A new report by Rand Corporation suggests the pending reauthorization of the federal transportation bill should look at more direct ways to fund the U.S. transportation system, such as charging drivers directly for the miles they travel.

"Failure to raise fuel taxes in recent years to keep pace with inflation and improved fuel economy has created significant transportation funding shortfalls at the federal and state levels," said Paul Sorensen, lead author of the report and an operations researcher at Rand, a nonprofit research organization.

The report, "Implementable Strategies for Shifting to Direct Usage-Based Charges for Transportation Funding," focused on the strengths and limitations of alternate mechanisms for adopting mileage-based road use fees. The report was requested by the American Association of State Highway and Transportation Officials and prepared for the National Cooperative Highway Research Program of the Transportation Research Board, a division of the National Research Council.

"The prospect of more fuel-efficient conventional vehicles and alternative-fuel vehicles in the coming decades-though clearly beneficial in terms of the environment and energy security-threatens to make funding challenges worse," Sorensen said. "Shifting from fuel taxes to mileage-based road use fees would help to overcome this problem, and there are several promising options for implementing such a shift."

The report found that the motivations for transitioning to a system based on vehicle miles traveled fees--to raise revenue and address additional policy goals--are strong.

Rand researchers explored several options for calculating VMT by drivers. The most promising options include estimating mileage based on fuel consumption; metering mileage based on a device that combines cellular service and a connection to an on-board diagnostics port; and metering mileage based on a device featuring a global positioning system receiver. Systems that rely on self-reported odometer readings or annual odometer inspections were found to be unreliable and too difficult or expensive to administer and enforce.

According to the report, real-world trials of these options could be funded now, to determine which system ultimately will have the best combination of accuracy, cost-effectiveness and ease of implementation.

But Martin Wachs, director of the Transportation, Space, and Technology Program at Rand, said another major concern for policymakers will be privacy issues.

"Even though people's movements can now be tracked to some extent through their cellular phone records, law enforcement officials often need a court order to access that data," Wachs said. "Consumers will be understandably concerned about on-board devices tracking their vehicle's position and movement, and will want safeguards as to what kinds of data are recorded and who has access to that information."

Liisa Ecola, another co-author of the report, said that there is no guarantee that instituting fees based on vehicle miles traveled will be any less controversial than increasing fuel taxes. Also, the collection of VMT fees will likely be more costly and more burdensome than the collection of fuel taxes.

"However, it's clear that the present system isn't working and fees based on vehicle miles traveled, if properly implemented, could result not only in more money to support the nation's transportation system, but also spread the cost burden in a more fair and equitable way," Ecola said.

To download the full Rand report, click here.