The fuel tax doesn’t account for cross-state travel. An MBUF can.

As we explore a mileage-based user fee (MBUF) as an alternative to the fuel tax, it’s imperative to take cross-state travel into consideration. In a statewide public opinion survey, one of the main concerns for residents in Delaware, New Jersey, North Carolina, and Pennsylvania was that, with an MBUF system, out-of-state drivers may not end up paying for their road usage. 

While this concern is valid, it’s a problem we’re already facing with the fuel tax. In fact, an MBUF may be one of the best ways to solve it!

But before we get there, here’s why it matters: out-of-state mileage accounts for a significant amount of travel, especially in the Eastern U.S. (This is one of the 10 findings summarized in our recently published July 2022 fact sheet.) 

For example, during our 2020-2021 passenger vehicle pilots in Delaware, New Jersey, North Carolina, and Pennsylvania, about 13% of the 1.9 million miles traveled were accrued out of state. This shows that even during a pandemic, out-of-state mileage was significant. 

Additionally, in some states, tourism brings a significant amount of visitors, which contribute to road funding via the fuel tax. In Vermont, for example, 26% of the gas tax revenue is derived from purchases by visitors to the state. Determining how to deal with cross-state travel is critical, especially for high-tourism states.

The Fuel Tax has a Problem with Cross-State Travel.

There are various short-comings to the current fuel tax when it comes to accounting for cross-state travel. One issue to consider is that people can drive within a state without purchasing gas in that state. Especially in the Northeast, there are a number of smaller states that drivers could pass through without filling up. 

Additionally, drivers who live or work near state borders may also cross state lines to buy cheaper fuel in a neighboring state. This means that their home state doesn’t receive the fuel tax revenue from their purchases, but the driver still contributes to the wear and tear on the roads. Neither of these issues are accounted for with the current fuel tax system for passenger vehicles.

An MBUF Can Fix These Shortcomings.

The Coalition has been on the forefront of exploring MBUF and cross-state travel, and our work has found that an MBUF approach can account for out of state mileage for several reasons:

  • Plug-in mileage reporting devices with GPS, and likely telematics in the future, can determine how many miles drivers accrue inside and outside of their base state and therefore assign miles to the correct state.
  • For approaches with non-location capability – plug-in devices without GPS and user choosing the manual option – estimated in-state and out-of-state mileage can be derived from several data sources such as the U.S. Census.
  • A multi-state clearinghouse could potentially distribute MBUF funds to participating states based on how many miles out-of-state drivers accrued in that state and ensure that the dollars paid are linked to the states where the miles are driven.

As we continue to study the potential for a MBUF, accounting for cross-state travel will remain a key consideration. To learn more about the research we’re currently doing on the subject you can read more in our June article discussing our current pilots.

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