“We focus on mileage-based user fees as if they are an end, but they are really just a vehicle to an end,” Jack Basso, chair of the Mileage -Based User Fee Alliance, told the audience at what the group hopes will the first of an annual series of conferences. While everyone in the audience could agree with that statement, there was a sharp division over what should be the real purpose of such fees.

For Robert Atkinson, who recently chaired the National Transportation Infrastructure Financing Commission, the purpose of such fees is to give transportation users incentives to use the transportation system efficiently and transportation providers incentives to manage it efficiently. Such fees, he pointed out, would make it easy to use congestion pricing to relieve or eliminate the waste of traffic jams. Moreover, creating a “platform” for such fees would allow a variety of new groups to manage roads. Private parties could build and toll roads in congested areas. Neighborhood associations could take over street maintenance.

Atkinson is no libertarian, having been associated with center-left groups for most of his career. But he is an economist and appreciates the use of market forces to improve efficiency.

Many at the conference, however, regarded Atkinson’s view as hopelessly visionary. They saw mileage-based user fees (or what the Antiplanner calls vehicle-mile fees and others call road user charges) as simply one of many ways of raising money to pay for construction, reconstruction, and maintenance of transportation infrastructure. IF that’s all it is, then the elaborate, GPS-based technological system that Atkinson and others (including the Antiplanner) propose is unnecessary. Instead, all that is needed is some way for people to report their odometer readings and pay a fee based on those readings.

In fact, some at the conference weren’t even interested in that. James O’Keefe, of the Alliance of Automobile Manufacturers, warned that auto companies are not interested in becoming tax collectors and will resist any efforts to mandate that fee technologies be built into new cars. Mileage-based user fees, he said, are a “very elegant and complex solution” whose costs are not worth the benefits. He noted that Oregon Representative Peter DeFazio has proposed a new gas tax that would be indexed to both inflation and average auto fuel efficiency, so that as fuel economy increases the gas tax does as well.

William Chernicoff, of Toyota, seemed to agree, saying that congestion and similar issues should be addressed through other policies. The only issue he cared about seemed to be road maintenance, but he noted that most maintenance problems were caused by heavy trucks. A 5,000-pound SUV that travels 15,000 miles a year, he asserted, caused no more highway damage than a 2,500-pound car that travels 10,000 miles a year. So he proposed that states charge all auto owners an annual access fee while the federal government collect vehicle-mile fees from heavy trucks.

Obviously, not everyone agreed with this. But those who define the problem narrowly as finding new revenues to replace gas taxes that are declining because of inflation and more fuel-efficient cars, it’s hard to escape the conclusion that there are simpler ways of raising funds than mileage-based user fees.

Yet increasing revenues are not the only purpose of mileage-based user fees. One problem with gas taxes is that they are collected mainly by the federal and state governments, but most cities and counties have to rely on general funds to build and maintain roads. It’s no coincidence that local roads and bridges tend to be in worse shape than state ones. A mileage-based user fee system would allow local governments to piggy-back and end their subsidies and improve the condition of their roads.

Mileage-based user fees also provide elegant solutions to things that O’Keefe and Chernicoff seemed to regard as side issues, such as the traffic congestion that costs Americans well over $100 billion a year, overly political fund allocations, and the potential for privately funded roads. As Atkinson noted, adoption of the wrong half-way measures, such as an odometer fee or annual access fee, would result in the “QUERTY problem,” that is, a dead-end solution that can’t evolve into something better.

The most refreshing presentation of the day came from Oregon’s own state Senator Bruce Starr, who persuaded the state legislature to start an ambitious pilot test program involving 5,000 motorists. “Ultimately, this issue will be solved at the state level long before anything happens at the federal level,” he said. “After we have tens or hundreds of thousands of Americans test this in a dozen or two dozen states, we can find the best practices and implement them at a national level.”

Some people fretted that, if the states each go their own way, they’ll end up with systems that are incompatible with one another. Trey Baker of the Texas Transportation Institute pooh-poohed this problem. More and more cars are being built with built-in computers and GPS systems. People with such cars, or who have smart phones, will be able to work with any state’s system simply by downloading an app to their on-board computer or smart phone. At worst, people might need to have 50 apps for all 50 states.

As Starr, Baker, and others envision it, states will make mileage-based systems available to people as an option at first. Starr eventually wants to mandate that cars that get more than 50 mpg join the system. Over time, this threshold would be reduced, and perhaps new cars that come with on-board electronics would be required to join the system as well. For many years, then, the gas tax and mileage-based systems would co-exist.

Naturally, there was a lot of discussion about the privacy issue. The only comment the Antiplanner made all day was to point out that the privacy issue is largely a red herring, as no privacy advocates were heard to complain when the National Highway Traffic Safety Administration proposed to mandate that all new cars come with vehicle-to-vehicle communication systems, which will provide people with no privacy protection at all (except not to drive). Edward Regan, a toll expert with CDM Smith, pointed out that, “In the toll industry, almost every toll agency offers a privacy option–and almost no one takes it.”

In any case, there are lots of ways to design systems that absolutely protect people’s privacy. As Starr said, the Oregon system will record how much people owe but not track where they go.

The last major speaker of the day was Peter Rogoff, formerly the Federal Transit Administrator but recently bumped upstairs to be “acting under secretary of transportation for policy.” Rogoff outlined the Obama administration’s plan to spend almost twice as much money on transportation as revenues, but offered little information about the administration’s view of mileage-based user fees.

When pressed during Q&A, Rogoff said, “We left a user-fee system in 2008,” when Congress began appropriating billions of dollars each year to supplement gas tax revenues to the highway trust fund. “One of the pitfalls of a user-fee system,” he added, “is all the users want the money they pay to come back to the facilities they use, which prevents cross-subsidization between modes and states.” This is an incredible admission even for someone representing a left-wing administration.

It’s true that Congress has had to transfer nearly $55 billion in general funds to the highway trust fund since 2008. But that’s only because Congress insists on spending about $10 billion more per year than the revenues to that fund. If Congress cut back spending to revenues, states would have the incentive to find local revenues to pay for roads and other transportation.

Unfortunately, as several speakers pointed out, the highway trust fund is about to run out of money again. Under Congressional rules, if the trust fund (which has normally had a balance of about $20 billion) falls below $4 billion for the highway side and $1 billion for the transit side, then the Department of Transportation will be restricted in how it can give the money to the states. The states contract out work in anticipation of getting federal funding for that work, and if the funds aren’t available, the states will have to default on their contracts.

Current estimates are that the highway fund will fall below $4 billion in July and the transit fund will fall below $1 billion in August. This means Congress will have to infuse another $10 billion or so into the fund before the August recess.

Does this mean, as Rogoff says, that we are no longer under a user-fee system and we can throw out all notions of such fees? Hardly. The advantages of a user-fee system over a politically driven system are so great that we should make every effort to return to such a system. User-fee driving programs tend to be more efficient, their infrastructure is better maintained, and resources tend to be allocated where they are needed rather than to the politically powerful. From the administration’s point of view, however, spending lots of money that we don’t have is a way of consolidating political power because it makes states, contractors, unions, and others beholden to the party doing the spending.

In short, Rogoff served the valuable purpose of showing what will happen if we don’t go to a mileage-based system. Mileage-based user fees won’t be implemented soon enough to avoid the July funding squeeze, but the president’s plan to make a one-time addition of $150 billion to the highway trust fund merely postpones the problem to another administration.

One thing that I didn’t hear anyone point out is that the federal problem is different from the state problem. For many members of Congress as well as the president, the federal goal is to create political favors. For them, it doesn’t matter where the money comes from. For most of the states, the goal is to create a self-sustaining system that provides both highway providers and highway users with good incentives. For them, where the money comes from is absolutely critical.

Thus, Senator Starr’s prediction that the states will solve the problem first seems likely to come true. That solution, however, would be delayed if Congress agrees to something like the president’s proposal, which would nearly double federal funds going to the states, because it would take the pressure of the states to find a more permanent alternative to the gas tax. For those like Atkinson who want an efficient system, gridlock at the federal level would actually be a good thing.