Michigan is spending up to $7.65 million on a pilot program to test a mileage-based alternative to its gas tax. [some emphasis, links added]
The pilot will launch in February 2027, run for six months, and enroll 1,000 volunteers, Jennifer Roberts, the road usage charge (RUC) lead at consultant CDM Smith, told FOX 2 Detroit.
Democratic Michigan Gov. Gretchen Whitmer proposed the program, and lawmakers approved the spending cap in the 2025 budget, according to the public act.
Whitmer leaves office Jan. 1, a month before the pilot is set to begin.
The Michigan Department of Transportation (MDOT) states on its website that participation will be voluntary and “no changes are planned at this time.” The department adds that lawmakers would have to pass new legislation before the state could impose a permanent mileage charge.
James Hohman, director of fiscal policy at the Mackinac Center for Public Policy, told the Daily Caller News Foundation that moving from taxpayer financing to direct user fees would help state residents, but only if the charge replaces the fuel tax.
“Some people within the road lobby have wanted it to be an additional revenue flow rather than a replacement,” Hohman said. “But it’s not a user fee if it’s just an extra charge, and it would not improve efficiency and fairness if it’s just another way to collect revenue.”
A mileage charge would apply to vehicles registered in Michigan, and “one of the difficulties” of the model is charging out-of-state drivers and people who regularly cross state or international borders, according to FOX 2 Detroit.
Out-of-state drivers currently pay Michigan’s fuel tax when they buy gasoline in the state.
The MDOT study “does model and pitch it as a replacement for fuel taxes,” Hohman told the DCNF. Charging out-of-state drivers is “something they’d like to do,” but the Legislature would have to decide how, Hohman said.
MDOT and Whitmer’s office did not immediately respond to the DCNF’s requests for comment.
The State Administrative Board approved a $6,307,178 contract with CDM Smith on June 2 that runs through Dec. 31, 2027, according to the board’s minutes. That works out to more than $6,000 per pilot participant.
The contract covers project management, procurement, statewide public outreach and “legislative engagement” as well as the pilot itself, and the board said the pilot will explore the “technical feasibility, political palatability, and public acceptance factors needed to make RUC viable for Michigan.”
John Peracchio, a member of the advisory committee designing the pilot and an appointee to the State Transportation Commission, said in a Feb. 4 interview with WDIV that one option is to “leverage the embedded telematics” already built into most new and used vehicles. …
“GPS can get you within two meters reliably today,” Peracchio said. Another option, Peracchio said, is “to leverage a smart device like an iPhone, and to marry that data up with information about your vehicle.”
The pilot will cover passenger vehicles only and will test four ways of counting miles: odometer readings, in-vehicle telematics, a plug-in device or a smartphone app, according to the minutes of MDOT’s Aug. 24 technical advisory committee meeting. The committee will grade the pilot on data security and privacy among other criteria, the minutes state.
MDOT’s 2024 survey of 19,160 Michigan residents found that 44% were “not confident that it will result in improved roads,” and more than 30% worried about data privacy and how their miles would be counted, according to the department’s report.
Seventeen percent of respondents said that they would refuse to provide mileage data, and only 25% called a mileage charge the fairest way to pay for roads, behind General Fund dollars at 31%, the report states.
Peracchio said a per-mile system “is analogous to tolling,” though he resists “the ugly gantries, toll tags, tag readers and video capture.” …
Electric vehicles cost Michigan roads approximately $50 million in expected gas tax revenue from 2019 through 2021, according to Bridge Michigan.
The annual shortfall could reach $95 million by 2030 if electric vehicles make up 25% of new sales, according to the Anderson Economic Group study for the County Road Association of Michigan that Bridge reported on in January 2023.
Electric vehicles made up 1.2% of vehicles on Michigan roads, a former Michigan State Police officer told the committee during public comment, according to the minutes.
[In addition to registration charges,] Michigan levies an annual tax of $267 for EV owners and $113 for plug-in hybrid owners, which are among the highest such fees in the country, according to FOX 2 Detroit. …
Michigan has raised its motor fuel tax from 31 cents to 52.4 cents per gallon [effective Jan. 1, 2026] while eliminating the 6% sales tax on fuel, a change the Treasury Department calls a swap rather than a price increase.
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