Public Sector Members
Oregon Department of Transportation
Nevada Department of Transportation
Minnesota Department of Transportation
California Department of Transportation
New York City Department of Transportation
North Carolina Department of Transportation
State of Washington Department of Transportation
Private Sector Members
International Bridge, Tunnel, and Turnpike Association (IBTTA)
Kapsch TrafficCom IVHS
SRF Consulting Group
Wilbur Smith Associates
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Welcome to the Winter Issue of MBUFA's Quarterly 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|
from Chairman Jack Basso
A lot has changed since our last issue. Congress completed action on the FY2012 Transportation Appropriations and in both the House and Senate, the logjam on SAFETEA-LU reauthorization, appears to have broken. The Senate Environment and Public Works reported a 2 year, $109 billion two year bill, Moving Ahead for Progress in the 21st Century Act of 2011 or MAP-21, in November. There were strong signals that the House would follow suit but in the end decided it was too late in the session. The current extension expires on March 31st, as does the authority to collect the fuel tax. Both the House and Senate are talking about taking up this legislation in the first quarter of the year.
Of course, the biggest challenge to enacting new legislation remains; funding. Our mission, to advance the understanding of mileage based fees as an effective substitute method for financing our nation's infrastructure, is critical. The reports we have received from states that are testing elements of a mileage based fee system have been both fascinating and encouraging. We need their work to identify best systems and best practices and to respond to concerns which have been expressed by car owners and policy makers.
Now with nearly twenty members from both the public and private sectors, MBUFA truly reflects the most advanced thinking in the United States about mileage based financing. I am expecting a busy time in Congress after the New Year begins and encourage all members and friends to forward what they are hearing and to offer suggestions for responding to questions.
Executive Director's Report
by Barbara Rohde
MBUFA continues to grow in membership and interest! We have added many new members and wish to welcome the most recent members ACS, AECOM, IBM, Atkins, State of Washington DOT and the State of North Carolina DOT.
We have held two Quarterly Meetings in Washington, D.C. since the last newsletter. At our meeting in September we featured the VMT Pilot Project in Nevada, presented by Deputy Secretary Scott Rawlins. We featured the I-95 Coalition Project at the December meeting with an update provided by Executive Director George Schoener.
MBUFA continues to focus on the need to provide education to policy makers and other interested individuals and in the past year have fielded over 300 calls from various organizations and individuals with questions on mileage based user fees. We are a 501 ( c) 3 organization, which requires a purpose of education.
The next quarterly meeting is scheduled in Washington, D.C. for March 16, 2012. Please contact me if you are not a member but have an interest in attending.
Privacy and Mileage-Based User Fees
by Adrian Moore, Vice President of Policy, Reason Foundation
Among the general public privacy seems to be the leading concern about mileage-based user fees (MBUF). And for that reason every time policymakers or transportation experts talk about MBUF, privacy is a hot subject.
With good reason! If we are going to shift from a user fee based on gallons of gasoline purchased to a user fee based on miles driven, we are going to have to count how many miles people drive. And that raises the question of how much information about where you drive will be collected. People will not support an MBUF if they think it will involve the government keeping track of which roads they drive on. Even worse if it keeps track of when they drove as well.
So a viable MBUF system has to protect people's privacy. And I would argue it needs to do so in three distinct ways. They overlap, so bear with me to through all three.
Strict policies protecting privacy:
First, any government implementing an MBUF system should have very strong policies regarding privacy. Those policies should ensure people have options for participating in ways that preserve their privacy, that privacy protections cannot be breached except in specific and severe circumstances with due process, and that people have recourse in the event of a privacy problem. And just as important, there needs to be oversight to ensure these policies are working.
Of course, people don't want to rely solely on recourse to the law or the government obeying its policies to protect their privacy. So the technologies used to asses and collect MBUFs need to provide options that protect privacy. A very low-tech, but crude, MBUF system might just use odometer readings. Other technologies might have the capability to assess which roads you drive and charge accordingly, but have all the data on that strictly stored on your vehicle, and only the amount you owe to each jurisdiction you drove it is reported to the system. For example, your car could have a GPS receiver which your onboard computer uses to keep track of how many miles you drove on which roads. Then perhaps once a month or perhaps when you pump gas your onboard computer signals the fees you owe and which jurisdictions it goes to, then the data is erased. That way you are "tracked", but only by your own car. Many other ways of using the technology to charge effective MBUFs without anyone getting private information are possible. Such options must be allowed.
Give people choices:
Finally an MBUF system should protect privacy is by giving people choices. No one should be required to divulge information about where and when they travel in order to be allowed to travel. So no user fee system should require divulging such information as the only option. One way to do this is by letting people opt-in to an MBUF system in place of fuel taxes, perhaps while requiring it for new electric and hybrid vehicles. That way people have to choose to be part of the system in which their miles are tracked. Or people should be able to choose a technology that protects their privacy by keeping them in control of the detailed data. At the same time, people could chose a system that does track and report their location, similar to the On-Star system some cars have now, perhaps in return for lower fees or for value-added services like accident response, directions, etc.
What I describe only scratches the surface of the possible options. But all three types of privacy protections are necessary. Only if people can see and understand how an MBUF system will protect their privacy, will they support it.
New Member Profile: North Carolina Department of Transportation
by Kevin Condon, Editor
In each issue we plan to focus on a new MBUFA member to share an update on MBUF and related transportation funding activities. To kick off, we talked to Mark Foster, Chief Financial Officer of the North Carolina Department of Transportation.
Work is being completed on a new 10-year, multi-modal work plan, which likely be released in the next few months. The prior statewide plan, submitted in 2004, identified huge future funding gaps and while it didn't recommend specific solutions to that gap it did address the imbalance of investment between new or expansion projects on the one hand and modernization and maintenance projects on the other. Subsequently the priorities have been more balanced. Going forward the DOT will use outcomes-based planning process, more closely modeled on processes used in the private sector. The "investors" are the public and an emphasis on ROI will drive the plan.
North Carolina has looked at what Foster called "VMT-lite", a near-term approach of taking annual odometer readings. But it's not "an easy switch", he said. "We need a bridge as a transition" that will take into consideration issues around equity, borders and interoperability.
The planners analyzed the future impact on revenue of the new CAFE standards. To date in North Carolina, losses in revenues due to improving fuel efficiency have been more than offset by the state's robust growth in its population and economy. But that won't last. The new plan anticipates that sometime between the years 2018 and 2020, the negative impact on revenues due to improving fuel efficiency of vehicles will be greater than new revenues based on growth, creating additional pressure on transportation budgets.
North Carolina DOT Secretary Gene Conti is very active within the I-95 Coalition, working with the U.S. DOT on the "Corridor of the Future", working with Delaware, Maryland and other states on interoperability issues.
Courtesy of DC.Streetsblog
As Washington D.C. Drags Its Feet, States Take the Lead on Mileage Fees
by Noel Popwell on 12/5/2011 (Courtesy of DC.Streetsblog)
Oregon, true to its history as the first state to implement a gas tax, was also the first state to consider getting rid of it - in exchange for adopting a mileage-based system for highway funding. And the Beaver state isn't alone: A number of other states have done studies and introduced legislation to charge drivers for the distance they travel instead of the gasoline they consume.
A new generation of fuel-efficient automobiles will compromise the gas tax as a method to fund infrastructure.
Enter the VMT fee?
To date, none of the states have passed legislation to enact a vehicle miles traveled (VMT) fee. But with an increase in the federal gas tax seemingly impossible in an election year and federal funding increasingly uncertain, states may well be left with little alternative but to reconsider an idea many experts agree makes sense.
With Americans driving less and opting for more fuel-efficient cars, revenues from state gas taxes have been on the decline. Data from the Federal Highway Administration show that between 2007 and 2008, 30 of 50 states experienced declines in their gas tax receipts, dropping by an average of two percent. If electric cars one day replace America's internal combustion fleet entirely, revenues based on gas taxes could dry up altogether.
For many states, VMT fees may be just what the doctor ordered. While the prospect of a mileage-based system has led some to argue that the GPS technology needed to make it work optimally is an invasion of privacy, there is a growing consensus that it is a much more sustainable option for transportation funding.
Earlier this year, the Congressional Budget Office issued a report stating that the VMT fee system is a feasible transportation funding option and would result in a more efficient use of the highway system. This follows several earlier reports, including from two federal transportation financing commissions, recommending that the federal gas tax be gradually replaced with VMT fees [PDF].
In the past decade, about two dozen states have examined the feasibility of such a system. Here are some of the more noteworthy initiatives:
Oregon: Having learned valuable lessons from its original VMT pilot program in 2007, Oregon transportation officials redesigned the ways that vehicle mileage is recorded and fees are collected in a Phase II pilot program this year. Instead of a pay-at-the-pump concept, the state's Road User Fee Task Force proposed legislation (HB 2328) based on an "open technology" platform applied only to drivers of electric and plug-in hybrid vehicles.
The original pilot program exposed design shortcomings and significant public opposition to the mandatory use of GPS technology to track vehicle miles traveled, so the new proposal would give Oregon's DOT the flexibility to establish multiple methods for reporting VMT. An "opt-in" feature would allow drivers to choose the method by which they report their mileage and pay their fees. The revised concept also envisions a larger role for the private sector in the data collection and management of accounts.
Colorado: In 2007, a blue-ribbon commission exploring alternatives to the gas tax recommended that a pilot program be established to test the feasibility of implementing VMT fees, and that pilot is now underway. Some legislators are also considering introducing bills to require that only electric cars pay the fee, at least in the beginning. A final report is due in May 2012.
Minnesota: In May of this year, Minnesota began a pilot program in which a group of 500 drivers from two counties are asked to test VMT collection technology. The participants will use smart phones and GPS technology to submit information that MNDOT will use to evaluate whether travel data is being recorded and conveyed accurately and reliably. The test will also examine whether other applications - such as real-time traffic alerts on construction zones, crashes, congestion and road hazards - are effective in communicating safety messages to motorists. Three different groups of volunteers will test the devices for six months each.
Nevada: Last year, Nevada also completed a feasibility study, which noted that it could take a decade or more to fully phase in a VMT fee program and that public acceptance will be critical to its success. Nevada hopes to eventually replace the gas tax as a funding source for surface transportation.
Idaho: A transportation task force, appointed by the governor to address a growing gap between the state's transportation system needs and available revenues, proposed a list of options including mileage-based user fees. The formula used to allocate funds to local jurisdictions would be adjusted consistent with user-pay principles.
Texas: Research on VMT fees has been ongoing in Texas since 2007. This year, state legislators introduced a bill (HB 1669) that would have developed a pilot program in response to a state-authorized Texas Transportation Institute study [PDF] calling for a mileage-based system. Although the bill failed to make it out of the House Transportation Committee, there is a strong possibility that it will come up again in the future.
Hawaii: A bill, SB 819, was introduced this year but failed to pass. It would have established a pilot program in the state and authorized refunds of motor vehicle fuel taxes paid to participants.
Massachusetts: A bill similar to Hawaii's (HB 2660) is pending, which would create a pilot program to study the challenges of adopting a VMT fee.
Multi-state: Perhaps the most intriguing of all the state trials is the federally-funded, multi-state VMT field test by the University of Iowa. Six sites were chosen: Austin, Texas; Baltimore, Maryland; Boise, Idaho; Eastern Iowa; and the Research Triangle, North Carolina. While the final report is currently being reviewed by the U.S. Department of Transportation and its findings have not yet been made public, it's the most geographically broad test to date and could be the most significant in showing whether the system would work on a nationwide scale.
New Zealand's Road User Charge System for Heavy and Light Diesel Vehicles
by Jim Whitty
Manager, Office of Innovative Partnerships and Alternative Funding, Oregon Department of Transportation
The world's only charge-by-the-mile road finance system for passenger vehicles operates in New Zealand. In September, I had the good fortune to meet in Wellington for six hours with officials from the national Ministry of Transport and the New Zealand Transport Authority to share wisdom learned from their Road Usage Charge program (RUC) over the past decade as well as the prospects for Oregon's open system approach to mileage tax collection. I also had the opportunity to meet with a private agent for RUC collection called in ERoads in Auckland.
Road user charging in New Zealand began in 1977 as a weight distance tax for heavy trucks. To create the RUC program, officials said New Zealand relied heavily upon Oregon's longstanding weight/mile tax for vehicles exceeding 26,000 lbs, albeit with some changes to fit the culture of the nation. That connection now continues into similar possibilities for light vehicles.
Light diesel vehicles did not enter the New Zealand road user charging system until the late 1990s. That's when diesel cars first began to enter the country for use on the nation's road system. Since New Zealand has never had a tax on diesel fuel, the government imposed the road user charge system for heavy trucks on operators of the light diesel vehicles.
New Zealand's road user charging system is a pre-pay system rather than the post pay systems analyzed by many for the US. When an owner registers a vehicle for use on New Zealand roads, the owner/operator must also purchase a paper RUC license from the New Zealand Transport Authority and display it visibly on the windshield. No one is allowed to operate a diesel vehicle on New Zealand roads without displaying an up-to-date RUC license (note: agricultural vehicles are exempted from purchasing RUC licenses). Light electric vehicles are not subject to the RUC until after June 30, 2013.
The RUC license follows the car rather than the owner/operator. Thus, purchasers of diesel vehicles must make sure their car has a valid RUC license before driving the vehicle on the road system notwithstanding that the prior owner may have neglected to obtain a current RUC license. This may mean the new owner may have to cover payment of many RUC kilometers in arrears.
For light diesel vehicle RUC licenses, users buy blocks of distance in any size by multiples of 1,000 kilometers. RUC licenses are purchased for a particular vehicle and cannot be transferred. The standard price for a light vehicle RUC is US$33 for a 1,000 kilometer block (note: this is US$0.033 per kilometer or about 2 US cents per mile). The heavy vehicle RUC licenses have a higher price.
Each purchase of a RUC license requires payment of an administrative charge per transaction rather than the size of the block purchased. The RUC license transaction charge is about US$6 per transaction. A user can purchase a paper RUC license through an identified agent or on line but with the same transaction fee.
In 2009, the government approved electronic versions of RUC licenses-called eRUC--for sale by certified providers. The first certified agent to sell the eRUC was ERoads, headquartered in Auckund. ERoads' sales tend to be for heavy vehicles and commercial light vehicle fleets because rental of the OBU and services costs about US$52 per month, an amount not economically viable for light diesel vehicles. In about two years of operations, ERoads now serves about 10 percent of the heavy vehicle RUC market. Earlier this fall, the government certified a competitor, International Telematics, as agent for eRUC services in New Zealand.
Operating a diesel vehicle without properly displaying a RUC license (or having an up-to-date purchase of an eRUC for those vehicles with an OBU) runs the risk of getting ticketed by the police. Penalties for violations are stiff. The primary target for violation inspections are heavy vehicles because every operator must pay the RUC.
Lighter vehicles are the more difficult enforcement challenge because only diesel vehicles are obligated to display a RUC license. Many light vehicles may skip purchasing a RUC license without consequence until the annual safety inspection required for all vehicles at which time the odometer is checked. The government has less enforcement tools for light diesel vehicles than for heavy vehicles.
The Ministry of Transport estimates that in 2009 the government lost about US$10 million from light diesel vehicles per annum due to non-compliance. (Note: This is about 6 percent of total revenues from light vehicles.) This compares to about US$23 million lost from heavy vehicles. Light diesel vehicles RUC revenues comprise about 24 percent of total RUC revenue while heavy vehicle RUC revenues comprise 76 percent. It's easy to see why enforcement focuses on heavy vehicles.
The whole RUC system for heavy and light vehicles costs about US$13 million to operate excepting the police. Total revenues equal about US$750,000 annually for this lightly populated nation of about 4.5 million people.
The RUC license rate is not connected to the fuel tax rate. The RUC licenses are less expensive for light diesel vehicles because the fuel tax rate equals about US$0.043 per kilometer.
The Ministry of Transport did an independent assessment review of it RUC program in 2009. The conclusion is that the emerging eRUC program and enforcement mechanisms for heavy vehicles will yield a satisfactory revenue program. The Ministry was less sanguine about the RUC program for light diesel vehicles.
How Fair is Road Pricing? Evaluating Equity in Transportation Pricing and Finance
Bipartisan Policy Center