This is the Spring 2016 issue of MBUFA's e-Newsletter. Please use the links below 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

STSFA DEADLINE APPROACHES	CALIFORNIA PILOT PROGRAM UPDATE
OReGO UPDATE	FUTURE OF TOLL ROADS
MBUFA MEMBER NEWS	CHAIRMAN'S LETTER
EXECUTIVE DIRECTOR'S REPORT	EVENTS
NEWS	RESEARCH LIBRARY
JOIN MBUFA

DEADLINE APPROACHES FOR FIRST YEAR OF STSFA PILOT APPLICATIONS

The deadline for the first year of the five-year FHWA program "Surface Transportation System Funding Alternatives" (STSFA) is fast approaching: 5pm on May 20th.

The $95 million program is the most significant commitment to demonstrating road charging as a sustainable alternative to the gas tax. $15 million has been allocated for fiscal year 2016 to be given to State Departments of Transportation to help fund demonstration pilots, although in the first year, pre-demonstration projects will be considered as well.

The FHWA's Notice of Funding Opportunity summarizes the program for states "to demonstrate user based alternative revenue mechanisms that utilize a user fee structure to maintain the long-term solvency of the Highway Trust Fund."

According to the NOFO, "The activities carried out using funds provided under this section shall meet the following goals:

To test the design, acceptance, and implementation of 2 or more future user-based alternative revenue mechanisms.
To improve the functionality of such user-based alternative revenue mechanisms.
To conduct outreach to increase public awareness regarding the need for alternative funding sources for surface transportation programs and to provide information on possible approaches.
To provide recommendations regarding adoption and implementation of user-based alternative revenue mechanisms.
To minimize the administrative cost of any potential user-based alternative revenue mechanisms.
Minimize the administrative costs associated with the collection of fees."

FHWA guidance is that at least two and as many as five awards will be made in 2016 with announcement of the awards to be made by as soon as August. There is no minimum amount for each award and there is a $7.5 million cap on individual awards. Awards of the remaining $80 million funds for the following four years ($20 million for each fiscal year 2017-2020) could be determined with a single solicitation in 2017, allowing states to grow the demonstration pilots to include larger areas and increased numbers of participating vehicles. While the language of the legislation doesn't specify the number of participating drivers, it is hoped that the pilots will far exceed the size of prior projects.

In addition to individual state applications, the FHWA is also encouraging multi-state joint applications. The agency is encouraging states to think big, although it will consider smaller pre-demonstration projects the first year, to give some state legislatures time to appropriate resources to fulfill the state match requirement. The program requires a 50% state match of non-Federal funds, although states can fulfill this requirement in part by using tolling credits and other "soft matches".

The FHWA conducted a webinar about the program on April 1st ("Background and Application Information for the Surface Transportation System Funding Alternatives Program"). In addition, representatives from FHWA have participated in two conference calls with members of MBUFA to answer questions about the program. Further information on the NOFO can be found here.

Additional questions about the program can be emailed to STSFA@USDOT.GOV .

CALIFORNIA ROAD CHARGE PILOT PROGRAM UPDATE

On January 5, 2016, Caltrans launched the new website (CaliforniaRoadChargePilot.com) dedicated to the California Road Charge Pilot Program. The pilot dashboard shows the number of volunteers (up to April 26, 2016) interested in participating in the pilot since signups began.

A major goal of the California Road Charge Pilot Program is to represent the diverse geographic, demographic and socio-economic aspects of California, encouraging a wide range of individuals, households, businesses and at least one government agency. This will include a cross-section of more than 5,000 vehicles reflective of the fleet currently using California's road network, which makes it the largest road charge pilot in the nation to date.

Caltrans is striving to ensure this cross-section by enlisting the interest of Californians from all parts of the state. Even though they have surpassed the goal of 5,000 volunteers signed up, they are recruiting significantly more in order to ensure the participation goals set by the Technical Advisory Committee are met (click here for breakdown of participation goals).

In addition, Caltrans recently announced the four firms selected to provide account management services to volunteers in the California Road Charge Pilot Program. Please click here for a link to the press release. Volunteers selected to participate in the pilot will be able to choose between Azuga and Intelligent Mechatronic Systems Inc. ("IMS") to manage their road charge mileage account, or they may choose a state-run account management service, which will be supported by Arvato Mobility Solutions. Accounts for heavy vehicles will be serviced by EROAD, Inc. These firms will offer the full range of mileage reporting options that range from low-tech options like manual odometer readings to fully automated reporting based on vehicle telematics. During the next phase of volunteer sign up and selection, Caltrans will provide detailed information about account management choices starting in May.

A public service announcement in English and Spanish highlighting the benefits of the California Road Charge Pilot Program has been playing at DMV field offices across the state, educating drivers about the opportunity to participate in the California Road Charge Pilot Program. The announcement will continue to play at DMV offices until mid-May 2016 and is available on the California Road Charge Pilot Program website by clicking here.

As California moves forward with recruitment and selection of volunteers, key dates are:

May 2016: Potential volunteers notified if they are selected, and will be asked to select their preferred reporting method
July 2016: Road Charge Pilot Program starts
March 2017: Road Charge Pilot Program ends
July 2017: California State Transportation Agency submits Road Charge Pilot Program results report

OReGO PROGRAM APPROACHES ONE YEAR MILESTONE

OReGO, the nation's first operational road usage charge program, will celebrate its one-year anniversary on July 1.

This volunteer-based road usage charge program has enrolled a total of 1,150 vehicles, with 975 actively enrolled as of April 2016. Notably, most of OReGO's vehicles are in the "22 mpg and above" fuel efficiency category, which means those drivers voluntarily pay more with OReGO and its legislatively-set 1.5 cents per mile rate than they previously paid under the state fuel tax program. Oregon DOT survey responses from program volunteers indicate that many these owners of highly fuel-efficient vehicles want to pay their "fair share."

Since coming online, the program has collected three quarters' worth of road usage charge payments from private sector account managers, demonstrating that it is a viable revenue-generating option for transportation system funding. Surveys indicate that program support is primarily strong and that volunteers feel positive overall about their program participation. Several more surveys are set for this summer and fall, both for volunteers in the program and for Oregonians in general. In addition, OReGO is applying for federal funding that will focus primarily on growing the program and building interoperability with other states.

For more information about the OReGO Program, contact the team at 503-986-7827 or MyOReGO@odot.state.or.us or visit us at www.MyOReGO.org.

By Robert Poole, Director of Transportation Policy, Reason Foundation

THE FUTURE OF TOLL ROADS IN AN MBUF AMERICA

People respond to a paradigm change in one of two ways. Those who see the glass as half-empty focus on how they are likely to lose out from the change. But those who see the glass as half-full look at how they can turn the change to their advantage.

The initial reaction of much of the toll industry has been of the half-empty kind: the fear that universal per-mile charging will put toll roads out of business. That negative scenario might come about, but only if the toll industry fails to seize the opportunity presented by mainstream acceptance of per-mile charging.

At a recent conference of the International Bridge, Tunnel & Turnpike Association, I urged the industry to get actively involved in shaping the transition to mileage-based user fees, in two ways. First, argue for MBUF policies that avoid the inherent flaws of per-gallon fuel taxes. And second, make toll facilities the leading edge of the transition to MBUF America.

As states continue to lead the way in devising the transition, the industry needs to argue strongly for MBUFs to replace fuel taxes, not supplement them - otherwise taxpayer groups will fight hard to prevent the transition. MBUF rates must be inflation-adjusted (as 21st-century toll rates increasingly are). And customers must have a choice of payment methods (as they do on toll roads).

And here are two more-challenging provisions worth fighting for. Premium highways should have higher per-mile charges than ordinary streets and roads, because they cost a lot more to build and maintain. And - if at all possible - MBUFs should be paid directly to roadway providers, to avoid the otherwise inevitable politicization of the resulting revenues. (This would convert roads and highways into utilities like electricity, water, telecoms, etc.)

How could toll roads become the leading edge of the transition? First, the industry should argue that all premium (limited access) highways become toll roads. Existing tolled Interstates would simply re-state their toll rates on a per-mile basis. Non-tolled Interstates and freeways would be converted so as to provide a bondable revenue stream for their reconstruction and modernization.

As states subsequently proceed to implement statewide MBUFs for their roadways, the principle of not charging twice for the same roadway would require that the miles people drive on the higher-rate premium highways not also incur the statewide MBUF. So the state would have to give rebates to users of premium highways for the state MBUF incurred on their premium-highway miles. Today's all-electronic toll systems make that a simple software routine. Once a month, each toll provider would send a file to the relevant state agency listing the miles driven by each customer on their facilities, and that agency would provide rebates of the basic MBUF to those customers.

These changes may sound very ambitious. But the transition from per-gallon to per-mile represents a once in a lifetime opportunity to rethink how we provide and manage America's roads and highways. We should take full advantage of this opportunity.

MBUFA MEMBER NEWS

EROAD Joins MBUFA

New Zealand-based EROAD has recently become the newest member of MBUFA. A fully integrated technology, tolling, and services provider, EROAD has developed a comprehensive range of tax services to support motor carriers to better meet tax filing and record -keeping obligations. The EROAD application supports mileage, location and fuel-based taxes, and automatically captures supporting data, identifies exempt miles, and calculates taxes owed.

Lee Munnich Awarded by University of Minnesota


	Lee Munnich

The Mileage-Based User Fee Alliance congratulates Lee Munnich, senior fellow at the Hubert H. Humphrey School of Public Policy at the University of Minnesota and Secretary-Treasurer of MBUFA, for recently receiving the University of Minnesota President's Award for Outstanding Service.

In the award announcement, Eric Schwartz, Dean of the Humphrey School, said of Lee, "Throughout his career, Lee has made enormous contributions to the health and well-being of the Humphrey School, the University of Minnesota, and to the State of Minnesota. His contributions reflect a deep commitment to the University and to public life."

The award announcement cites many of Lee's accomplishments including leading the State and Local Policy Program at the Humphrey School (SLPP) from 1991-2015, "advancing the quality of policy formulation and implementation for states and local communities" and his contributions to the introduction of MnPASS lanes and the idea of congestion pricing.

According to the University's website, the award was established to "recognize faculty and staff (current or retired) who have provided exceptional service to the University, its schools, colleges, departments and service units."

Washington State Transportation Commission Awards RUC Contract to D'Artagnan, Berk Consulting and WSP | Parsons Brinckerhoff

D'Artagnan Consulting has been awarded a contract with the Washington State Transportation Commission (WSTC) to prepare a detailed statewide Road Usage Charge (RUC) demonstration implementation plan in preparation for a project slated to start in 2017.

D'Artagnan will be working in conjunction with Berk Consulting and WSP | Parsons Brinckerhoff as well as several DBE firms to complete the project. The work will entail updating the WSTC body of materials assessing RUC since 2012 that was successfully completed at the direction of the State Legislature. The plan will address unanswered questions that remain through testing and evaluation with the intention of implementing the demonstration in 2017, with legislative approval.

The implementation plan will be complete by the end of 2016 for review by the WSTC, the Governor's office, and the transportation committees of the State House of Representatives and the State Senate. It will include all the details necessary to launch a road charge pilot test including agency roles, technologies and methodologies, procurement strategy, recruitment plan, rigorous evaluation criteria, a communications plan, and detail project expenditure budget.

The D'Artagnan Team will also actively consult, coordinate and receive guidance from the Department of Transportation, the Department of Licensing, the Department of Revenue, and the Office of the State Treasurer, as well as the WSTC appointed RUC Steering Committee in establishing participation and coordination parameters for the project.

Jim Whitty Joins D'Artagnan Consulting, LLP


	Jim Whitty

D'Artagnan Consulting, LLP is pleased to announce the addition of Mr. Jim Whitty as a new Partner in the firm, in charge of worldwide strategic marketing. Formally of the Oregon Department of Transportation, Jim helped pioneer Road Usage Charging (RUC) and

made Oregon the first state to implement both the gas tax in 1919 and road usage charging in 2013. Jim has been a visionary leader who helped formulate the Western Road Usage Charging Consortia, recently rebranded as "RUC West". Jim Whitty is an internationally recognized leader and proponent of finding a sustainable revenue source for our roads and future transportation infrastructure.

Road Pricing Blog Merged Into D'Artagnan Website

D'Artagnan announced the merging of Road Pricing Blog, founded by Principal Consultant Scott Wilson in 2010, into the firm's website www.dartagnan.co. In addition to the existing library of over 500 entries, the site features regular updates and analysis of activities from jurisdictions around the world, combining the firm's own work with other efforts, historical and contemporary. The combination of the two efforts is an essential resource for the emerging global market of distance-based charging.

By Jack Basso, Chair, MBUFA

CHAIRMAN'S LETTER

The congressional process is a little like the tectonic forces below the earth. Pressure for action is resisted until it builds up to a point over time that it is too great to hold back any longer. Then there is a seismic shift.

A year ago, we were struggling to believe that Congress would ever pass a long-term surface transportation reauthorization bill let alone fund user fee pilots. But, after more than a decade of Highway Trust Fund shortfall crises and dozens of highway bill extensions, the pressure for action became too great. The FAST Act was signed into law and with it, the Federal government is providing the investment needed to prove the concept of what I believe will be a seismic shift in how the United States funds public transportation infrastructure - the newly created, $95 million Surface Transportation System Funding Alternatives (STSFA) program at the Federal Highway Administration.

We are a few days away from the deadline for states to submit their user based alternative revenue proposals for these new grant funds.

This is an extraordinary opportunity that carries significant responsibility. We know from Congressional Budget Office projections that when the FAST Act expires in 2020, unless there is new funding, Congress will be facing a $108 billion deficit in the Highway Trust Fund as they draft the next six-year bill. That is a hole too great to be fixed by budgetary sleight of hand or even another bailout by the Federal Reserve Bank!

We have heard from authors of this legislative provision that we have this short five-year window of opportunity to pilot mileage-based user fee mechanisms on a regional basis with sufficient scale to convince policy makers that this is a viable path forward. They are looking at mileage-based user fees as the only alternative for a long-term sustainable financing mechanism.

We are very appreciative of how aggressively and thoughtfully FHWA has moved to issue the Notice of Funding Opportunity so soon after the enactment of the FAST Act and we are grateful for their accessibility and willingness to answer the questions they can about the program.

It is now up to MBUFA members to meet this challenge and demonstrate through new, large, regional pilots that mileage-based user fees are the new sustainable funding mechanism for the Highway Trust Fund. It is up to MBUFA to continue its role of making information available to the states, to policy makers and to the public to encourage applications and increase awareness and understanding.

While the epicenter for this change is going to be in the states, which are sponsoring the pilots, the tremors will be felt in Washington, DC.

By Barbara Rohde, Executive Director, MBUFA

EXECUTIVE DIRECTOR'S REPORT

2016 has started with a bang on the issue of MBUF!

On February 23, MBUFA hosted its third national conference: The Impact of the FAST Act on Road Charging: Where Will This Legislation Lead the United States?

The conference attracted more than 100 attendees who listened to a record 34 speakers in one day! Each of the six panels focused directly on the changing world that MBUF has brought to the world of transportation financing. I especially want to thank our Co-Chairs Lou Neudorff from CH2M and Adrian Moore of the Reason Foundation for so ably putting together, with our Steering Committee, such an informative and useful conference.

I also want to thank the participants for our panel entitled "Full Speed Ahead: The California Story" for making the trip to the East Coast to provide up-to-the-minute information on the newest pilot in the nation. Thanks as well to Congressman Desaulnier for taking the time to be on the panel to talk about what inspired him as a State Senator in California to sponsor this critical legislation for the state several years ago.

March 22 also brought a major milestone for this issue with the United States Department of Transportation issuing the Notice of Funding Opportunity for the first $15 million for FY16 in federal matching funds for projects throughout the nation. Further information about the NOFO is available in this newsletter. Over the past several weeks, MBUFA has been hosting conference calls directly with key individuals involved with the federal project to provide as much background as possible prior to the May 20 application deadline.

MBUFA also wants to welcome EROAD as our newest member. More information about the company and their involvement in the issue of distance based pricing can be found in this newsletter under Member News.

The months ahead provide a very exciting time for this organization. In addition to providing any assistance we can to the upcoming pilots that result from the NOFO, we will be hosting a Quarterly Meeting in June in Washington, DC. In addition, we are considering a West Coast Conference or Workshop later this year to provide updated information on the issue to many interested organizations and individuals in that area of the nation.

Thanks again for all of the help and contributions from many of you on this issue and your continued support for MBUFA!

EVENTS

MAY	May 11: MBUFA Member Implementation Call, 11am EDT May 25: MBUFA Member Implementation Call, 11am EDT
JUNE	June 8: MBUFA Member Implementation Call, 11am EDT June 20: MBUFA Quarterly Meeting June 22: MBUFA Member Implementation Call, 11am EDT