The Mackinac Center cherishes opportunities to work with like-minded organizations — promoting limited government and free markets can leave one feeling a bit lonely these days. The latest chance involved the Reason Foundation, based in California. We wrote and published a study together, explaining why Michigan policymakers should pilot a new road funding program.
Reason’s Robert Poole is a long-established expert on transportation policy, and so the Center was excited when he asked us to collaborate with him. We knew a perfect co- author: Chris Douglas, an economics professor at UM-Flint and member of the Center’s Board of Scholars. He has closely studied road funding issues in Michigan, writing a report on the subject we published in 2018.
The new Reason-Mackinac report explains the advantages of using a road funding system based on mileage-based user fees. The idea is that drivers pay fees based on how much they drive instead of paying taxes at the pump. There are several advantages to such a system.
First, mileage-based user fees will generate more consistent revenue over the long term. Forecasts say average fuel efficiency will continue to increase, as will sales of hybrid and electric vehicles. This means drivers will pay fewer gas taxes per mile driven, and revenues probably won’t keep pace with future road needs. Mileage-based fees do not suffer from this problem.
Second, this system is fair. People who drive more do pay more gas taxes, but mileage-based user fees would apply equally, no matter the engine your vehicle uses. What’s more, fees could be designed to charge different rates for different roads or vehicle weights — the more expensive the road and heavier the vehicle, the higher the fee.
Poole and Douglas address a common worry associated with mileage fees: providing driving data to the government. This is a legitimate concern, but fees can work without anyone having to compromise their privacy. Drivers could opt to pay a general fee and not submit any detailed driving information, for example. In a handful of pilot programs now underway, private companies manage the data under strict confidentiality rules, and the government never sees the details.
Mileage-based user fees are just the type of policy innovation that forward-thinking, nonpartisan think tanks like the Mackinac Center and Reason Foundation are known for. Both organizations emphasize good public policies first and leave the partisan politics to others.