NEW YORK (CNN/Money) - As cars get more fuel-efficient, states counting on gas-tax revenue will feel the pinch. One alternative: tax people based on how many miles they drive, a scheme Oregon will begin testing in 2005.

Here's how Oregon's plan would work, according to James Whitty, an official with the Oregon Department of Transportation who is overseeing the program.

Two devices would be installed in every new car registered in the state: A GPS (for global positioning satellite) device for indicating whether the car is within Oregon's borders, and a second device to count how miles are driven.

The counter would transmit the number of miles driven in Oregon to a receiver on gasoline pumps whenever drivers stop to fill up.

A mileage tax -- instead of a gas tax -- would then be added to the bill.

Oregon plans a test in March or April of 2005 with 20 vehicles registered around the city of Eugene, said Whitty. The state plans to expand the test to 300 vehicles beginning in October or November.

Oregon, said Whitty, depends on gasoline taxes for more than two-thirds of road revenues, which go to contruction and maintenance. While those revenues haven't started declining yet, they will soon as more gas/electric hybrid cars hit the road, Whitty said.

Cars, whether fuel-efficient or not, take up about the same amount of space on roads and cost the state equally in road costs. As a result, said Whitty, they should be taxed the same.

Eventually, Whitty hopes, tracking systems will be factory-installed, more likely if other states adopt similar plans. That is why Whitty is hopeful that California will also institute such a system.

A similar tax idea has been proposed in California, according to several media reports.