Virginia official outlines mileage-based user fee pilot and highway‑use fee, citing fuel‑tax revenue erosion

Scott Honeys, assistant commissioner for finance at the Virginia motor vehicles department, told the Senate Transportation committee that Virginia launched a mileage‑based user fee pilot and a highway‑use fee after a 2018 working‑group study found fuel‑tax revenue was eroding even as vehicle miles traveled rose. "Virginia has been using taxes on motor fuels to fund transportation for over 100 years now," Honeys said, and the state needed new tools to sustain transportation funding.

The working group concluded the 2018 revenue drop reflected rising fuel economy across traditional internal‑combustion vehicles as well as growth in electric vehicles. Honeys described the study's projected impacts to 2030, saying a chart in the report showed roughly 25,600,000 (about 25.6 million) gallons’ equivalent impact from EVs by 2030 while rising fuel‑efficiency in conventional vehicles produced a larger revenue effect.

Honeys summarized legislative action taken after the study: the General Assembly adopted many working‑group recommendations in 2020, including two 5¢ per‑gallon increases to the state gas tax (a 10¢ total increase) with annual indexing to the consumer price index and the establishment of a highway‑use fee assessed at vehicle registration. He said the highway‑use fee defines "fuel‑efficient" vehicles as those achieving 25 mpg or greater and applies a formula that compares an efficient vehicle's fuels‑tax contribution to an average vehicle; the fee collects 85% of that calculated difference.

On program operations, Honeys described Virginia's optional mileage‑choice pilot (the mileage‑based user fee option) and the common commercial account manager the state contracted with (MOBIS) to administer enrollment, device distribution and customer service. He said customers can enroll using either a plug‑in OBD‑II device or a telematics/software integration and can opt for GPS‑enabled or non‑GPS (odometer‑only) tracking; "Virginia doesn't require GPS information, for participation," he said. About 60% of participants choose GPS features for app functions, he added.

Honeys gave participation and finance figures: Virginia has roughly 7 million registered vehicles, about 2 million meet the 25 mpg threshold and the program has about 25,000 participants (about 1% of eligible drivers). The pilot operates at an average cost of roughly $200,000 per month; Honeys said the state used a $3.3 million federal grant to offset operating costs and that since launch the program has collected about $2 million in fees for about 200 million miles traveled. He acknowledged the per‑participant acquisition and operating costs make per‑mile collection relatively expensive and said the state is studying other collection options (for example, periodic odometer capture) learned from other states.

Committee members pressed for background materials and technical detail on parameters such as the 85% factor and the 25 mpg threshold; Honeys said the working‑group report includes the summary material and that he would provide the study to committee staff for follow‑up. He also offered a vendor contact and said Virginia negotiated contract extensions and per‑unit price reductions after seeing participant renewal behavior.

The committee did not take a vote; members requested the 2018 study and vendor contact information for follow up. The presentation concluded with an offer by Honeys to answer additional questions by email through committee staff.