Monday, May 17, 2010

Brilliant Strategy for Transition to Road User Fees

Everybody in transportation knows that we need to move from a gas tax to a road user fee in order to finance transportation infrastructure. Regular people – that is, everybody else – hate this idea and doesn’t get it. A colleague has come up with what I think is a genius political approach that I describe in the second half of this post. The first half describes the problem.

This is what the public says:

I’m already paying for the roads through my taxes. [Actually, you are paying with 18 year old prices since the fuel tax hasn’t been changed in that long. In the meantime, the costs have increased enormously. And compared to the price and volatility of the gas itself, the taxes are not that significant a percentage. ]

It works great. Why touch it? If the amount of money raised is the problem, just raise the tax. [Well, 1) you can’t just raise the tax, which is why it hasn’t happened in 18 years even though we are experiencing a crisis in our transportation infrastructure which is crumbling and ancient. If you’re lucky enough to do any traveling to Europe, you’ll note that our airports, train stations, trains, roads, and sidewalks are so much worse than what you see there. We are looking like the poor, ragged cousin. And if the fuel tax is broken as a means of raising money, as we move to more fuel efficient vehicles and alternative fuels, it will get increasingly broken.]

Paying by the mile is an unfair and regressive as a tax. What about the miles I drive out of state or on private roads? What about poor people? [Today’s gas tax has all those same problems. Some of the road user fee implementations could correct some of those problems.]

What about my privacy? I don’t want the government to know my every move. [Good point, read this that I wrote earlier]

THE SOLUTION. Here is a strategy that can get political buy-in and offer us a transitional path toward adopting road user fees. I’m thinking it is pretty clever and viable.
Put together a working group of legislators and outside stakeholders to discuss how we pro-actively address the impending transition to electric vehicles. Here is how the logic can proceed:

1. Everyone is willing to agree that EVs should pay their fair share, and that the gas tax system let's them off the hook.

2. It is far better to pro-actively come up with an appropriate solution before there are lots of them. With the tax expectation in place, people can buy EVs with full knowledge, rather than government trying to change the rules after this has become a significant market with a significant constituency.

3. The bill itself should be lightly worded. Owners of electric vehicles need to pay for miles driven within the state according to some referred-to rate plan (which definitely needs to adjust with inflation). The simplest means would be an odometer reading at time of inspection. Other mechanisms that result in the appropriate payment, as approved by the state, would also be allowed.

4. To be fair, any driver/vehicle can choose to opt in to this new method of road user fees, instead of paying gas taxes.

We have a platform for experimentation on this new payment method, and working it through the entire system with low volumes. We start with the lowest common denominator for payment (odometer reading) that side steps privacy and technology concerns. However, other technology solutions could come online and be approved by the state (payment with GPS using smart phones, or with other in-vehicle devices – those built in to the car or those retrofitted on existing vehicles). Having multiple payment options will ultimately provide consumers with an array of choices that many people will find more appealing. Some solutions will address the privacy issues. Some will be able to track out-of-state versus in-state miles. Just about every other option could be a preferred choice over the crude odometer reading because it will reduce the distance taxed. As time goes on, there would likely be all sorts of methods for payment and collecting of the data that use a wide range of devices, evolve over time, and take the burden of devices and refreshing them away from the state.

That is the gist. I think it is a brilliant strategy that should have few detractors now, gives a slow easy opportunity for working the new payment mechanism through the collections systems, and opens up the path for any kind of vehicle, to opt into the system.


kevin mclaughlin said...

Recently I am hearing people call electric cars 'the problem, not the solution' and I use that here only to reference the idea that some folks might think that electric cars should relieve them of all enviro-tax burdens (and maybe more). ie electric cars are not a magic bullet.

Also, this post does not address the idea of 'congestion' only a shift from gas tax to mile tax. Obviously a mile-based taxed can be used for congestion ($/mile changes), but a bit curious why this was not addressed (when places like NYC have crossed the mental threshhold into this kind of tax already).

as always, great ideas and solutions.

Robin Chase said...

Good points Kevin. You make a point I made to the Dutch Minister of Transport yesterday. Some cities and countries are so eager to encourage fuel-efficent/alternative fuel vehicles that they discount to zero tolls, parking, and congestion charges. Not right!

We do want cleaner vehicles to pay a little less than dirty ones, but these vehicles still take up space and congestion roads, and they still need roads and bridges to drive on and so should pay their way.

My recommendations for the actual implementation of road user fees should be a device/payment mechanism that enables layering on congestion pricing. See this old post for more on that:

Uncle Mike said...


There is a major fault with this entire argument, at least as far as building and maintaining roads are concerned. Nearly all wear and tear and damage to roads is caused by large and overweight trucks. Without the damage caused by these trucks, most roads would last 200 years or more. Every road engineering report I have ever seen agrees on this point.
For political reasons, the US dramatically subsidizes the trucking of freight. Political vectors include the power of the trucking industry, which discourages the more efficient rail freight industry; the rail freight industry itself, which carefully balances maintaining its oligopoly with preventing new tracks for passenger trains and new entrants; and NIMBY communities that oppose the expansion of rail for freight and passengers.
Cross-subsidizing the trucking industry even further, by extracting a larger amount of money from passenger cars to help pay for repair of the damage caused by trucks, won't solve our transportation problem. We need to make trucks pay the full cost of the damage they do, and we need to require more freight to go by train. We need to re-regulate both trucking and rail freight rates so that money can be raised to pay for maintenance and new freight infrastructure. This in turn will open the door for more passenger train traffic, local, regional, and intercity. And THAT is the only way we will get cars off the roads AND reduce harmful auto exhaust and dependence on oil.