In 1919, Oregon was the first state to charge a tax per gallon of gas. And the state could be one of the first to charge everyone by mile driven.
Oregon’s gas tax is scheduled to climb from 36 cents a gallon up to 40 cents in 2024. But the state’s gas tax revenue is almost certainly heading into a permanent swan dive. It won’t be enough to keep up the state’s roads and bridges. Vehicles are getting more and more miles to the gallon. And electric or other alternatives are going to slowly replace them.
The Oregon solution is pay as you go, not pay per gallon. You can sign up for it now. OReGO participants pay 1.8 cents a mile. They get fuel tax credits based on gas consumption. Very few Oregonians are enrolled — about 700 — because the immediate benefits are limited.
House Bill 2342 tries to hit the accelerator for OReGO. It imposes a mandatory per-mile road usage charge for registered owners and lessees of passenger vehicles of model year 2027 or later that have a rating of 30 miles per gallon or greater. It would begin on July 1, 2026.
That makes sense, in some ways. The question is: Does it provide the right incentives? What’s the goal?
One goal is to ensure there is enough revenue to keep the state’s roads and bridges repaired. This bill could help with that.
Another goal, for some, is to encourage Oregonians to drive more fuel efficient vehicles or more electric vehicles. Better for the environment.
The gas tax already does it. This bill doesn’t really do much. There would be an added elimination of title registration fees under the bill. But if the goal is to give Oregonians a nudge, this bill adds a perverse incentive — new charges on more fuel efficient vehicles.
Lawmakers in Salem could alter the bill so the pay as you go formula takes into account the fuel efficiency of the vehicle. That might encourage more Oregonians to go electric or pick a more fuel-efficient choice.
The complication is how that policy would effect lower-income Oregonians.
Want to buy an electric car? The long-term costs can have clear benefits. The upfront cost usually is more, and that can be what people focus on.
The gas tax never was progressive. Should Oregon look to do more with a nudge for electric cars? If the Legislature simply opts to provide incentives for electric cars, it could be leaving some Oregonians behind.