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SAdvancing the state of the practice of Mileage-Based User Fees 

    Summer 2012 

          

In This Issue
Upcoming Events
Chairman's DC Update
Executive Director's Message
An MBUF Education
How to Make Distance-Based Charging System Publicly Acceptable
What's Next on MBUF?
State Updates: Washington Road Usage Charging Feasibility Study; California SF Bay officials Approve Bay-Area Mileage Tax
Other News
Research Library

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IBTTA 80th Annual Meeting & Exhibition September 9-12, 2012

 

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 2012 AASHTO Annual Meeting, November 15-19, 2012

 

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This is the latest issue of MBUFA's e-Newsletter. Please use the "In this Issue" links (left) to jump directly to articles and departments of interest. We welcome any comments and suggestions as well as contributions --news, features or links to  recent research -- for upcoming issues.  -- The Editor.
 
Jack Basso, Chairman of MBUFA
Jack Basso, Chairman of MBUFA
 

DC Update 

from Chairman Jack Basso

   

The passage of MAP-21 represents a historic milestone in the history of the Surface Transportation programs. The legislation contains many reforms that offer the potential to expedite the rebuilding and expansion of America's infrastructure. I want to commend Senators Boxer and Inhofe as well as Chairman Mica for their leadership in passing this bill.

However, the issue of revenue remains very much in play. We have managed to fund the Highway and Transit programs for two more years at current levels at which time we will face a new revenue crisis. Given the lack of political will to pass a gas tax increase as recommended by several commissions, we need to look at alternative revenue collection methods. The chart that follows shows where we could be in fiscal year 2015 if we fail to address the fundamental revenue issues.

 

The passage of MAP-21 represents a historic milestone in the history of the Surface Transportation programs. The legislation contains many reforms that offer the potential to expedite the rebuilding and expansion of America's infrastructure. I want to commend Senators Boxer and Inhofe as well as Chairman Mica for their leadership in passing this bill.

   

 

 Click Here to Enlarge

 

We came very close to having funding included in the bill for Mileage Based User Fee pilot studies and we are encouraged by having come very close to success. We intend, with your help, to work to gain legislative support for that kind of research.

 

Most importantly, we need to address this investment issue of whether it will be possible to make the necessary investments for the American people.

We look forward to working with all of you and thank you for your continuing support.

 

Executive Director's Report

Barb Rohde

by Barbara Rohde

 

  

The Mileage Based User Fee Alliance has had an exciting few months since the last edition of the newsletter.  We have welcomed many new members during this period and even received inquiries from some international interests.  In addition, we have provided updates of the organization at several national and international meetings and symposiums.

 

Although we were disappointed by the removal of the language from the MAP-21 bill in late June, allowing for beginning research into this critical issue, we were also very heartened by the concern of many people that want this language to move forward and their statements of support.

 

For all of us who have been involved with mileage based fees, we knew the debate to begin this critical research effort would not be easy. But we definitely want to thank the many, many MBUFA members and others who provided supporting material in addition to their time and expertise to help us provide factual, concise information to all types of inquiries ranging from local and state officials, to congressional members and staff, to the media.

 

We have been told that without the strong support of the members of MBUFA, we probably would not have moved as far in the legislative process as we did--so we thank all of you who have been supporting this effort at various points during the past two years.

 

The web site has recently been updated to reflect some of the issues we have received the most questions during the debate of the past several months.  In almost all cases, when we receive a "cold call" from someone, they have reached us after reading the web site.  We have tried to provide basic information for someone who has limited knowledge of this issue and needs to find a source for a quick primer with basic facts.

 

As we prepare for the next phase of the organization, we are organizing four committees to move us forward--communications, strategic planning, membership, and research.  We will be starting this effort at the September 21 quarterly meeting and welcome your thoughts and suggestions in these areas.

 

 

We believe the next several months will provide as many exciting opportunities for MBUFA and mileage based issues as we have seen for the organization and its membership in the past few months.  Thanks for your critical assistance in these efforts in the past and as we move forward.

 
An MBUF Education    

 by Kevin Condon, Editor

(CEO, Verdeva, Inc.)   

    

The apparent ease with which a freshman House member's amendment to MAP-21 passed bar funding of mileage-based user fee pilot studies -- funding that had bi-partisan support from members of the Conference Committee - is an indication of how much work needs to be done in educating the public to dispel common myths about MBUF.  This is essential to reduce the very reasonable concern by elected officials that the issue will be demagogued.

A quick scan of the comments section following most online stories on mileage-based user fees shows how the majority of comments from online readers (admittedly a more passionate group than the public at large) oppose such fees based on misconceptions.   While its hardly good news that these misconceptions are wide-spread it is encouraging news is that there are really only a few misconceptions:

         Mileage-based user fees necessarily mean an invasion of privacy by the government

         MBUF by definition is unfair to rural drivers

         The current gas tax is sufficient and sustainable.

         Any mileage-based fees won't replace current gas taxes but will be added on top of them.

The  problem is that these misconceptions are used to argue against the very activities that are needed to, as Reason Foundation's Adrian Moore points out in this issue, identify and test various approaches to determine which best address these and other concerns.  

There is much to be encouraged about. It's encouraging that elected officials who are familiar with transportation funding issues are able to achieve bi-partisan agreement on the need to study and test MBUF.  It's encouraging that some states, especially Oregon (see Jim Whitty's article below) are incorporating the lessons from past efforts to design politically viable approaches.

It's also encouraging that high-profile political heavyweights -- Ed Rendell (former PA governor), NYC mayor Michael Bloomberg and former CA governor Arnold Schwarzenegger have made a tri-partisan call for a presidential debate on infrastructure investment.

Continued attention needs to be paid to educating everyone - the public, officials, media - about mileage-based user fees so that misconceptions are diminished enough so that the funding and testing can be done.  That's why MBUFA's mission is so vitally important and worthy of support:

  • Create a constructive learning environment and policy space for collaboration and networking among individuals and groups interested in mileage based user fees
  • Coordinate efforts to build awareness of mileage-based user fee programs in the US and around the world
  • Promote research to test the feasibility of mileage-based user fee programs

If your organization isn't yet a member of MBUFA, join the growing number of members committed to achieving this mission!  Just click here MBUFA membership packet.

Jim Whitty, Oregon Department of Transportation Feature Article

Oregon: How to Make a Distance Based Charging System Publicly Acceptable: Take the Terrain That's Offered

by Jim Whitty, Manager, Office of Innovative Partnerships and Alternative Funding

  

Let's take a look into the not too distant future.  In a few years--say eight or ten--I will purchase a new highly fuel efficient automobile, perhaps an electric vehicle, if the battery life gets better, or a plug-in hybrid vehicle.  As part of vehicle registration, I will choose a method of reporting my miles driven from among various options provided me by the government.  Since I will want to keep things simple and easy, I will choose to use my new vehicle's telematics to report my miles to a tax processor.  For those not familiar, "telematics" is an on board computer with access to the Internet that does many things.  I will choose as my tax processor the company that has my data plan subscription.   I will direct my tax processor to debit my bank account for the amount of my mileage tax.  My tax processor will forward the net revenue to the government.  After I make these choices, I will forget about paying my mileage tax and simply drive.  Paying mileage taxes will be as easy for me as paying the fuel tax is now.

 

Do you think my prediction is far fetched?  Owners of the all-electric Nissan Leaf could do this today if a state legislature or Congress passes mileage tax legislation into law.   The Nissan Leaf already contains telematics that sends engine performance, driving habits and, yes, miles driven and where into the Internet cloud for access by the owner on the home computer.   That data is available to whomever the owner grants access.  State Farm Insurance Company has made an arrangement with Ford Motor Company to do just that for their pay-as-you-drive insurance customers.

 

How do we get to this future and what is Oregon doing to get there? 

  1. Oregon has rejected the engineer's approach to mileage tax system design.  At ODOT I frequently hear "With enough money, engineers can design anything."  But focusing on the engineering aspects of a distance based charging system is a mistake.  Passing mileage tax legislation into law is not an engineering project; it's a public policy project.  Public acceptance is essential to changing public policy.
  2. Oregon has adopted the approach of Psychologist Amos Tversky who said, "Let us take what the terrain offers."  This means the State of Oregon and the nation must adopt what is achievable and take an evolutionary approach to making distance charging a reality in the United States.  To determine what is achievable, the State of Oregon has learned to listen to the public.

 

Following our first pay-at-the-pump pilot program in 2007, Oregon DOT hit a policy stop sign.  While the pilot was regarded as successful, the public objected to our mandated government box that contained a GPS receiver.  Even the tech savvy said, "The government chose that device; I did not."  Oregon's mileage fee system developers had no pathway forward.  We had to rethink and redesign the system.   

 

Over the next couple of years, we noticed the smart phone market was growing quickly and these phones had GPS chips in them.  The users chose these devices from the marketplace and paid for the flow of data through private companies.  We also noticed people are buying Pay-As-You-Drive insurance policies that required reporting of miles driven.  We decided to redesign the mileage data collection system around what was already happening in the marketplace.

 

Based on this new perspective, we came up with the tenets for design of a new system. 

  1. Offer motorists the ability to choose from among multiple options for reporting miles driven.  Let motorists choose a reporting method they find comfortable and acceptable.  Some reporting options may involve on board reporting technologies but non-OBU options should be provided as well.
  2. There should be no government box.  The government should not select any particular technology for reporting miles driven.  Thus, there will be no requirement for GPS technology.  Instead of choosing technologies, the government should define what the system must do and let technologies available in the marketplace adapt to it.
  3. The system should be open.  The government should set standards for an open system that will allow commercial off the shelf technologies that meet the standards to be used in the system.  This will allow the technologies and system to evolve with new capabilities and taxpayer preferences.  The standards will be set and published by the government.  The government shall select an independent certifications agency to apply the standards.
  4. The government should enter into public private partnerships to assist in mileage tax collections.  Insurance and telecommunications companies do similar accounting activities now.  The government does not.

 

According to these tenets, Oregon DOT developed a new concept of operations for a road usage charge system for light vehicles.  Once mileage tax legislation is adopted by the Oregon legislature, the Oregon DOT will approve certification of on board units for use in the mileage tax system on board units in four initial categories: (1) an odometer reporter that reports all miles driven and contains no GPS technology-much like devices used in insurance industry for pay-as-you-drive insurance, (2) a smart phone app paired with the odometer reporter for differentiating miles driven out of jurisdiction, (3) an after market mileage locator unit, such as Garmin™ and Tom Tom™, and (4) factory installed telematics, such as OnStar™, Ford SYNC™ and Toyota's Entune™. 

 

ODOT will provide non-on board unit options as well.  Motorists could select a Pre-payment option whereby they could purchase miles in advance in lots, 1,000, 5,000, 10,000, and true up at the end of the year.  Or, motorists could elect out of the system altogether by paying a flat annual tax that buys them unlimited miles.  The flat annual tax would be a high number based on the rate multiplied by a large amount of annual driving, perhaps 35,000 or 40,000 miles.

 

Motorists will choose their method of reporting but also will choose who collects the mileage data, processes the tax and manages accounting.   Motorists will be able to choose the government process for these functions or certified services providers from the private sector. 

 

In the fall, ODOT will run a new pilot program to test the rudiments of this new mileage tax collection system.  The purpose of the pilot will be to test the fundamental building block for an open road usage charge system-the data message format that integrates mileage date from the car into the back end computer servers-but will also show policymakers how easy the system will be for motorists.  The pilot will test only three OBU options: the odometer reporter, the smart phone app paired with the odometer reporter and an after market vehicle location unit.    There will be two options for tax processing and account management: Oregon DOT and a private sector company. 

 

The pilot will have about 50 volunteer participants but they will be people of policy import, such as transportation commissioners, local transportation supporters and legislators.  Eleven legislators have signed up so far from both parties and both houses.  These volunteers will actually pay the mileage tax for three months and get a fuel tax refund or offset.  Nevada and Washington State are preparing to join the pilot with their own sets of participants but they will receive an illustrative billing because the states do not have authority to charge the mileage tax in a pilot as Oregon does.

 

Oregon's Road User Fee Task Force - the independent body created by legislation and appointed by the Governor, Senate President and Speaker and which as been guiding Oregon's policy development on road user charges for over ten years-is preparing legislation for the 2013 session to apply a road usage charge of 1.56 cents per miles on a small group of highly efficient vehicles to start the system, most likely owner/operators of electric vehicles and plug-in hybrids.  If adopted, this legislation would direct starting the system on July 1, 2015. 

 

Oregon's new pilot is a big part of the preparations for adoption of legislation in 2013 but Oregon DOT is undertaking several other efforts to improve the chances of passage.  One is a fleet forecast that predicts future revenues over 35 years-note that the trend line spikes downward under even the most optimistic scenario; another is preparation of an operational and transactional cost model that predicts system costs and taxpayer costs.  A third is preparation of an urban/rural impact study to determine the relative impact of a road usage charge system on rural and urban drivers. 

 

Most importantly, Oregon DOT Director Matt Garrett has directed me to undertake a round-the-state speaking tour to all of ODOT's area commissions on transportation prior to the 2013 session.  I have done one so far in a southwest Oregon rural community and our message was received well.   The idea of legislation for a mileage charge has received positive review from many local governments and most of the local media.  The local AAA organization has also been a positive force.

 

The Oregon Electric Vehicle Association is not pleased with having their vehicles targeted in legislation but individual members indicate that setting a target of vehicles over 50 miles per gallon would be a positive development.  ODOT will seriously consider that possibility and have a discussion on this point with the Road User Fee Task Force.

 

The Alliance of Automobile Manufacturers has been an opposing force to date.   It may be possible that removing the target on electric vehicles may change AAM's thinking.  In any event, Oregon DOT is designing the system to achieve public acceptance.  The alliance should take a deeper look at the new approach because the association may not understand Oregon's new public acceptance approach to distance charging compared to the earlier model.

 

The nature of our vehicles is changing.  This nation will get more fuel efficient in the years to come and as a result our consumption based revenue system will die a slow death that strangles our nation's ability to adequately maintain the road system.  The nation has very few feasible alternatives-a flat charge unrelated to use, tolling the interstates, raising the gas tax on an ever shrinking base, general funding, do nothing-none of which will prove acceptable to the public over time.  By adjusting our thinking on charging by distance by moving into the terrain that is offered, policymakers and system developers can make the charge on distance traveled acceptable to the public.  The terrain for starting a distance based charging system is available.  Let's take what the public offers!

  

Adapted from an address given by James M. Whitty to Congressman Earl Blumenauer's Transportation Finance Stakeholders Group at the Library of Congress, Washington DC, July 24, 2012

 

 What's Next on Mileage-Based User Fees?  

 by Adrian Moore, Vice President, Reason Foundation
 

MBUFA gets asked by a lot of folAdrian Mooreks to come and answer questions about mileage based user fees. State DOT officials, staff on Capitol Hill, trade associations, media, and others seeking to know more about this issue bombard us with questions and some definite themes emerge.

One of those themes is what is happening now and what needs to happen next?  So I thought I'd touch on that a bit this month.

Without going into a lot of details, right now we have Oregon (see Jim Whitty's article below) and Minnesota doing small scale pilot project to further explore how a mileage based user fee (MBUF) system might work in their states.  You have several other states studying the same question and thinking about their own pilot projects.

And that pretty accurately captures where we are at with MBUFs--a lot of studies have been done, some small scale pilot projects have been done and are ongoing, there are many ideas about what technologies to use and how to structure an MBUF system.  But in terms of knowing what works best, and on which dimensions, we still have a long ways to go.  We keep telling people that as a nation we are at the stage of trying to figure out how an MBUF system might work and how it could be put in place.

This is important to understand because a lot of people we meet with think we are past that, that the question is "should we or shouldn't we use MBUFs?"  But we are not there yet. Until we know how an MBUF system would work and how it could be implemented, we decide if it is better than the current system or not.  Yet too often when the issue of MBUFs comes up, especially in the press, people are asked if they are for or against using MBUFs, a really irrelevant question at this point.

That is why MBUFA has taken the stance that the most important next step for MBUFs is large scale trials. These would have to be done by a partnership of federal and state and local governments, and they should be on the scale of tens of thousands of vehicles.  Those kinds of trials would allow us to answer a lot of the questions that are relevant at this point. Questions like:

How does the system record miles driven and asses the charges? Which of the many possible technologies are used?

How do people pay? Who do they pay?

Where does the information about miles driven etc. reside, what is communicated, how is privacy protected?

How does the system provide for the needs of the agencies that build and maintain the roads and also provide value to the users?

Does the system require a new device in all cars? How do we phase cars into the system?

How are the prices people pay set?

Etc, etc, etc.

The list of questions is very, very long. I cannot help but wonder how anyone can rationally say they are for or against MBUFs when we don't know the answer to these questions. On what basis to you take a position if you can't answer those questions?  So let's hope discussions about MBUF shift away from for or against and focus instead on how we answer more of these questions so that we can, at some point, decide if MBUFs will work or not.

 

 

State Updates:  United States map

  

Washington: Road Usage Charging Feasibility Study 

  

D'Artagnan Consulting, Cambridge Systematics and BERK & Associates are providing support to the Washington State Transportation Commission and Washington State Department of Transportation for the Road Usage Charging Feasibility Study. The objective of the project is to ensure that the Commission and the newly-created Road Usage Charging Steering Committee have the research and analytical support necessary to make an initial policy assessment of the feasibility of a road usage charging (RUC) system, either separate from or in conjunction with other states, and identify next steps for legislative consideration.

Outcomes of the study will include providing an informed decision as to whether RUC is worth studying further as a statewide and regional policy and, if so, under which parameters and constraints; defining a research and development plan and proposed budget for examining the issue in more depth and/or experimenting with such a system through technology demonstrations, pilot projects, or system trials that help the Commission, the Legislature, Governor, Department of Transportation, and other stakeholders sort out the complexities of potential implementation of RUC; and outline a way to communicate to the public in a way that encourages informed debate based on facts in lieu of emotionally charged statements and inaccurate sound bites.

________________ 

 

California: SF Bay Officials approve study of SF Bay area mileage tax (The Associated Press)

San Francisco Bay area officials will study a proposal to charge motorists a tax on every mile they drive in the nine-county region as a way to raise money for roads and public transit while reducing traffic and pollution from car emissions.

Members of the Metropolitan Transportation Commission and the Association of Bay Area Governments approved going forward with further study of a possible Vehicle Miles Traveled tax on Thursday night, as part of a broader environmental review of several transportation options.

Under a proposal still in its early stages, drivers could be required to install GPS-like odometers or other devices in their vehicles and pay from less than a penny to as much as a dime for every mile driven. The idea could take a decade or more to be launched.

Commission spokesman Randy Rentschler acknowledged such a concept ultimately could prove a hard sell with Bay Area residents, who would likely resist both the travel tax and the government-mandated tracking devices.

"The last thing we're interested in is where you go and what you do," Rentschler said Thursday, after the vote. "What we're trying to do is get people to figure out a way to raise revenue that they could support."

Mileage taxes already have been subjected to pilot studies in Atlanta and several communities in Oregon and Washington state. Drivers who were given a sum of money and then had amounts deducted based on how much they drove logged fewer miles, according to the San Jose Mercury News.  Based on current Bay Area driving patterns, a mileage tax could raise up to $15 million a day, the Mercury News said.

The two regional agencies are considering the tax as part of a broader, 25-year transportation and land-use plan to accommodate the 2.1 million new residents who are expected to reside in the Bay Area and to curb greenhouse gases.

Other ideas floated so far include raising bridge tolls during rush hour, creating more carpool lanes and funding public transportation options in counties north and east of San Francisco.

The draft environmental review is scheduled to be completed in January and the tax, as well as many other alternatives, will be presented for a vote in April 2013, Rentschler said.

 

 
Other News
 

 

States, cities revive mileage taxes as transportation revenue dwindles -- CivSource

The Long Haul to a Road User Fee - National Journal

Gas Tax Avoiders -  NewsObserver.com               

Seeking public acceptance - Roads & Bridges

Is a VMT Tax a Good Idea? - The Atlantic Cities

Officials approve study of SF Bay Area mileage tax - Times-standard.com

Would Americans Support Increased Taxes to Improve Highways, Streets, and Transit? - PR Newswire

Mileage-based user fees for Minnesota? - CTS Catalyst

Kansas: Motorists pump fewer gas tax dollars in state tank - Kansas Reporter

Florida considers using GPS tracking to charge drivers per mile - WINK News

US House of Representatives rejects funding Vehicle Mileage Tax studies - Road Pricing

Falling Apart and Falling Behind -- BAF releases infrastructure report

 

MBUFA logo
Research Library
 
 

The Mediating Role of Motorists' Evaluation of Current Roadway Conditions in Determining Their Willingness to Pay for Future Improvements. Morgan State University National Transportation Center 

 

Equity of Evolving Transportation Finance Mechanisms: Transportation Research Board  August, 2011

 

I-95 Coalition Project Database 

 

 
Alternative Approaches to Funding Highways

Congressional Budget Office 

Click Here

 

The Intersection of Urban Form and Mileage Fees: Findings from the Oregon Road User Fee Pilot Program, 2011

Mineta Transportation Institute

Click Here

 

Guidelines for Shaping Perceptions of Fairness of Transportation Infrastructure

Policies: The Case of a Vehicle Mileage Tax  

University of Nevada Las Vegas

 Click Here

 

Well Within Reach - America's New Transportation Agenda

Miller Center of Public Affairs, University of Virginia

Click Here

 

A Forum on the Future of Highway Transportation in America

International Bridge and Tunnel Tolls Association

Click Here

 

Transitioning to a Performance-Based Federal Surface Transportation Policy

Bipartisan Policy Center

Click Here

 

Paying Our Way

Report of the National Surface Transportation Infrastructure Financing Commission

Click Here

 

National Surface Transportation Policy and Revenue Study

Commission

Click Here

 

System Trials to Demonstrate Mileage-Based Road Use Charges

The RAND Corporation for the National Cooperative Highway Research Program

Click Here

 

Surface Transportation Funding: Options for States

National Conference of State Legislatures

Click Here

 

Idaho Governor's Task Force on Modernizing Transportation Funding in Idaho: Final Recommendations 

Click Here

 

NCHRP 08-36: "Road Pricing Communication Practices"

Transportation Reseasrch Board

 Click Here

 

Vehicle Mileage Fee Primer

Texas Department of Transportation

Click Here

 

Roadmap to a Single European Transport Area - Towards a competitive and resource efficient transport system

European Commission 

Click Here

 

Road Pricing: Public Perceptions and Program Development

National Cooperative Highway Research Program (Transportation Research Board)

Click Here

 

Mileage-Based User Fees: Defining a Path toward Implementation

University Transportation Center for Mobility

Click Here

Implementable Strategies for Shifting to Direct Usage-Based Charges for Transportation Funding

The RAND Corporation, University of Minnesota and National Cooperative Highway Research Program

Click Here

 

Multi-State VMT-Based Road-User Fee Initiative

I-95 Coalition

Click Here

 

National Evaluation of a Mileage-Based Road User Charge

University of Iowa Public Policy Center

Click Here

 

The Fuel Tax and Alternatives for Transportation Funding

Transportation Research Board

Click Here

 

Are We There Yet? Creating America's Future Transportation System -2009

American Association of State Highway and Transportation Officials

Click Here

Congressional Budget Office 

 
How Fair is Road Pricing? Evaluating Equity in Transportation Pricing and Finance

Bipartisan Policy Center

Click Here

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