Drivers of hybrid and electric vehicles in Utah have the option to pay about 1 cent per mile driven instead of an annual registration fee.

The state is four years into its pay-per-mile pilot program, which can save some drivers money while also making up for lost gas tax revenue for vehicles that use little or no fuel. Eventually, Utah plans to enroll all vehicles in the program.

RELATED: Michigan may test out gas tax replacement using $5M pay-per-mile pilot

Michigan is considering a similar user-fee system to replace its gas tax and address its nearly $4 billion annual road funding deficit. Legislators have proposed spending $5 million to test out a voluntary program over a two-year span.

To draw from Utah’s experience, the County Road Association of Michigan invited Utah’s director of technology & innovation to Michigan to present on the system Wednesday, June 5 in Lansing.

“As transportation changes, Utah asked what’s a solution that’s sustainable for the long term,” said Nathan Lee, who has served the Utah Department of Transportation for more than 23 years.

“For us, our program is an opportunity for people to make choices.”

The average Utah driver pays $2,464 per year between gas and fuel taxes (18 cents per gallon federal and 35 cents per gallon state). That’s way more than the average annual cost of $850-$955 for EV drivers, according to Utah’s DOT.

Michigan drivers pay the same in federal gas tax, and slightly less in state fuel tax (30 cents per gallon).

If Michigan ditches its gas tax, what might a replacement look like?

Currently, Utah’s road usage charge system is only available to drivers of electric and hybrid vehicles. About 20% of eligible drivers have enrolled, though Lee said that rate has been rising since the 2020 implementation.

All drivers of hybrid or electric vehicles have to pay an additional vehicle registration fee annually, as is the case in Michigan ($155 on top of plate and tab fees). Those that enroll in the usage-fee program forgo that fee and instead pay 1.06 cents per mile.

“If you only drive 6,000 miles per year, you’d pay half of the fee you’d pay at registration,” Lee said. “You could drive 15,000 miles before hitting that fee, which is more than what the average driver does.”

Utah legislators initially planned to expand the program to gas- and diesel-powered vehicles as well by 2032, but Lee said he expects that timeline to be pushed back. With 4.5% of vehicles on the road being electric/hybrid, Lee noted there isn’t a significant need to rush it with gas tax still being paid by 95.5% of drivers.

Program participants have the choice to submit a photo of their odometer monthly to report their miles driven to the state, or to allow their vehicle’s technology to automatically report miles.

Lee said there’s technology available to exclude miles driven outside state lines. Those miles account for about 6.5% of miles driven, according to aggregate level data available to the state.

As of May, Utah stopped differentiating where the miles were driven and allowing drivers to exclude their out-of-state miles. Lee said the tech could be useful down the road, and may be ahead of its time.

“The tech works great, it’s just a lot more expensive to collect that information,” he said. “If your idea is about how do I get revenue for roads, the last thing you want to do is spend a lot of money collecting information.”

Utah’s program doesn’t allow commercial vehicles to enroll at this point. Those vehicles already pay gas tax, plus a fee through the International Fuel Tax Agreement that is returned to each state based on miles traveled within their borders.

Lee said there are ongoing conversations and pilot programs looking at ways to ensure commercial vehicles are paying their share of road usage fees in a future where fuel taxes are replaced with different revenue streams.

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Details around Michigan’s proposed pilot program haven’t been finalized yet. However, it’s expected the voluntary pilot will start by the end of 2024 and conclude by the end of 2026.

Participants would pay a milage-based fee and receive a refund for any motor vehicle tax or vehicle registration fees paid during the study.