As electric vehicles (EVs) and hybrids become more prevalent, the traditional model of funding highway maintenance through gas taxes faces significant challenges. This shift in vehicle technology means states are seeing a decline in gas tax revenues, compelling them to seek alternative methods to fund road infrastructure. Oregon is among the states taking proactive measures by proposing a shift from gas taxes to per-mile vehicle fees.
The Shift to Per-Mile Fees
Oregon’s House Bill 4009 aims to reform the state’s OReGO program, transitioning from voluntary to mandatory participation for electric and hybrid vehicle owners. This initiative is designed to ensure all vehicles contribute to highway maintenance, regardless of their fuel use. The bill also mandates biennial highway cost-allocation studies to guide the setting of OReGO rates, aligning them with the same cost allocation principles that govern fuel taxes.
A Brief History of Oregon’s Highway Funding
Oregon has been at the forefront of innovative highway funding solutions for decades. It was the first state to implement a fuel tax in 1919 and began conducting highway cost-allocation studies in 1937. These studies became a constitutional requirement in 1999, with the latest, the 24th HCAS, published in 2025. The state’s proactive approach also includes early adoption of mileage-based user fees, with pilot programs conducted in 2006 and 2012.
The Role of OReGO
In 2013, Oregon’s Senate Bill 810 authorized OReGO, the nation’s first road usage charge program, which has been operational since 2015. Despite its pioneering nature, the voluntary participation of fewer than 800 drivers has not generated sufficient interest to address the state’s transportation funding needs. HB 4009 seeks to make participation mandatory for EV and hybrid owners, thereby expanding the program’s reach.
Key Provisions of HB 4009
- Maintaining various options for mileage reporting, including odometer readings, in-vehicle telematics, and plug-in devices.
- Offering a flat-fee payment alternative to mileage reporting.
- Modifying existing EV rebates, including suspending the standard rebate and limiting the Charge Ahead rebate to one per household.
- Initiating the first OReGO HCAS to establish initial rates and requiring biennial reports.
This legislation preserves driver choice in how they report mileage while mandating that all vehicles, regardless of their power source, contribute fairly to road upkeep. By grounding rates in Oregon’s cost allocation framework, the bill ensures that charges reflect actual highway maintenance costs rather than inflation or arbitrary revenue targets, unlike some other states’ approaches.
As fuel efficiency improves and EVs and hybrids become more common, the importance of a cost-based road usage fee system will only grow. Oregon’s long-standing fiscal discipline in highway funding is set to continue with the implementation of House Bill 4009.
Original Story at reason.org