Importance of Recognizing Locational Differences in Assessing the Impact of a Road User Charge: Oregon Case Study

Abstract

Oregon Senate Bill 810 created a program that allows drivers to pay a flat-mileage road user charge (RUC) of 1.5 cents per mile rather than the 30 cents per gallon state fuel tax. Major concerns about the adoption of this RUC are that it could increase costs for rural households relative to urban households and that the costs would fall disproportionately on lower-income groups. Further, it has been suggested that significant differences in the impact of the RUC could arise from locational distinctions beyond the urban–rural split alone. Earlier studies analyzed the regional impacts of an RUC only at the statewide level or only with the use of a broad urban–rural distinction. The newly available Oregon Households Activity Survey (OHAS) data provide detailed household location information, which permits impacts to be assessed with regional and geographic definitions relevant to policy makers in Oregon. Results with the use of OHAS data showed that, on average, statewide households would pay 5 cents more daily under the RUC than they did under the fuel tax because the 1.5 cents per mile RUC actually will produce more gross revenue than the fuel tax. However, the price increase in rural regions will be less than the statewide average, whereas more urban regions will pay slightly more than the statewide average. Further, the distributional impact of the flat 1.5 cents RUC on all households in the OHAS data set differed, depending on the region of the state examined.