Virginians can pay new fee by the mile to boost gas tax

More than 7,000 Virginians have signed up to pay a fee for each mile they drive under a program launched this summer, putting the state at the forefront of a nationwide effort using new technology to prop up gas taxes that pay for roads.

The Virginia program, known as Mileage Choice, is aimed at drivers of electric vehicles and fuel-efficient cars who pay less in gas taxes while using the same roads as other drivers. Since 2020, Virginia has levied a fixed fee on those kinds of vehicles based on the difference between what they would have paid in gas taxes if driving an average number of miles.

In July, the state launched an alternative program to let drivers pay the fee at a per-mile rate — a cost savings for those who drive less than the average amount, which officials peg at 11,600 miles annually. For drivers of battery-powered cars, that fee works out to a penny per mile.

With the Biden administration aiming for half of new vehicle sales to be electric by the end of the decade, the federal government and states across the country are exploring such fees, seeing them as a way to ensure drivers continue to pay for the roads they use. The push is coming years after state and federal officials began to notice that increased fuel efficiency was denting transportation budgets funded by gas taxes.

Oregon and Utah have the nation’s longest-running per-mile programs, while other states have run pilots.

Officials at Virginia’s Department of Motor Vehicles said they are pleased with the quick growth, which has attracted the attention of transportation officials across the country. Last year’s infrastructure law calls on the federal Transportation Department to test such a tax at the national level.

“It’s definitely exceeded our expectations,” said Jessica Cowardin, a spokeswoman for the Virginia agency.

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Scott Cummings, the assistant commissioner for finance at the Virginia DMV, said the need for a fee became clear in 2019 when gas tax revenue declined, even as the number of miles driven grew in the state. That tax is a major component of the state’s transportation budget, used to build and maintain roads.

In response, the Virginia General Assembly decided to impose new fees on electric vehicles and gas-powered vehicles with fuel efficiency of more than 25 miles per gallon, levying a flat fee paid at registration. Last year, before the per-mile option launched, 1.9 million vehicles were subject to the flat fee.

The fees are calculated on a sliding scale. Lawmakers devised a formula that calculated what drivers of a 25-mile-per-gallon or higher vehicle would pay in gas taxes compared with one that gets 23.7 miles per gallon, then set the fee at 85 percent of the difference. Despite the complexities, it closes the revenue gap in the gas tax while providing slightly more benefits for the most fuel-efficient vehicles.

The driver of a new Nissan Altima that gets 30 miles a gallon would pay a flat “highway use” fee of $24.46, plus an average $108.27 in state gas taxes for a total of $132.73. The owner of a new Hyundai Ioniq hybrid that gets 55 miles per gallon would pay a $66.29 flat fee plus $59.05 in gas taxes for a total of $125.35. The driver of an electric Tesla Model 3 would only pay the flat fee of $116.49.

The per-mile fee is calculated by dividing the annual fee by 11,600, while drivers who opt in to the mileage tracking program won’t pay more than the flat fee amount. Virginia recently received its first revenue from the per-mile program, pocketing $2,100 for miles driven in August.

The state programs are in their infancy, but by enrolling some 2,000 drivers a month, Virginia’s has rapidly become the largest in the country, just as Utah — which has about 4,000 drivers enrolled — previously leapfrogged Oregon (830 drivers).

“Virginia’s may be the largest, but we will always be the longest-running,” said Michelle Godfrey, a spokeswoman for the Oregon Transportation Department.

Donald Camp, 73, a retired State Department employee, was among the first in Virginia to sign up. He got a mailer from the Department of Motor Vehicles indicating that his eight-year-old Nissan Leaf was eligible, then decided to give it a go. Camp, who lives in Falls Church, said setting up the program was simple after the tracking device arrived in the mail.

The flat fee for a vehicle like Camp’s is $116 a year. He said he doesn’t drive much, figuring he’ll pay about $20 total on a per-mile basis.

“I will save an enormous amount,” Camp said.

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The growing interest in mileage fees represents a shift in the politics of fees imposed on electric vehicles. Almost a decade ago, Virginia state Sen. Scott A. Surovell (D-Fairfax) helped to lead a revolt of Toyota Prius owners who objected to a $100 fee the administration of then-Governor Robert F. McDonnell (R) was trying to impose on hybrids.

“A lot of people felt like they were being punished for being virtuous,” Surovell said.

But now, he said: “Everybody recognizes that if you’re going to buy an electric car that uses zero gasoline, it’s going to have a big impact on roads capital and maintenance funds.”

The mileage fee’s future in Virginia is not assured. The law creating the program was passed under former governor Ralph Northam (D). Macaulay Porter, a spokeswoman for Gov. Glenn Youngkin (R), referred to the program as a “pilot.”

“The governor will work with the General Assembly to assess the success of the program, as we ensure our transportation infrastructure is adequately maintained for the future,” Porter said in an email.

Like many states, the federal government has relied on a gas tax to help fund investments in roads and transportation, but Congress hasn’t increased the 18.4-cent tax since 1993. Its buying power has been significantly eroded by inflation and gains in fuel efficiency over that time.

Transportation agencies that offer the per-mile option through tracking devices also face questions about the privacy of users. Virginia offers two options, one of which tracks the driver’s location. The Virginia program doesn’t differentiate between miles driven inside and outside the state, but as states begin to consider how to attribute miles and share fees among one another, officials involved in designing the programs say location data will be vital.

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Camp said he was surprised when the program’s app showed a dashboard grading his driving habits on braking, acceleration, cornering and speed. He said he didn’t recall opting in to have detailed data collected and was surprised to see the results.

“I have no idea how this information is used,” he said.

Cummings said the only data the state receives is the number of miles a participant drives and the amount of fees they have paid. He said Emovis, a firm that runs the system, is required to follow strict limits on how it uses data, adding that it can’t be shared with third parties.

The federal government has not openly taken steps toward implementing the pilot called for in the infrastructure law, which directs the Transportation and Treasury departments to devise a plan while providing a $50 million budget to fund the work. Federal Highway Administration officials say the agency is preparing to identify members of an advisory committee that will help to design the test.

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