Michigan is actively exploring alternatives to traditional gas taxes for road funding due to the increasing popularity of electric and hybrid vehicles, which are expected to reduce gas tax revenues.
This shift has led Michigan legislators to propose a $5 million pilot program to test a mileage-based road usage fee. This pilot, which aims to start by June 2025, would be funded through the state’s general fund as part of the proposed $6.8 billion transportation budget.
The program, designed to be voluntary, would allow participants to opt for a mileage-based fee instead of traditional fuel taxes, with a promise of a refund for any fuel taxes or registration fees paid.
The pilot’s design includes a 19-member technical advisory committee tasked with evaluating the program’s implementation details, such as the cost and ease of recording mileage.
Concerns about privacy are central to the debate, as the program would require GPS tracking or other methods of mileage recording, raising issues about government intrusion into personal data. To address these concerns, the state plans to offer non-GPS options for mileage reporting, such as odometer image capture systems.
The concept of road usage charges isn’t new; states like Oregon and Utah have already implemented similar programs. However, Michigan faces unique challenges with deteriorating roads and bridges, with predictions indicating a significant decline in road conditions by 2035. This has spurred discussions on the need for a sustainable funding model to support infrastructure repairs and potentially attract and retain residents by improving state infrastructure.
Governor Gretchen Whitmer, having previously proposed and then withdrawn a significant fuel tax hike, now supports exploring these alternative funding mechanisms. The state also considers other revenue-generating options, including toll roads and increasing the gas tax, to address the funding shortfall for road maintenance and repairs. However, these options, particularly tolls, face resistance from stakeholders like the trucking industry due to the potential for higher costs.
