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Tuesday, July 14, 2015

Road Funds Part 6 - OReGO

We have been looking at way to fund the roads and bridges. This discussion was started because of  OReGO the program that Oregon is trying out to replace the gas tax. We have discussed OReGO here several times, most recently here.


I admit that I am not a fan of the program, but we have established our scoring criteria and so let's see how OReGO does.

First for non-fleet vehicles, there are two options. One of the options collects location information, the other does not. If you allow your location data to be collected, you can avoid paying the road tax when you are out of state or on private roadways. Both methods require a device to be plugged into your car's ODB II port, but privacy and out-of-state driving fees are both in our scoring criteria, so we'll need to score these two variants of OReGO separately.

When we wrap this series up, we'll discuss the implications of the program in more detail, but for now, let get the scores. Here are our 7 vectors:

Road fund taxes/fees should:
1) Have some correlation to road wear
2) Not be excessively regressive
3) Provide adequate funds for transportation maintenance needs
4) Be simple to pay
5) Allow for collection without invasion of personal privacy
6) Allow for out-of-state travel without paying in-state road fees
7) Tax drivers from out-of-state when they are using Oregon roads

OReGO GPS Option: 

1) Correlation to road wear - 80 points
This program correlates to road wear better than say property taxes, but it has no weight component, so it has a minor deduction. The deduction is small because in this weight range, the impact of vehicle weight is not a significant factor in road wear calculations.

2) Not A Regressive Tax - 100 points
This program is less regressive than the gas tax. It is also not as progressive as the property tax. To get full points in this category, the only requirement was to be "not be excessively regressive". This tax meets that bar.

3) Provide adequate funds - 100 points
This mileage tax isolates the tax rate from the fuel economy of the vehicle. The average fuel economy could increase every year and this method would still collect the needed funds.

4) Simple to pay - 0 points
To use OReGO, you have to setup a digital wallet and fund it with a credit card or bank account. So far these are just one-time setup items and not too difficult. But the hard part, the reason it scores a zero IMHO is because you have to track the tax that you pay at the pump. There is no way to wave a wand at the pump to tell them that you are in the mileage tax program. This means that you will have to keep track of this and provide the data to the OReGO program, then you will pay or receive a refund based on the OReGO tax vs the gas tax. Sounds complicated to me. If the gas tax were completely removed, and you only had to deal with the OReGO tax, this would score higher. However, currently, both are in place and since only 5000 vehicles out of the millions in the state in in OReGO, this item scores a zero.

5) Privacy - 10 points
There is a GPS enabled device in your car. The only reason that this scores any points is because they have made some effort to scrub the data before it is ever seen by the state. Here is what they say in the FAQ:
Commercial Account Managers collect location information to determine whether you are driving inside or outside Oregon, and for the purposes of administrating their value-added services. In the regular operation of the program, location information is not disclosed to ODOT. ODOT employees may review data for program audit purposes. All program-related data remains confidential based on Oregon Law and ODOT policy.
That sounds pretty clear to me that location data is collected and it can be reviewed for auditing or unusual purposes.

6) Out-of-state travel - 100 points
If you travel outside of Oregon, you will not have to pay the OReGO tax. Of course if you buy gas in another state, you'll be paying their gas tax.

7) Tax out-of-state drivers - 100 points or maybe 0 points later
If 100% of the vehicles in the state were on this program, then the gas could be eliminated. That would simplify paying (see #4), but if the gas tax was gone, that would mean that out-of-state drivers would not pay anything for the road wear they cause. So as it is today, with the gas tax remaining as the mileage tax is tested, it scores 100 points.

Adding it up, the OReGO GPS option scores 490 points.

OReGO No GPS Option 

The No GPS option is similar in several regards. Items 1-4 and 7 are the same as the GPS option.

1) Correlation to road wear - 80 points

2) Regressive Tax - 100 points

3) Provide adequate funds - 100 points

4) Simple to pay - 0 points

5) Privacy - 60 points
The No-GPS option scores better than the GPS option since your location data is not collected. Here is what the OReGO FAQ says:
The ODOT Account Manager (Sanef) does not collect location information, only miles driven and fuel consumed. All program data is destroyed on a set schedule per program policy.
So they still have a record of how many miles you have driven on any given day. This is far more information than they can collect from an odometer reading at the DMV.

6) Out-of-state travel - 0 points
Every miles that you drive under the No-GPS program is taxed. If you drive to another state and buy gas, you will be paying the OReGO tax and the other state's gas tax.

7) Tax out-of-state drivers - 100 points

Adding up the No GPS OReGO program scores 440 points.

Scores so far:
 raising the gas tax 520 points
 increasing property taxes 380 points
 increasing vehicle registration 380 points
 tire tax 350 points
 GPS OReGO 490 points
 No GPS OReGO 440 points

OReGO scores better than several of the options that we've explored but simply raising the gas tax is still the high score option.

Toll roads, congestion zones, and many other ideas are still to come.