Is the gas tax a user fee?

Here is my answer for the National Journal Transportation Blog.

"User pays" was the foundational concept and an interesting one to reflect on. The question notes that current gas taxes inadequately cover even simple maintenance requirements on existing roads, yet the phrase resonates strongly with drivers. They sincerely believe that they have paid for all that is required with their gas taxes at the pump.

If the road user really paid what driving costs to maintain, what driving costs to widen and build new, what driving costs in police forces, emergency personnel and equipment, lifetime effects of accident road deaths and injuries, watershed destruction, groundwater and run-off pollution, excess asthma rates, higher incidence of heart disease and negative effects for those living near highways, congestion, and CO2 emissions (etc, my list is truncated), we wouldn't be in the unfunded situation we are in today.

Also, if "user pays" included all those "externalities" (so many things in quotes), it would seem perfectly appropriate for the gas tax to include pedestrian and sidewalk improvements, mass transit, electric charging stations, and environmental remediation efforts because all of those things are attempts to mitigate the real and costly negative impacts caused by the car-driving users.

At the end of the day, if we take political realities into account, the one thing I ask for is for drivers to truly understand what their fuel tax is actually paying for, and what is quietly and covertly being subsidized by their other taxes. Because we haven't included these costs in the gas tax, we are using local, state, and government money brought in from other sources to cover the difference. When we say we don't have enough money for education, or welfare, or parks, or elderly programs, we need to recognize that this shortfall is in part because we are paying for all sorts unfunded car-related expenses with non-gas-tax dollars.

To read how other experts weigh in on this, go to the National Journal Transportation Blog.

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Protecting location privacy of drivers

As background to this one. you might want to read the more general article we just wrote for the Huffington Post on why we call for a national dialogue about (and promise for) location privacy. Below are some specific ways we might technically provide location privacy in for cars.

We start with what we consider to be the gold standard:

A privacy-preserving taxing protocol should reveal the minimum possible amount of information needed to achieve the policy goal, in this case the amount of tax owed.

Most current systems (e.g., E-ZPass) operate on the "trust us" model:
the government promises to properly respect the security of the driver, but collects potentially invasive information. But we all know, there just aren’t any “trusted third parties” that can be trusted forever. And we don’t need to rely on them.

For some kinds of applications, simply having a tamper-resistant device in the car that calculates the tolls and reports only the amount owed would suffice. Such a device could be auditable (so that drivers could know that the device is not secretly delivering information about their position) and equipped with a self-destruct feature (to erase location information) so that the driver could hide her information if necessary (perhaps at a cost of paying an excessive "default toll").

But wouldn't it be great if the tolling and traffic software could run on any smartphone? For this kind of setup, there are more sophisticated solutions available. One of the truly amazing aspects of modern cryptography is that it makes it possible to design protocols for mutually untrusting parties to act as if there is a trusted third-party mediating, without actually requiring such a third-party. For instance, electronic cash allows people to pay bills anonymously and untraceably, but in a way that assures merchants that they are actually getting paid (it's hard to forge). Anonymous credential systems allow individuals to prove that they are authorized to access certain data or enter particular areas without revealing their identity. We need to demand that these sorts of protections are required and part of any future road pricing systems.

Cryptographic protocols can be designed to allow the government to collect taxes, detect infractions, and record aggregate traffic statistics without violating the privacy of drivers. For a more comprehensive discussion of such solutions, see here. The big contractors likely to be involved in designing and implementing the road pricing systems (e.g., IBM and Siemens) have on staff some of the finest cryptographers in the world. Requiring such protections would pose no substantial obstacle to the technical adoption of a mileage-based system.

This post was co-authored by Andrew Blumberg.

Photo by Gerlos.

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Advice for Cities & Towns on Green Transport

I sometimes get asked for the quick hits that a local government can undertake that is within their jurisdiction. Here is what I send them:

1. Parking maximums for buildings (all kinds) rather than parking minimums. If the developer is ready to build without parking, their ear is closest to the market, let them do so. This will reduce the cost of housing by as much as 25%, increasing affordable housing within the city. Every parking space built is a magnet for a car, which will then be driving on city streets, increasing our congestion problems. Yes, I know all about residents desire to protect the existing free on-street parking for themselves. See number 2 below.

2. Make residential parking permit rates much higher, and consider monthly fees rather than annual ones. This will make more parking available for those residents that need to park, by getting off the road cars that are rarely used (this is why we need this to happen monthly, so there is incentive to get rid of your car quickly when you no longer use it often.) In northern climates, it is easy to see the enormous number of vehicles that are little used by walking down a street one week after a snowfall and seeing the number of cars that haven't moved in a week.

3. Charge residents for curb cuts just like on-street parking. Their individual curb cut is removing a space available for others on the street. Curb cuts shouldn't be free for residents or businesses.

4. Give a rebate to residents who don't own cars -- they cost the city less money! less demand for ploughing, road maintenance, police and traffic enforcement, reduced emissions, etc.

5. Do bicycle traffic education for every middle school student (and in driver's ed).

6. Offer $200 rebate to kids on their 16th birthday, good only toward a bike purchase (and registration with the local police).

7. Improve bike and pedestrian connections everywhere. Start with routes to school, around the public library, and convenience/food stores.

8. Paint bicycle lanes on as many oversized roads as you can simply by giving the minimum width to cars (usually 10 ft) and allocate remaining space to bikes. Stop your lines short of the intersections and just do the straight-aways. This lets you get 80% of the job done quickly and cheaply, without fiddling with the complex part.

9. Require that businesses that offer parking to employees to "register their commutes" so that there is a database for potential commute ridematching. You can't require agreeing to share a ride, but you can require registration.

10. Consider building municipal parking lots, and make parking in those lots cheaper for residents than on-street parking permits. [This makes parking less convenient, and people will be more likely to leave their house to bike, walk, or T for short errands rather than hop in their car.]

11. Remove on-street parking for every space created in municipal lots. Do better things with those spaces -- bus priority lanes, bike lanes, wider sidewalks.

12. Consider making play streets in some neighborhoods, by closing them to through traffic with wooden barriers (that are signed with relevant times) during afterschool hours. In New York City I saw this in practice with neighbors opening and closing the street.

13. Consider closing scenic roadways on Sundays when there is reduced traffic (and alternate routes) and making them accessible only to people and non-motorized vehicles.

Thirteen is purportedly an unlucky number. Please add your low cost ideas to the comments.

Robin

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99 years: the Road to Financial Wellville?

Over the last thirty years, it feels like the worst of our political system has driven our financing of transportation infrastructure. No one has had the political will to raise gas taxes, established in 1993, and therefore grotesquely inadequate. [Who among us would be satisfied with a 1993 budget for our own households?] And many of the significant infrastructure projects that have been financed by Federal funds have risen to the top based on politics rather than merit.

The result is that every state’s transportation infrastructure is in financial crisis. One of the proposed – pushed – solutions coming out of Washington is to privatize public highways and bridges. This is a solution that ducks the fundamental problem of a broken financing system, and gives states another few years to avoid the central problem.

[Quick definition: road privatization is when a section of road is transferred to a private company for a term of contract, typically in exchange for an up-front payment and a fraction of future toll revenues. The private company is responsible for all road maintenance and repair and has prescribed abilities to increase tolls over the years.]

I’m told by a colleague who does this sort of thing (Henry Lee at Harvard) that my issues could be solved with the right contracts. Perhaps. If that is the case, here are the major problems with privatizing public roads as it is now practiced (Indiana and Chicago) and hopefully these snakepits can be avoided:

• Term of Contracts Too Long. These privatization contracts have enormously long terms – 75 and 99 years. That is just too long in the extremely dynamic world in which we live. One of the bankers brokering these deals told me his primary job was to make sure the contract could accommodate any eventuality. Then he went on to deride me that he couldn’t “predict the future.” Exactly. So don’t make the contracts so long. How about 15-20 years?

• Loss of Network Integrity. One of the beautiful things about all networks is that they are connected. When you put a chunk of it under someone else’s control – even 2% -- the system as a whole is devalued and the network loses future flexibility. For example, over the course of 99 years, you might decide to take advantage of the extended rights of way to run fiber optic cables, or decide that certain sections would make great wind farms (NIMBYism wouldn’t be an issue). Implementation of these ideas would be dramatically complicated by having a separate owner for a piece of the ROW.

• Private ROI trumps Public Good. Over the course of 99 years (yes, I’ll repeat that clause again and again), it may turn out that it is in the public interest to find a higher user for the ROW than the contracted revenue stream it gets from the private company. For example, it might be in the public’s interest to convert a lane to a high speed bus lane or light rail in order to maximize people throughput per vehicle or lane, or to minimize CO2 emissions per person. This desire would run counter to the private owner’s focus solely on vehicle count.

• Valuation of Assets too Low. In a 99-year contract, you’ve basically discounted the future down to nothing, meaning you have basically sold the asset (yes, yes, I know the state gets it back after 99 years). But the lump up front sum -- that is so incredibly appealing to states ($3.85b in Indiana; $1.8b in Chicago) -- is nothing like what it would cost to actually build these stretches of highways or bridges from scratch. The costs of amassing the land and the rights of way alone, would be cost as much, even before we add in construction costs. These deals are selling off – sorry, “leasing” – our public assets at a fraction of their value. See commentary re Indiana.

One of the very sad facts about road privatization, is that the public is ill-informed about what it means. The carrot of the large sum of cash upfront is tantalizing (and programmed to be spent in usually less than 10 years leaving 89 years without the carrot), and the rising tolls is presented as a non-issue over a short fixed period of time. But as residents of Toronto discovered after they privatized a highway, tolls were eventually raised and so they complained. It should be interesting for politicians to note that they can't hide behind the private sector company doing the dirty work: most Torontoans put the blame squarely on the government that cut the deal. In a January 2008 article in Governing magazine, the same is said of the Governor of Indiana, who privatized a significant part of that state’s highway system and lost control of his state house in a subsequent election.

At the end of the day, we have to and will pay more to drive. The private companies will increase the tolls, or the government can do it. The path of doing nothing is what we have followed for the last few decades. The question for the public, and for states contemplating privatization: What serves the public interest in the long-term? Say, over the next 99 years.

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Car Sharing Advice for Cities

(this post was originally written in 2006 for ecoplan.org)
How can and should a government support the development of Car Sharing Organizations (CSOs)? As I write this, I note that many things revolve around the major cost items of running the business.



1. Car insurance. Insurance is very difficult to obtain in this nascent industry since the insurers have no experience with the risk basis, and it is a major cost to the CSO. It took years of accumulating data to finally get our insurance rates down in line with reality. If the government (city? state?) could establish some kind of pool for just the catastrophic incidents, this is an important way in which insurance risk can be tiered, making insurance affordable.

2. Parking. Parking ranks right up there as one of the largest variable costs. CSOs compete with individual's costs of maintaining and parking their own vehicles. If private parking is available on-street (cheaply), this makes the CSO service relatively more expensive than owning your own car and parking it on-street for free or close to free. Likewise, the convenience of on-street parking can make car-sharing (or private ownership) that much more (less) appealing than the alternative parked deep in large garages. This can swing both ways in supporting or creating an additional hurdle depending on where (and price) of the residential housing stock.

My best advice here is: Offer up some parking spaces (municipal lots or on-street) for one year agreements to whichever car-sharing company wishes to bid on them. In the early years, you will likely have only one company bidding, and their bid will be close to zero $/month. As the business gets more established, and as competition enters the market, the value for specific parking spaces to specific companies will rise: the city will enjoy the additional revenue, and more than one company can compete in specific locations (especially if you can offer up more than one space in a location). This seems like the most fair way to both nurture a budding industry, as well as accommodate success and competition.

3. Marketing. This is very very dear to both starting and existing companies. The city has lots of resources to get the word out to residents at very low cost. Providing this ability, whether the area has one or many competing companies is critical, and keeps the costs of providing the service down. For example, on bus, subway adverts, or information mailed out to residents that renew vehicle registrations, etc. Again, please make sure to offer this service if there is only one company, and quickly accommodate the addition of other competitors as they arise.

4. Taxing, Zoning, Plating, Parking Permits. Zipcar operates in many cities, counties, and states across the US and now Canada (Toronto). Obstacles have included: residentially zoned neighborhoods where the inclusion of a car-share parking space could be construed as "business" and thus not allowable; a business tax applied on each and every parking location as if it were a separate "business establishment"; per transaction taxes meant for car rental that make the economics of hourly rental impossible (i.e. $10/rental tax ... if you rent for just a few hours that makes it economically unreasonable); are these vehicles plated commercial or residential? In Boston, commercial plates pay a higher rate at the toll booths, and get to park in loading zones. We would like to pay residential rates at the tolls and not be allowed to parking in loading zones... In any event, you can imagine how these can cause issues, some of which are easier to resolve than others.

5. Geographic carve-outs. If my memory from 3 years ago serves me, London offered up its support for carsharing on a borough by borough basis (?). I think this is problematic because, like most businesses, carsharing does best when it can scale. Also, users very much stand to gain from competition (improved quality of service) and a large network (i.e. a member can pick up a car from both work or home, without having to join two companies). Again, this is an easy issue to correct going forward."

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