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SMART Options report considers a mileage fee transportation funding mechanism for Michigan

May 14, 2014
Executive Summary: Context and Considerations of a Mileage Fee for Michigan

This report explores the potential of a mileage fee as a funding mechanism for Michigan’s transportation system. A mileage fee is a charge that motorists pay based upon the distance driven on a defined road network.

A mileage fee, compared to the fuel excise tax, is a fairer way of assessing vehicle impact to roads. Road damage is a function of the amount of travel and the weight of the vehicle, and a mileage fee directly addresses the amount of miles traveled, an unconsidered factor in transportation finance. A mileage fee has a number of other advantages. It can:
  • improve transportation efficiency and access,
  • reconcile transportation funding shortages,
  • increase public and institutional cost effectiveness and accountability,
  • address institutional waste,
  • and support environmental sustainability.
Mileage fee studies have been conducted in several states and public institutions, including Texas, Minnesota, Florida, Iowa, Wisconsin, and Nevada. The state of Oregon is the first state to implement a mileage fee policy, on a limited basis.

A mileage fee policy can be designed through a marketplace that allows users to choose among many different options for data and fee collection as well as opportunities to lower costs through travel behavior changes.

Data and fee collection options for a mileage fee could include the following:
  • Flat rate
  • Gas pump reporting and collection
  • Smartphone applications
  • GPS (including existing vehicle telematics)
  • Mail or online payment
  • In-person payment
The state of Michigan is at an opportune time to play a leading role in transportation finance. As a state recognized as the center of transportation technology and ingenuity, Michigan can utilize its automotive resources to advance a more robust system for transportation finance.

The next steps to explore potential value could include:
  • Establishment of an advisory group or task force which could include transportation policy experts, legislators, researchers, local elected officials, urban planners, and engineers to identify next steps and areas of research
  • Implementation of a pilot project, potentially as a partnership between MDOT and the University of Michigan and other key stakeholders
  • Development of a public dialogue strategy that is accessible, informative, and responsive to research and pilots as they develop.
This report provides a foundation for understanding a mileage fee, but more importantly, it provides the first steps for a rich conversation at the state level for developing a sustainable transportation funding mechanism that is long-term, efficient, and fair.

Download the Report
RELATED TOPICS: transportation policy
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