If Michigan policymakers started transitioning to a new user fee system, the state’s road funding system would improve, according to a recent study released by the Mackinac Center for Public Policy and Reason Foundation, a nonprofit research and educational institute.
The study, Michigan’s Road Forward: Replacing the Fuel Tax with Mileage-Based User Fees, proposes a plan to replace gas taxes with mileage-based user fees.
Between 1997 and 2017, the average fuel efficiency for cars increased by 26 percent. This is expected to increase because of standards set by the federal government and advances in technology. Consequently, Michigan’s gas tax revenue would have a $1 billion per year shortfall by 2050.
Fuel taxes also vary based on gasoline prices. When gas prices are higher, drivers tend to buy less fuel.
The study explains that revenue will decline over time even with increases in the fuel tax and that using fuel taxes as a source of revenue for roads is unlikely to keep up with infrastructure needs long-term.
Under a user fee system, drivers would be charged based on how many miles they drive and the types of roads they use. Roads that are more expensive to build and maintain could cost more.
In addition, heavier vehicles like trucks would pay a higher rate.