Gas Tax Shift Will Harm Rural Drivers

The Governor’s Transportation Revenue Options Commission (TROC) recently recommended an 8.1 cents per mile driven “fee” as a way to address the state’s $9.35 billion (and growing) annual shortfall in highway, bridge, and mass transit funding.

I've examined the recommendation and invite you to review my findings:

Gas Tax Shift Will Harm Rural Drivers

The Governor’s Transportation Revenue Options Commission (TROC) recently recommended that Pennsylvania completely replace the 58 cents per gallon state gasoline tax with an 8.1 cents per mile driven “fee” as a way to address the state’s $9.35 billion (and growing) annual shortfall in highway, bridge, and mass transit funding. Given implications from switching to a mileage-based user fee (MBUF), I asked the Center for Rural Pennsylvania how it would impact motorists from the Commonwealth’s 48 predominately rural counties.

The answer: Rural drivers will pay an extra $3.19 per weekday (Monday-Friday, 260 days annually) under the MBUF, or $829.40 per year ($3.19 x 260 weekdays).

Currently, rural drivers travel an average of 55.2 miles and burn an average of 2.22 gallons of fuel (based on a typical vehicle getting 24.9 miles per gallon) per weekday, paying $1.28 per weekday in state gas tax. In contrast, an MBUF of 8.1 cents per mile would cost rural residents $4.47 per weekday.

In comparison**:

Rural

Avg. Miles Driven Per Weekday = 55.2

Miles Driven Per Weekday ÷ by 24.9 MPG = 2.22 Gallons Used Per Weekday

Gallons Used Per Weekday x 58 Cents Per Gallon State Gas Tax = $1.28 Per Weekday

Avg. Miles Driven x 8.1 Cents MBUF = $4.47

Rural difference between state gas tax and MBUF = $3.19 more per weekday, or $829.40 more per year ($3.19 x 260 weekdays)

Suburban

Avg. Miles Driven Per Weekday = 49.41

Miles Driven Per Weekday ÷ by 24.9 MPG = 1.99 Gallons Used Per Weekday

Gallons Used Per Weekday x 58 Cents Per Gallon State Gas Tax = $1.14 Per Weekday

Avg. Miles Driven x 8.1 Cents MBUF = $4.00

Suburban difference between state gas tax and MBUF = $2.86 more per weekday, or $743.60 more per year ($2.86 x 260 weekdays)

Urban

Avg. Miles Driven Per Weekday = 25.80

Miles Driven Per Weekday ÷ by 24.9 MPG = 1.04 Gallons Used Per Weekday

Gallons Used Per Weekday x 58 Cents Per Gallon State Gas Tax = 60 Cents Per Weekday

Avg. Miles Driven x 8.1 Cents MBUF = $2.09

Urban difference between state gas tax and MBUF = $1.49 more per weekday, or $387.40 more per year ($1.49 x 260 weekdays)

Approximately 75 percent of Perry County workers, for example, commute outside the county to places of employment daily. Burdening them with $800-plus per year in additional traveling costs for no reward (case in point: the deplorable, late-1970s-like condition of our state-maintained roadways) is grossly unfair. Obviously, rural roads in rural counties need to receive a proportionately larger share of state highway maintenance dollars right now. I also have qualms how MBUF data would be collected, and what mischief PennDOT could do with that information.

A full-scale MBUF could generate $8.9 billion per year. Besides the MBUF, other TROC ideas include:

  • A toll on corridors of highways and expressways, as well as a toll on managed lanes

  • Elimination of funding transfers from the Motor License Fund to the Pennsylvania State Police

  • A $1 fee for package deliveries

  • A $1.11 charge for every Uber and Lyft trip

  • New or increased fees for vehicle registration, electric vehicles, vehicle rentals, and vehicle leases.

  • An increase in both the vehicle sales tax and jet fuel tax

  • Indexing the state’s current gas tax to inflation

Many of the TROC recommendations are ill-timed and shortsighted given ongoing federal discussions on infrastructure funding and Pennsylvania’s stagnant economic recovery. This fall, the state House will hopefully adopt a resolution directing the Legislative Budget and Finance Commission to conduct a study comparing PennDOT’s ability to maintain and complete road projects to other states and countries. Despite having the highest liquid fuels tax in the country, highest tolled road (PA Turnpike) in the world, and increasing licensing and registration fees, reliable and sustainable transportation in the Commonwealth remains problematic. While I don’t totally dismiss all of PennDOT’s funding woes, I do question whether its budget-management, construction, and contract bidding/awarding methods have kept pace with best practices elsewhere.

**Two data sources were used: 2017 Local Area Transportation Characteristics for Household from the U.S. Bureau of Transportation Statistics, and the Automotive Trends Report with data collected by the U.S. Environmental Protection Agency. The 2017 Local Area Transportation Characteristics for Household estimates, by state, the number of daily miles driven by rural, suburban, and urban householders. It calculates mileage using a regression formula that includes the number of vehicles in the household, household size, and information from a household survey. For Pennsylvania, this survey contained more than 7,200 responses.

In addition, the Eastern Transportation Coalition has put forth an interesting MBUF concept that appears more balanced and doesn’t hurt rural commuters (at least according to their calculations). Following is the summary sent to me by Eastern Transportation Coalition Executive Director Trish Hendren:

“The Eastern Transportation Coalition and our partner states have been studying MBUF through data-driven research and pilots over the last three years. [We are] leading the work on bringing the perspective of both the East Coast as well as the trucking industry to the national evaluation of MBUF.

“In 2020, our work included a detailed analysis using vehicle registration data from the Pennsylvania Department of Motor Vehicles, U.S. Bureau of Transportation Statistics, and U.S. Census to examine the geographic implications of a revenue-neutral MBUF rate (a per-mile fee that would result in no net change in state vehicle use revenue in terms of total dollars) of 2.807 cents per mile in Pennsylvania. Our study found that, if the fuel tax were replaced with a revenue-neutral MBUF system, drivers in most rural areas would pay less than they do now, and all drivers—whether urban or rural—would see minimal changes in their fuel expenses each month. The memo summarizing the household analysis conducted in Pennsylvania is attached for your reference.

“The 8.1 cents per mile is not a rate that the Coalition, our partner states, or any agency in the country has explored in real-world pilots.

Eight cents per mile is close to a rate calculated by a research institute that had several flaws, including:

  • Does not distinguish between passenger cars and commercial vehicles, meaning the rate would apply to equally to cars and trucks

  • Based on Highway Statistics data sets versus state specific data; the paper acknowledges, ‘Relying solely on the nationally organized H-S data could be problematic for any type of detailed MBUF rate setting exercise’

  • Assumes administrative costs of close to 20 percent, much higher than other research has shown

Based on total highway spending divided by vehicle miles traveled and does not account for federal funding that PA receives.”

Perry Stambaugh