that space.
Tolling is regressive.
Gas taxes are regressive.
Income taxes can be very regressive and Oregons is already one of the highest in the nation.
It’s been discussed and attempting to mitigate people moving here has no support, in fact most people here want a lot more people to move here.
So the freeways are a parking lot if you ever venture on 26 or I5 OR 84.
I guess people will magically decide not to drive is the BikePortland consensus fix.
Good luck with that.
I guess we just need a race-adjusted capital gains-based road fee. The only road fee that can’t be called regressive.
Ot let’s just make sure everyone has the same level of income despite what they do.
Income taxes could be regressive, but they almost never are!! Having a progressive marginal rate structure – which Oregon has, along with the federal government – means that those with higher income pay more of their income than those with lower income do in taxes. If you want to frame that as bad, I’d suggest using a word other than “regressive” since that has a specific meaning in tax policy (relating to how much of someone’s income goes towards paying that tax).
All flat rate user fees are regressive since they take up a higher percentage of your income if you have lower income. They disproportionately burden poorer people, and any benefit they may have in changing the market should be considered against that burden. Gas taxes are very bad on this front – especially in the context of rising land values in central cities (forcing poorer people out of areas with lower transportation cost, which means more driving which makes gas taxes even more regressive). And tolling would probably act in a similar way, though no doubt the new costs would also shift the housing market.
And traffic is absolutely a factor in when people travel and by what means. I don’t drive in the city for lots of reasons, but I especially don’t drive north on I5 between 3 and 6 PM because I know traffic will be miserable. Everyone I know does this, if I’m going to Seattle for a weekend and have the misfortune of driving instead of taking the train you better believe that I’m leaving as early as humanly possible on Friday after work to avoid hell going towards Vancovuer.
I can’t think of worse public policy for transportation than to use general funds like income taxes to fund roads.
Then they really become “free” in most people’s minds.
I just can’t understand why people oppose simple use fees for roads like tolls or specific car based taxes.
I would like to see any evidence that only mostly low income people drive so I think the regressive part of car based taxes like tolls and gas and vehicle weight is bogus unless you show me otherwise.
I don’t consider freeways like Parks or libraries.
They are a necessary for society and the people who use them should pay for them.
If you can’t think of worse policy than general funds going towards transportation, I’m not sure what to say to you.
It’s not the end of the world to have a regressive fee for road use; there already is one for transit. But it’s worth at least considering what a progressive funding structure for road infrastructure would look like. And to be clear, it’s not that “mostly low income people drive”, rather that if tolling is implemented it’s the people who currently drive with the lowest income that are most likely to be priced out – and given the spatial dynamics in Portland (with poorer Portlanders being pushed further into the suburban fringe by gentrification and housing affordability) that’s a downside worth taking seriously.
All user fees are regressive in the sense that people have different abilities to pay a flat fee based on income. If I make $40k/year and pay a $4 toll every day it makes up 3.7% of my income. If I make $100k/year and pay the same $4 toll every day, it only makes up 1.5% of my income.
Why regressive? Discount TriMet tickets are available. And everyone is getting a huge subsidy every time they step on a TriMet vehicle.
Well, the plan is still to toll I-5 now, but no tolling would happen on I-205. This is going to divert huge numbers of commuters over to I-205, which will in-turn lead to more congestion on I-84 and Sandy Blvd. I-84 and I-205 in NE Portland will be gridlock for most of the day when the I-5 project starts, which will cause spillover onto local streets as well.
Charging a tax on tires would be a good proxy for a road use tax except that it would be a pretty high tax relative to the price and exactly the sort of thing that people would go across the river to avoid.
This comments thread is emblematic of why we cannot get things done in Oregon. We need revenues to build and repair roadways. We should be charging those that use the roadways to shoulder that burden. Ideally, people should be driving less and using alternatives as that would benefit all. Then someone brings up “Equity” and everything goes sideways.
Driving is a privilege. A motor vehicle weighs X pounds, produces X amount of pollution, and causes X amount of damage to road infrastructure no matter who is behind the wheel. Race, gender, income, social status, politics, or background matter not to pavement or the atmosphere. The vehicle is what matters and if you use one, then you should be paying for the privilege of using one.
I am for tolling. The only things that should matter when charging tolls are miles driven and gross vehicle weight. Those are controllables for the vehicle’s owner. It’s like sales taxes, if you wish to avoid paying sales taxes, then don’t buy as much stuff or purchase less expensive items. Necessities like food and medicines are exempt in most places. The consumer then choses how much tax they pay based on their spending habits. They don’t have to buy anything outside of necessities if they so choose. Driving is no different. Drive less miles – less tolls. Buy a lighter vehicle instead of a huge SUV – pay less tolls. Use public transit or a bicycle – avoid tolls!
Politicians need to make pragmatic decisions based on physics, chemistry, math, and common sense. Roadway tolls will not solve deep rooted economic hardship and systemic disenfranchisement.
I’ll close with this: when the “Full Rip 9.0” earthquake hits, should get lifesaving supplies and treatment to all that need it or should we convene a blue-ribbon panel to conduct a 30-day review and formulate a plan to ration food, water, and meds in a manner aligned with the state’s DEI goals? This sounds ridiculous to consider in an immediate emergency. When the crisis is slower moving, we waste years needlessly handwringing instead of taking decisive action for the common good.
As someone who lived through the 9.2 “Great Alaskan” earthquake in 1964, I agree with your comments, particularly in closing.
Ref: https://en.m.wikipedia.org/wiki/1964_Alaska_earthquake
Tax equity matters though, and we shouldn’t be funding everything based solely on user fees. It disproportionately burdens lower income earners. If someone has moved further east or north in Portland to find housing they can afford, the price shock when tolling (or any higher road user tax) is something that should be addressed. This is less of an issue when people are able to make their living choices based on a future state with an already existing road user fee/tolling, but the transitional period matters too. I don’t want to see folks losing their jobs, being evicted, and falling on hard economic times based on lack of foresight on tax policy.
Everyone has to spend a baseline on basic needs. Maybe some states exempt food from sales tax, but what about something like clothing? Sure, conspicuous consumption and high fashion are big drivers of the industry, but everyone needs clothing to live. There are more equitable ways to raise revenue than sales taxes.
Road usage/miles travelled fees involve new(er) and preferably electric and connected vehicles. My aging 9mpg Suburban has the odo perma-broken at 98,000 miles.It’s a dash out job to fix it, way more than the value of the truck in scrap. So yeah, not gonna happen + I have 2 other spare engines and a transmission for it, and 2 trucks’ worth or body panels and seats to fix it for the next 15 years.