States pay for roads in a variety of ways, including vehicle registration fees and tolls, plus money from their general funds. Gasoline taxes account for a large portion of revenue, with the average U.S. rate currently at 32.3 cents a gallon at the state level along with 18.4 cents in federal tax. (Both figures are somewhat higher for diesel fuel.) Even without the impact of electric vehicles, gas-tax revenue is falling as new cars become more fuel efficient and Americans do less driving.

So what can be done? In the short term, the simple fix is to raise gas taxes, most of which haven't been adjusted in years, even as gas prices themselves have climbed (the average price of a gallon stood at $3.83 in September). Yet Mississippi, for example, still charges the same 18 cents-per-gallon tax that it has since 1989. The federal gas tax has not been changed since 1993. The value of these cents-per-gallon taxes has eroded over the decades because, thanks to inflation, they now buy less road maintenance and construction.

Faced with crumbling infrastructure and reduced revenue, 31 states and the District of Columbia have implemented some form of variable-rate gas tax. By tying rates to a broader range of metrics, lawmakers avoid the need to cast annual votes to adjust rates. Maryland, for example, revises its gas tax each June based on inflation and the average cost of a gallon during the previous year. North Carolina relies on a complicated formula that takes into account changes in the state's population as well as the Consumer Price Index. Alabama and Minnesota base their gas taxes on the annual cost of highway construction. Illinois and Indiana treat gas like any other retail product under their general sales tax. Georgia is the first state to link gas taxes to fuel efficiency standards.

Several states are seeking to recoup revenue lost to electric vehicles by imposing new fees on EV owners. Last month Texas began charging $400 to register an EV, plus an additional $200 every year thereafter—on top of the $50.75 registration fee all car owners pay. In all, 33 states assess annual EV fees, according to the National Conference of State Legislatures. Meanwhile, seven states levy a tax on electricity at EV charging stations. Most are directing the funds to road construction, although Iowa's tax is being placed in a statewide economic development fund.

The fees aimed at EV ownership underscore the contentious nature of the gas tax issue—both economically and environmentally. In some states, rebates and credits have been offered to encourage purchases of EVs and hybrids among consumers who believed that one of the advantages of ownership was avoiding gas taxes.

According to Carl Davis, research director for the Institute on Taxation and Economic Policy, "Both federal and state gas taxes have lost purchasing power in the face of growing infrastructure costs and better vehicle fuel economy. Some of the consequences of that were delayed by the federal Infrastructure and Jobs Act of 2021, which provided a large infusion of federal infrastructure dollars to states. But when that funding winds down, the shortfall created by inadequate gas tax revenue will be hard to ignore."

Among the considerations in replacing gas taxes are whether new formulas should be based on miles driven, fuel efficiency, rural versus urban locations, each owner's income level or some combination of all four. The weight of commercial vehicles might also be factored in.

A road-usage fee is the most frequently cited long-range alternative, as Oregon's task force determined 22 years ago. More than a dozen states are studying it and four—Oregon, Utah, Virginia and Hawaii—have implemented voluntary pilot programs. Hawaii's model, which begins in 2025, will apply to only electric vehicles at the start, with motorists opting to pay a flat rate annual fee of $50 or get charged 0.8 cents per mile.

Basing fees on miles driven typically requires either periodic odometer readings, as in Hawaii's program, or, most efficiently, tracking via Global Positioning System devices. Hawaii moved away from a GPS approach after surveys showed that Hawaiians, like most Americans, are worried about electronic monitoring of their daily activities.

Michigan's new budget includes $5 million to survey residents about using GPS devices to track mileage. The state lost $50 million in gas tax revenue between 2019 and 2021, a figure that could climb to $470 million annually, based on projected EV sales.

Eric Paul Dennis, a transportation analyst at the Citizens Research Council of Michigan, believes that after decades of research without a fully functional mandatory program in any state, the outlook for road-use taxes is dim.

"There's no program design that I have seen that I think can be implemented at scale in a way that is publicly acceptable," he said. "That doesn't mean that a program can't be designed to do so, but I feel like if you can't even conceive of the program architecture that seems like something that would work, you probably shouldn't put too much faith in it."

David Gomberg, a Democratic state representative in Oregon and co-chair of the Budget Committee, expressed concern that road-use taxes will promote geographic discrimination. "People who live in rural communities drive more than people in urban communities," he notes. "You drive further to get to work, to school, to the store." Basing fees on fuel efficiency also concerns him. "Often people in rural communities have less fuel efficient vehicles. You don't put a bale of hay on the back of your Tesla."

Gomberg said a simpler and more equitable approach might be to fund roads with the same broad-based taxes that states use to pay for public schools. "We're looking at a seismic shift in how we pay for roads," he said. "Nothing is off the table."

But if Oregon has learned anything after 22 years of study—including a voluntary program with fewer than 1,000 participants—it's that the road to finding an alternative to gasoline taxes is filled with potholes.

(c) Peter Funt. This essay originally appeared in The Wall Street Journal.