A road charge is a “user pays” system where all drivers pay to maintain the roads based on how many miles they drive, rather than how much gas they purchase.
User pays is a time-tested and familiar principle, employed by electric, water, and cell phone companies. California is exploring how it could apply this “user pays” funding model for its much-needed roadway maintenance and repairs: those who use the roadways and benefit from them are also the ones who pay for them.
California is carefully considering whether and how a road charge system might be efficiently designed for Californians’ unique needs, without being overly burdensome for vehicle owners to comply with or overly costly for the state to administer.
California needs a sustainable and equitable way to pay for and keep pace with its increasing road maintenance and repair needs. The state’s current fuel excise tax (i.e., gas tax) is enough to fund only $2.3 billion of work, leaving $5.7 billion in unfunded repairs each year.
The current transportation funding system is outdated. It relies on gas tax and other fuel tax revenues that are in decline due to increases in both fuel efficiency and hybrid and electric vehicle usage. By 2030, as much as half of the revenue that could have been collected from the gas tax will be lost to fuel efficiency.
As more vehicles use California’s roads, roadway wear and tear increase. California drivers ultimately suffer the consequences of delayed road maintenance through poor road quality and high vehicle repair costs. A recent transportation study found that Californians spend an average of $762 annually on vehicle repair costs due to poorly maintained roads.
As part of the ongoing effort to find viable, long-term roadway funding solutions, the Legislature passed and Governor Brown signed Senate Bill 1077 in 2014 to study road charging as one potential option.
As future fuel consumption continues to decrease due to increased fleet efficiency, so does the gas tax revenue. California will be challenged to sustain its $2.8 trillion economy if it continues to rely primarily on fuel-based transportation revenue for its roadway maintenance and repairs.
Continuing the gas tax would place more of the funding burden on individuals driving less fuel-efficient cars. As Californians continue to drive extensively and roadway wear-and-tear increases, we need to find a fair, sustainable, and equitable funding model to maintain roads for future generations regardless of what types of vehicles they drive.
Senate Bill 1 (SB 1) , the Road Repair and Accountability Act of 2017, was signed into law on April 28, 2017. SB 1 adjusted fuel excise tax rates to offset the decrease in the purchasing value of the taxes (inflation) and indexed the rates to automatically adjust for future inflation, thereby delaying the expected funding shortage by another decade. The bill’s passage provides more time for researching and refining a sustainable gas tax alternative.
No decisions have been made, nor conclusions reached, about whether a road charge – or any other new transportation funding model – is the appropriate solution to California’s transportation funding challenges. A road charge is one of many concepts being researched and tested by the state over the next several years to provide sustainable roadway funding that reflects today’s transportation realities and could be equitable for all California drivers.
If a road charge is found to be a viable alternative solution to the gas tax and is enacted by the Legislature, it will be a complex process of transitioning to a new funding system. Numerous state agencies will be involved, and more than 34 million registered vehicles will be impacted by any changes.
A voluntary road usage charging coalition exists called RUC West that formed in 2013, consisting of 14 western state departments of transportation: Arizona, California, Colorado, Idaho, Hawaii, Montana, New Mexico, Nevada, North Dakota, Oklahoma, Oregon, Texas, Utah, and Washington. All states are committed to collaborative research and development of a new transportation funding model based on drivers’ actual road usage.
Oregon has enacted policy to implement RUC programs. California, Colorado, Hawaii, Washington, and Utah are all testing RUC pilot programs. Arizona, Idaho, Montana, Nevada, New Mexico, North Dakota, Oklahoma, and Texas are in the process of researching RUC.
In December 2015, Congress passed and President Obama signed into law the Fixing America’s Surface Transportation (FAST) Act . It is the first long-term authorization since 2005’s Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) , which expired in 2009.
In the FAST Act, Congress recognized the need to demonstrate user-based alternative revenue mechanisms, utilizing a user fee model (road charge) to maintain the long-term solvency of the Federal Highway Trust Fund. FAST Act enactment created a five-year, $95 million grant program: Surface Transportation System Funding Alternatives (STSFA) . Through a competitive process, funding is available for eligible states or a group of states to test road charge design, acceptance, and implementation.
California applied for and was successfully awarded three years of funding through the STSFA grant program totaling $4,530,000. Year one research has been completed and final reports compile initial planning findings. Year two and three research is currently in development. Learn more about it
In November 2015, the Mineta Transportation Institute released findings, sponsored by the United States Department of Transportation , on the estimated relative cost of a gas tax versus a road user charge. Findings were developed from an analysis of vehicle miles traveled data extracted from the 2010-2011 California Household Travel Survey. The study looked at current driving habits data among various groups, including urban/rural and low/high income households, and it found no statistically significant difference in the cost of the two programs to California households.
The purpose of researching road charge is to find a sustainable and equitable transportation funding model to maintain and repair our roads for all Californians. The gas tax model means that, all else equal, long distance drivers and/or individuals driving less fuel efficient vehicles pay more because they burn more fuel. However, national research shows that rural and low income households tend to own vehicles with lower fuel efficiency, which means they pay more per mile driven. Under a road charge, everyone would pay the same amount per mile driven.
All vehicles cause wear and tear to California’s roadways and contribute to road congestion, and under-funded roads are costly for everyone. The goal is to provide a system where all vehicles contribute to funding roadway maintenance and repairs in proportion to individual roadway use, regardless of fuel source or amount used.
With the passage of Senate Bill 1077 , California demonstrated its foresight and commitment to investigate a long-term, sustainable transportation funding mechanism as a potential gas tax replacement: road charge.
The California Road Charge Pilot Program (RCPP) was a 9-month, statewide field trial conducted by the California State Transportation Agency (CalSTA) through the leadership and collaboration of Caltrans, the California Transportation Commission (CTC), and the Road Charge Technical Advisory Committee (TAC). The pilot ran from July 1, 2016 to March 31, 2017.
Senate Bill 1077 (2014) created the 15-member volunteer Technical Advisory Committee (TAC) to study, gather input, and make recommendations on the pilot’s parameters. Members represented the state’s transportation, social equity, privacy rights, and telecommunications interests, among others.
Meeting on a monthly basis, the TAC engaged in a yearlong process to solicit and discuss input from a broad and diverse group of stakeholders the year prior to the pilot’s deployment.
Senate Bill 1328 extended the TAC’s authority through January 2023 to study road charge as an alternative to the gas tax.
More than 5,000 volunteers participated in the RCPP, the largest road charge pilot to-date. Participants represented California’s diverse demographic, geographic, and socioeconomic population and a diversity of vehicle types:
Participants tested various recording, reporting, and payment simulation methods for miles traveled, which included no-tech, low-tech, and high-tech options. Eighty percent of participants opted for automated tracking, and the remaining 20% opted for manual tracking. Recording options included:
The pilot employed strict data security and privacy measures to protect drivers’ personal information. As a result, no data breaches or complications occurred.
The RCPP was successful in studying the viability of using third-party vendors (account managers) to provide the necessary services and technologies used to record and report miles driven. The pilot was also successful in providing flexibility of services to pilot participants and demonstrating the ability to offer other value-added features, enhancing the user experience.
Participants drove in excess of 37 million miles during the nine-month pilot, demonstrating Californians’ desire for mobility. The RCPP is a testament to California’s commitment to being a leader in innovation, as the state achieved many firsts during the pilot, including:
Pilot participants had several misconceptions about how California’s transportation system is funded and why current funding is diminishing. That included participant disconnects between paying a gas tax and its revenue being used to fund roadway maintenance and repairs. However, participants’ overall understanding and acceptance of road charge fairness increased throughout the pilot. Participants feedback included:
The RCPP also demonstrated that a road charge is costly for California to administer. Compared to the minimal cost associated with administering the gas tax (less than 1%), a road charge is much more complex and costlier.
In December 2017, CalSTA submitted a final findings report to the Legislature, the CTC, and the TAC.
California was awarded Surface Transportation System Funding Alternatives (STSFA) grant funds in the first three of five funding rounds. In Round 1 (FY 2016), California was awarded $750,000 to develop an organizational framework; investigate the pay at the pump/charge point demonstration; and conduct public attitude research. In Round 2 (FY 2017), California was awarded $1,750,000 to demonstrate a pay at the pump/charge point pilot. In Round 3 (FY 2018), California was awarded $2,030,000 to explore road charge nexus with usage-based insurance, transportation network companies, and autonomous vehicles. More than $40 million is still available in Rounds 4 (FY 2019) and 5 (FY 2020).
Additional STSFA grant funding was awarded to RUC West . Round 1 (FY 2016) included a $1,500,000 award for defining a regional system and regional pilot planning with 11 participating states. Round 2 (FY 2017) included $2,590,000 in funding for a regional pilot demonstration (California and Oregon) and investigating interoperability. Round 3 (FY 2018) included a $950,000 award to explore road charge and autonomous vehicles.
Building on the RCPP’s momentum, Caltrans is applying for additional grant funding to continue researching a road charge. Ultimately, it is up to the Legislature to determine if a road charge is implemented in California.