KAILUA-KONA — The state might do away with gas taxes and replace them with a road use charge, depending on the results of a proposed statewide trial program.
KAILUA-KONA — The state might do away with gas taxes and replace them with a road use charge, depending on the results of a proposed statewide trial program.
The state Department of Transportation is weighing the change, which would charge motorists for the number of miles they drive as opposed to the amount of gas they buy at the pump. The proposal would overhaul the way the state collects taxes to fund road repairs. As it stands now, the state’s fuel tax comprises roughly 33 percent of the state highway fund.
The pilot program is being considered as a replacement for declining gas tax revenues and could operate by billing vehicle users based on the odometer readings recorded when a driver takes their vehicle in for a safety check.
DOT also cast the program as an attempt to make payments more even throughout the state.
“Although (DOT) does not propose to collect actual revenue during this demonstration, participant feedback and input from partner project agencies will inform how a model payment structure could be defined to enhance compliance,” the state wrote.
The state said a survey of the vehicle miles per gallon by ZIP code showed “residents of rural areas (such as the Big Island) tend to pay more in gas taxes today than they would under a revenue-neutral RUC.”
The proposed system would serve to even out the payments between the rural and urbanized sections of the state.
It also would aim to “ensure that visitors contribute their fair share to the road system under an RUC, how that compares to gas taxes, and how to operationalize large rental car fleet relationships to accurately and efficiently assess an RUC,” the state wrote.
Jim Mezzasalma, who performs safety checks at Kona Coast Customs in Kailua-Kona, said he’s unsure how the whole thing would be implemented and what that might mean for the business.
“I understand the need. I just don’t see how they’re going to do it,” he said.
Additionally, odometer readings are entered manually, which could have problems for tax collection, Mezzasalma said. They might be required to take photos of the odometer instead, he added, but that is another step in an already extensive list of actions.
Without knowing how DOT plans to implement the program, it’s hard to say whether this is a good idea, said Tom Yamachika, president of the Tax Foundation of Hawaii, a private nonprofit, nonpartisan educational organization that monitors the state’s taxes and policies.
“Obviously, we need to maintain the roads and bridges and stuff like that,” he said.
But how the money will be collected is another question.
“The devil’s always in the details,” Yamachika said.
One advantage of gas taxes is they are effectively invisible, Yamachika said. It might be easier to pay a tax on each gallon pumped for users, rather than as a lump sump at the end of the year or the quarter when car owners are getting their safety checks.
“I don’t know about you, but when I get my vehicle (registration), it’s a bit of a sticker shock,” Yamachika said.
That’s one issue Oregon has dealt with when it began its test drive of a road use program July 1. There, each driver has accounts that accumulate the mileage cost, which is then paid. That’s done by a device plugged into the vehicle that monitors the miles driven and fuel used.
Oregon also considered a flat fee, additional taxes on batteries or tires and continuing to raise the gas tax before choosing the mileage-based program.
Of the five options, the RUC was the best because of its inherent fairness, said Michelle Godfrey, public information officer with the Oregon Department of Transportation.
The charge is “agnostic to the type of vehicle you drive,” she said. “It’s a direct proxy of actual consumption.”
Therefore, people with low- or high-mpg vehicles are paying the same amount for the amount they drive, she said.
The Hawaii Legislature this year rejected a proposed hike in the gas tax that was expected to increase costs for a typical motorist by about $83 a year. Also rejected were increases in vehicle registration fees and the vehicle weight tax.
The Tax Foundation said Hawaii drivers pay 74.4 percent of the cost of maintaining the roads through state and local fees, taxes and tolls. That is the highest percentage nationwide, followed by North Carolina at 63.3 percent.
The trial RUC program is projected to cost $19 million — although $11 million is the “in-kind” cost from odometer readings. An additional $1.5 million is from the state for policy design and test setup. The federal government is asked to pay $6.5 million, mostly for reporting and evaluation of the manual and automated reporting evaluation.
“We’re thrilled you guys are thinking about it and joining the Pacific state in leading the nation,” Godfrey said.
Email Graham Milldrum at gmilldrum@westhawaiitoday.com.