Welcome to the first issue of MBUFA's Quarterly Newsletter. Each issue will give you articles from experts in alternative transportation funding.  Taken together these features will take a look at the issues and technologies of VMT and sustainable transportation funding solutions.  You'll also find transportation funding news from Washington DC, state capitals, and nations around the world.  We welcome your comments and suggestions. We also welcome your contribution, whether news tips or guest feature suggestions.

 

Jack Basso, Chairman of MBUFA

 

Letter from Chairman Jack Basso

  

Welcome to the Inaugural Issue of the MBUFA Newsletter!!  This newsletter will b

 

We also hope you will visit our new website www.mbufa.org.

 

The Mileage Based User Fee Alliance was founded in August, 2010, as a 501 (c) 3 organization to provide a unified voice toward information and education on this topic to interested parties around the globe.  We were very pleased to have three such distinguished professionals in the field as Jack Basso (Washington, D.C.) , James Whitty (Oregon)  and Lee Munnich(Minnesota)  agree to serve as Officers of the organization.  We held the first quarterly meeting in September 2010 in Washington, D.C. and have been working at a very active pace since that time. 

 

Membership in the organization provides immediate access to updated mileage based issues as they happen around the world.  In addition, members provide input into policy decisions for the organization as it addresses questions on this issue on almost a daily basis at this time.

Members include state DOTs, local government transportation divisions, not for profit organizations, universities, and corporations.

 

Currently, we are monitoring legislation in both the U.S. House of Representatives and the U.S. Senate involved in mileage based legislation.  In addition, we are monitoring legislation in the State of Oregon that specifically addresses the mileage fee issue beginning in 2014.

We will also monitor related activities in other states as well as many initiatives of local units of government on mileage based programs as a potential revenue source in the near future.  At the same time, we are continuing to follow international developments in user-based road pricing.

 

We look forward to you enjoying this newsletter and the information provided about MBUFA and its Members.  We hope if you are not a Member of MBUFA at this time, you

will join in the near future and be a part of this exciting organization.

 

  

by Kevin Condon, Managing Partner, Verdeva LLC

 

 

1982: President Ronald Reagan: "We have an emergency situation with regard to our national highway system and a great many bridges, anyone of which has the potential for a tragic disaster. We feel that a gas tax as a user fee to fund necessary repairs is a fair way to solve the problem. I assure you I will never approve such a tax as just a part of general revenue raising." (Letter to constituent from President Ronald Reagan, 12/27/82) 

2009: Commission Report to Congress: "The nation faces a crisis. Our surface transportation system has deteriorated to such a degree that our safety, economic competitiveness, and quality of life are at risk.  As a nation, we have reaped the benefits of previous generations' foresight and investment, generations that developed and built a transportation system that became the envy of the world ... Not only have we failed to make the needed and substantial investment; we have failed to pursue the kind of innovation necessary to ensure that our infrastructure meets the demands of future generations."  (Report to Congress by the National Surface Transportation Infrastructure Financing Commission, February 26, 2009)

1982 to 2011 - Two factors -- aging infrastructure and chronic under-funding over three decades threaten our transportation system more than ever. Wait, though.  Going forward a third factor makes the prognosis even worse:

 

2012-2032 -- Over the next 30 years we face a third and more existential threat to the system: declining gas sales due to increasing fuel efficiency. The urgency of transportation funding now collides directly with another national priority: reducing our consumption of oil by increasing the fuel efficiency of vehicles, including the transition to hybrid and electric vehicles.  Less gasoline consumption per mile means less revenue per mile but not less use of the roads. There is bipartisan recognition of the severity of the shortfall in the Highway Trust Fund and much has been done to find a solution. But much remains to be done.

 

Eisenhower's idea of funding the highways with a user-fee system (the per-gallon gas tax) remains an idea with support across the political spectrum. The problem is that the flat gas tax is less and less effective each year as more vehicles use the roads but burn fewer gallons doing it. Real highway spending per mile traveled has fallen by nearly 50 percent since the federal Highway Trust Fund was established in the late 1950s. Going forward, stricter CAFE standards and rising prices at the pump will accelerate that shortfall, worsening a situation where total combined highway and transit spending as a share of gross domestic product (GDP) has fallen by about 25 percent from the late 1950s to 1.5 percent of GDP today. 

 

State and local transportation funding faces the same three challenges.  According to the National Conference of State Legislatures "The cumulative national shortfall for transportation funding to keep pace with projected needs has been estimated at $1 trillion through 2015. Of this, $34 billion is the annual unmet need to maintain existing roads and transit facilities."  Look for states to lead the way exploring and adopting alternative funding approaches

 

Saving the User Fee Model: VMT as an Alternative Approach: There is widespread consensus among transportation funding experts in government as well as the research community that there is an urgent need to replace the current system with an alternative revenue model. The National Surface Infrastructure Finance Commission (NSITFC) recommended to Congress that the current gas tax be replaced with user-based charges --a vehicle mileage tax (VMT).   There isn't a one-size-fits-all VMT approach and states will likely consider different versions (see articles below by Jim Whitty and Adrian Moore). It is, however, the most viable way toward sustainable funding tied to user charges.

 

Seeking to resolve public concerns and improve system design of its road user charging program, the state of Oregon fundamentally revised its concept for collecting mileage based user charges.  Moving past the original pay-at-the-pump model, the state's Road User Fee Task Force now proposes legislation (HB 2328) for a vehicle road usage charge to electric and plug-in hybrid vehicles under an open technology platform.

 

Though hailed as a success, national scrutiny of Oregon's 2007 Road User Fee Pilot Program revealed design flaws and public enmity for the GPS technology employed.  Many members of the general public strongly object to a government mandate for a "GPS box" in their cars as a violation of privacy.  They also expect a large and costly government bureaucracy to manage the new revenue system.

 

The principal design flaw was dependence upon a closed system for mileage data collection and payment.  The pay-at-the-pump model only had one way to develop data, one way for data to flow and only a government agency could manage accounts.  The technology experts noted the applied technology would become stuck in time. 

 

To address these issues, Oregon DOT revised its road user charge model as an open system platform that allows the marketplace to play a large role in data collection and management of accounts.   The state could tap into market forces to allow the public to choose the means by which they report their mileage from approved methods, the on-board technology to suit their needs and the method of invoicing and payment  

 

 An open system is an integrated system

based on common standards and an

operating system accessible to the marketplace

whereby components performing the same

function can be readily substituted or provided

by multiple providers.

 

An open system platform for road user charges has strong potential for resolving key issues discovered during assessment of Oregon's road user fee pilot.  The open platform allows design of a mileage data collection and payment system to access existing processes familiar and acceptable to the public such as the smart phone, navigation unit and tolling markets. 

 

Rather than one way to do things, an open system allows many ways to do things so that technologies and systems can evolve with improvements and preferences.  The state would set common standards for how mileage data should flow to a central computer system maintained by a billing agency.  The state and private sector companies would provide motorists choices for electronic data creation and data transfer from among certified options. 

 

The basic options for mileage data generation and data transfer would involve either the odometer or vehicle location technology.  Motorists obviously accept the odometer as standard equipment in their vehicles but a requirement for GPS is another matter.  While motorists object to a mandate for GPS, many readily access the GPS function in smart phones for apps they want to use.  Avoiding a GPS mandate seems essential to obtaining public acceptance for charging by the mile but allowing optional use of motorist owned GPS devices for location based mileage counting also seems necessary. 

 

The basic system for mileage counting would involve reporting directly from mileage counting equipment already in vehicles-the odometer-and for accuracy, the reporting should be electronic.  One way might involve accessing the on-board diagnostic port (OBDII).  A less cumbersome way involves wireless transfer of mileage data directly from the odometer.  A 2009 report prepared by Noblis for FHWA and RITA identified three ways for wireless transfer from the odometer.

 

Reporting of mileage directly from the odometer will solve the privacy issue because this method does not require vehicle location technology.  Motorists choosing an odometer method, however, will report mileage undifferentiated by geographic location.  Thus, they will be charged one rate for all miles reported.  If motorists want to differentiate their mileage by geographic location, they should choose on-board technology that performs this function, whether GPS, cellular or something else.

 

The state would provide the basic invoicing and payment system, probably a simple invoice sent by mail with the motorist paying by mail or on-line.  The state would certify options available under alternative account management services offered by the private sector.  During a no growth period for public sector employment, having private sector account service alternatives will enable the mileage charging system to grow as the number of accounts grows.

 

The open system approach for collection of mileage taxes is part policy and part theory.  If the Oregon Legislature passes HB 2328, the state of Oregon will move to make application of a vehicle road usage charge under an open system a reality, perhaps with public acceptance.

  

DC Update: Mileage Based User Fees in Federal  Reauthorization

 by Dr. Adrian Moore, Vice President, Reason Foundation  

 

(Editor's note: On March 20, 2011, Dr. Moore testified before the Subcommittee on Highways and Transit, in the U.S. House Transportation and Infrastructure Committee.  His article below draws on that testimony.) 

Reauthorization

 

  

European Roadmap Recommends Road User Charges

European Commission Mobility and Transport
 To read more: Click Here
 

 

Montreal: So what will it be? A payroll tax, a mileage tax or bridge tolls ...

By Andy Riga, Montreal Gazette

(To read more: Click Here )

 

Montreal: Mileage tax better than gas tax to curb car use, experts say

Montreal Gazette

Ninety-one per cent of participants said that they would agree to continue paying the mileage fee in lieu of the gas tax. Though never tried on a large... (To read more: Click Here)

 

Europe: Telenor Connexion Test Wireless Road Traffic Monitoring

By David Ng, Cellular News

(To read more: Click Here)