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Part V of the FRAME Act Policy

The Fiscal Honesty

Replacing a dying fuel tax with a user-based revenue system

Part V · The Fiscal Honesty

The policy.

Part V — Title VII of the Act as the paper presents it — is a revenue transition in three steps, taken in order. In the short term, two bridge measures: dedication of tariff and duty revenue on imported steel and iron to the Highway Trust Fund (Sec. 702), and a transitional fee on battery electric vehicles under Fair Share for Fair Roads (Sec. 704), capped for equity (Sec. 705). In the long term, a tested route to a Vehicle Miles Traveled fee: the five-year American VMT Choice Pilot Program (Sec. 708), offering participants a choice of reporting systems (Sec. 709), governed by statutory privacy protections (Sec. 710), and ending in a report to Congress with a legislative framework for conversion (Sec. 711).

Part V · The Fiscal Honesty

What it will do.

Sec. 702 redirects revenue from tariffs and duties on imported steel and iron into the Highway Trust Fund, linking the materials used to build infrastructure to the fund that maintains it. Sec. 704 assesses a transitional fee on all battery electric vehicles — the class of vehicles that pays no fuel tax at all. Sec. 705 caps it: under the Equity Cap, no EV owner pays more than the average gas-tax contribution of a traditional light-duty vehicle.

The pilot is the substantive policy. Under Sec. 708 it runs nationwide for five years to test a VMT transition at scale. Sec. 709 gives participants a menu. The Simple Odometer System is privacy-first: non-GPS reporting of total miles only, assessed at a flat national rate. The Smart VMT System is opt-in and technology-enabled, allowing variable rates — lower for rural travel, with a surcharge for travel in highly congested urban areas at peak hours. Revenue from urban congestion surcharges returns directly to the metropolitan area where it was generated, to fund local transit and safety projects.

Sec. 710 sets the conditions under which any of this data may exist: pilot data may not be used for law enforcement or surveillance purposes without a court-ordered warrant; collection is limited by data minimization to what is necessary to assess the fee; and stored data must be encrypted and anonymized. Sec. 711 closes the pilot with a report to Congress carrying a legislative framework for converting the system from a tax on consumption to a fee for access.

Part V · The Fiscal Honesty

What it solves.

The paper states the arithmetic without ornament. The federal gasoline tax stands at 18.4 cents per gallon and has not been increased since 1993; inflation has consumed a staggering percentage of its purchasing power. The Highway Trust Fund has been effectively “dead” since 2008, sustained by emergency General Fund transfers totalling over $275 billion. Electrification and fuel efficiency then sever, vehicle by vehicle, the remaining link between using the road and buying fuel. A revenue base that shrinks as the fleet modernizes cannot fund the system the rest of the Act builds. Part V answers with a bridge (Secs. 702, 704–705) that asks non-fuel vehicles to contribute on capped, comparable terms, and with a pilot (Secs. 708–711) that generates the operational and public evidence — participation, cost of collection, privacy performance, rate behavior — on which Congress can decide a permanent conversion, rather than legislating one untested.

Part V · The Fiscal Honesty

Planned and measurable outcomes.

What the paper itself commits to — and, separately, the indicators it implies. The second list is drawn from the paper's logic; the paper does not state those as targets.

Stated in the paper

  • Tariff and duty revenue on imported steel and iron directed into the Highway Trust Fund (Sec. 702).
  • A transitional fee on all battery electric vehicles (Sec. 704), with no EV owner paying more than the average gas-tax contribution of a traditional light-duty vehicle (Sec. 705 Equity Cap).
  • A five-year, nationwide VMT pilot (Sec. 708) with two participant systems: flat-rate, non-GPS odometer reporting, and an opt-in variable-rate Smart VMT system (Sec. 709).
  • One hundred percent of urban congestion surcharge revenue returned to the metropolitan area that generated it, for local transit and safety projects (Sec. 709).
  • Privacy as a statutory condition: no law-enforcement or surveillance use without a court-ordered warrant; data minimization, encryption and anonymization (Sec. 710).
  • A final report to Congress with a legislative framework for system conversion (Sec. 711).

Indicators the paper implies (not stated targets)

  • Highway Trust Fund receipts from Sec. 702 dedications and Sec. 704 fees, year by year.
  • Pilot participation and retention under each Sec. 709 system, and the revenue collected per mile under each.
  • The cost of administering each reporting system relative to revenue collected.
  • Congestion surcharge revenue returned to metropolitan areas, and the projects it funds.
  • Privacy compliance: data elements collected per participant, and any warrant-based disclosures.

The evidence

The problem in numbers.

The problem this Part answers: solvency. The Highway Trust Fund's revenue base is frozen, eroding, and already exhausted on current projections.

Exhaustion: FY2028 (highway) and FY2027 (transit).

On CBO's February 2026 baseline, the Highway Account's end-of-year balance falls from $56.4 billion (2025) to $36.4 billion (2026) to $14.5 billion (2027) and is exhausted in FY2028; the Mass Transit Account is exhausted in FY2027. The cumulative shortfall by 2036 reaches roughly $295 billion — $201.8 billion highway and $93.1 billion transit. — Congressional Budget Office, *Highway Trust Fund Accounts

Baseline Projections* (February 2026). ; corroborated by the Tax Policy Center. Source

$275 billion.

Since 2008, Congress has covered the gap with General Fund transfers into the Trust Fund. As the Presentation Deck states it: $275 billion in General Fund bailouts since 2008 (CBO). Solvency by bailout is the current system, not an aberration in it.

18.4 cents, unchanged since 1993 — worth roughly 38–39 percent less.

The federal gasoline tax has not moved since 1993 and is not indexed; measured against consumer prices it has lost about 39 percent of its purchasing power, and about 38 percent measured against highway construction costs (an indexed tax would stand near 29 cents).

Institute on Taxation and Economic Policy, analysis of federal gas tax erosion. Source

27.1 mpg and climbing; 11.5 percent electric or plug-in.

New-vehicle real-world fuel economy reached a record 27.1 mpg in model year 2023, up 40 percent since model year 2004, and battery-electric, plug-in hybrid and fuel-cell vehicles were 11.5 percent of production (projected 14.8 percent for model year 2024). Every gain in efficiency and every electric vehicle shrinks the per-mile yield of a per-gallon tax — the erosion is structural, not cyclical.

U.S. Environmental Protection Agency, 2024 Automotive Trends Report (December 2024). Source

+$340 million over ten years.

Oregon's road usage charge program (OReGO) is the longest-running U.S. evidence on the alternative: ODOT estimated a per-mile charge would raise about $340 million more in gross revenue over ten years than the fuels tax it replaces, precisely because it is not eroded by fuel efficiency, and the state's Road User Fee Task Force found rural drivers as a group would pay less under a per-mile charge than under the fuel tax.

Oregon Department of Transportation, Road User Fee Task Force Report (2017). ; revenue estimate as reported by Streetsblog California (2017). Source

Why this approach is the modern one

The legacy approach pretends a 1993 revenue instrument can fund a 2030s system, and fills the difference with general-fund transfers (figure 2) whenever the balance approaches zero — figure 1 shows the balances now reach zero inside the baseline window even after those transfers. The erosion has two independent drivers, both measured: inflation against an unindexed rate (figure 3), and a vehicle fleet whose efficiency and electrification (figure 4) permanently reduce gallons per mile driven. No adjustment to the gas tax alone answers the second driver. FRAME therefore does two things in sequence: it stabilises the fund with revenues that exist now — dedicated steel and iron tariff revenue (Sec. 702) and an electric-vehicle fee with an equity cap (Secs. 704–705) — and it builds the exit from the per-gallon base through a five-year American VMT Choice Pilot (Sec. 708), offering a non-GPS Simple Odometer option or an opt-in Smart VMT option (Sec. 709) under statutory privacy protections (Sec. 710), reporting to Congress before any conversion framework takes effect (Sec. 711).

That sequencing follows the only mature domestic evidence available. Oregon has run per-mile charging in pilot or program form since 2006–07; its findings (figure 5) answer the two standard objections — revenue adequacy and rural equity — with operating data rather than modeling, and its participants have consistently rated the charge acceptable once experienced. A charge per mile driven is also the only major revenue design whose base grows with road use itself, which is what "user pays" meant when the Trust Fund was created in 1956.

Evidence check

road-user-charging evidence is state- and pilot-scale. Collection costs per dollar raised are materially higher than for the fuel tax, and privacy and public acceptance at national scale are untested — which is why FRAME pilots for five years and reports to Congress rather than converting outright.

Part V as a designed paper.

The policy of this part, set out in full with its evidence — a printable policy paper in the FRAME series.

Download the Part V paper (PDF)