This is the Summer 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

FHWA GRANTS AWARDED	CALIFORNIA LAUNCHES ROAD CHARGE PROGRAM
OReGO AFTER ONE YEAR	TESTING A BETTER WAY
MEMBER SPOTLIGHT: AZUGA	MBUFA QUARTERLY MEETING
CHAIRMAN'S LETTER	EXECUTIVE DIRECTOR'S REPORT
EVENTS	NEWS
RESEARCH LIBRARY	JOIN MBUFA

FEDERAL HIGHWAY ADMINISTRATION ANNOUNCES STSFA GRANTS

The Federal Highway Administration announced last week in a press release the recipients of the first round of grants allocated by Section 6020 of the FAST Act. $14.2 million dollars have been awarded to state departments of transportation to go to eight different projects to study user-based revenue models for maintaining the solvency of the Highway Trust Fund under the Surface Transportation System Funding Alternatives (STSFA) grant program. It is required that the Federal grant money be matched by states receiving the funding.

STSFA was set up to "fund projects to test the design, implementation and acceptance of user-based alternative revenue mechanisms" and the projects that the FHWA has chosen reflect both a priority towards testing a variety of data collection methods as well as testing the user-based concept at a large scale with multi-jurisdiction interoperability being the focus.

The mileage-reporting methods that will be tested are manual and automated odometer readings, on-board mileage counters, pay-at-the-pump/charging station collection, Mobility-as-a-Service (MaaS), and registration fees based on estimated miles driven. Two other projects will focus on the regional implementation of user-based collection models and the last grant was awarded to expand the state of Oregon's current road usage charge program, OReGO.

Launched in July 2015, OReGO was the first Road Usage Charge Program in the U.S. and the Oregon Department of Transportation has received a $2.1 million grant for improving upon the system. ODOT listed the activities that the grant will support as "certifying new business models and devices that will allow all Oregonians to participate; developing a manual mileage reporting option that doesn't require specific technology; collaborating with other government bodies such as the cities of Portland and Salem and the Port of Portland to streamline road charge-related services; developing and improving compliance mechanisms that would support a mandatory program; and, working with other states to identify and overcome barriers to interoperability to enhance the viability of road usage charging locally and nationally".

The Delaware Department of Transportation received a $1.49 million grant that will be used in collaboration with other members of the I-95 Corridor Coalition to test user fees measured by on-board devices. According to DelDOT, the project "will include pre-deployment activities to begin addressing the challenges associated with a user-based approach to revenue generation [which] will include strategies to address privacy concerns, equity questions, administration costs and out-of-state usage".

The Western Road Usage Charge Consortium (Western RUC), a coalition of fourteen state departments of transportation collaborating on the study of a road user charge funding program, will collaborate with the Oregon Department of Transportation to use its $1.5 million grant to study the implementation of road user charging in a regional system. In a press release through Western RUC member Caltrans it said the "RUC West grant award will help develop a regional plan that addresses critical policy, organizational, technological, and operational challenges for finding an equitable and innovative way to generate and collect revenue to fund transportation infrastructure".

Caltrans itself received a $750,000 grant to expand on the State of California's own Road Charge Pilot Program. The pilot was launched in July 2016 and is currently the largest pilot in the country. The grant money will be used to test a road user charge using pay-at-the-pump or charging station. The award, according to Caltrans, "affords Caltrans the opportunity to expand upon the ongoing efforts to engage the public on transportation funding and alternative methods of future revenue generation, while continuing to formulate and strengthen a streamlined system of administration, oversight and compliance for a road charge program".

The remaining grants awarded will go to the following:

Hawaii Department of Transportation, $4 million, for studying user fee collection based on manual and automated odometer readings at inspection stations.
Minnesota Department of Transportation, $300,000, for studying the use of Mobility-as-a-Service providers (MaaS) as the revenue collection mechanism
Missouri Department of Transportation, $250,000, for studying the implementation a new registration fee schedule based on estimated miles per gallon
Washington Department of Transportation, $3.85 million, for testing critical elements of interoperable, multi-jurisdictional alternative user-based revenue collection systems

The STSFA grants are the most significant commitment to studying user based transportation funding options to date. The Mileage-Based User Fee Alliance will continue follow these projects closely and report to its Members as information becomes available.

	CALIFORNIA LAUNCHES LIVE ROAD CHARGE PILOT PROGRAM On July 1, 2016 California launched a nine-month road charge pilot to research the viability of a pay-by-the-mile funding model. As of August 5, 2016 the California road charge pilot team have exceeded the goal of enrolling 5,000 vehicles statewide into the program. These vehicles are helping California gain insight into an innovative way to finance transportation infrastructure. The following chart represents the total number of vehicles currently enrolled in the pilot, across four vehicle types.

	At the conclusion of the nine-month pilot, the California State Transportation Agency will submit a report to the Legislature, the California Transportation Commission and the Road Charge Technical Advisory Committee by June 30, 2017. This report will include the results of the pilot, a summary of the pilot participants' experience and stakeholder input received throughout the entire pilot program. The Legislature will make the final decision on whether, how and when to enact a full-scale permanent road charge program. Anyone that would like to learn more about the pilot program or the status of the pilot can join the interest list here: www.CaliforniaRoadChargePilot.com

SELLING OReGO: OREGON'S ROAD USER CHARGE PROGRAM ONE YEAR LATER

It has been just over a year since the launch of OReGO, Oregon's first-in-the-nation road user

charge program that charges drivers a tax based on miles driven rather than fuel consumed.

Senate bill 810 enabled ODOT to sign up 5,000 volunteer cars and light-duty trucks and charge them each 1.5 cents per mile. Drivers log on to the OReGO website to register, choose from one of three account managers and opt to have their mileage recorded by a plug-in on-board diagnostics device, which may or may not be GPS-enabled. Participants receive a credit on their bill to offset the fuel tax paid at the pump.

Eventually, the Beaver State would like to replace the fuels tax with a statewide road user charge but this depends on how well OReGO works. Since fuels tax revenues continue to dwindle due to more fuel-efficient and electric vehicles on the road, officials need to demonstrate that charging by the mile instead of at the pump makes more sense.

So with the program's one-year anniversary completed, Maureen Bock, ODOT's program manager for OReGO, provided an assessment of where things stand.

Here are the main takeaways.

Participation in the program has been far less than the maximum allowed

The OReGO program was designed to accept up to 5,000 participants. As of the end of June, just 1,025 Oregon vehicles were enrolled. Two factors may explain the low number. Unlike California's new road user charge pilot which doesn't cost money, OReGO asks volunteers to pay a new tax so this may have discouraged drivers who may have otherwise participated. Also, there hasn't yet been much of an active push to market OReGO beyond the signup website thus limiting public awareness and keeping participation relatively low.

The program unexpectedly made a profit

Drivers of low mileage vehicles (22 mpg or lower as defined in the bill) were expected to make up most of the volunteer pool (up to 3000 of the 5,000 participants), resulting in a big tax refund bill for the state. Instead, 75 percent of the participant vehicles were high mileage and the state paid out less money in refunds than they collected in road user charges. The results are remarkable because the current bill does not vary the per-mile rate based on vehicle emissions levels so drivers of fuel-efficient vehicles in the program have to pay while their gas-guzzler-driving peers get a check.

This policy choice may appear skewed but the intent of the program for now appears to be fairness in paying for road use rather than limiting carbon emissions. In this regard, ODOT is ceding responsibility for promoting environmental quality to other state agencies which have this mission by statute.

Bock says that there is anecdotal evidence that some participants with fuel-efficient vehicles felt a need to "pay their fair share." Although these drivers realize big cost savings on fuel it is unclear if these results will hold up going forward.

Most volunteers liked the program

Midway through the program, close to 500 participants completed a survey run by an outside consultant reporting their overall experience. Results showed that over 70 percent of respondents rated their experience as either excellent or good. Over 90 percent indicated that signing up was simple and straightforward while 70 percent reported that they clearly understood the available options.

The survey also gathered data on participants' experience with the account managers' mileage statements and billing. Results showed that the percentage of respondents who thought that the statements and bills they received were clear and accurate were 67 percent and 57 percent respectively.

The survey did not solicit open ended responses from participants and did not attempt to compare experiences among the three different account managers. Participants will be surveyed again and those results will be available later in the year.

OReGO's managers are getting prepared in case the legislature makes the program mandatory

ODOT has applied for FAST Act funding to further expand and enhance OReGO. Among the proposals are:

Develop programs to increase public awareness of the need to find alternatives to the gas tax and allay concerns about the privacy and security of driver travel data
Increase the benefits provided to drivers by the account managers to include other services like pay-for-parking
Make the program more robust by putting in place mechanisms that improve account manager performance and reduce tax cheating
Explore the issue of how to deal with out-of-state drivers - or interoperability as transportation experts refer to it. This would include continuing to work with other states, by way of the Western Road Usage Charge Consortium, sharing information and creating common technical standards.

These results will allow program managers to report back to the Road User Fee Task Force, which could recommend statewide adoption.

There were no reported unauthorized disclosures of volunteers' personal information

Opponents of road user charges have long advocated against the distance-based fee concept due to privacy concerns including the potential for officials to use GPS to track driver location and use the data for nefarious purposes. To assuage these concerns, the bill prevented the disclosure of volunteers' personal information for those using the GPS option and required account managers to destroy all records of the travel patterns of individual drivers after a 30 day period (disclosures to the police during a criminal investigation are allowed).

In addition, vendors were required to sign contracts that included confidentiality provisions with the stipulation that they could face stiff penalties for any violations. By the end of its first year, OReGO avoided any confidentiality violations. Whether this can reassure the public and elicit more participation is left to be seen.

After its first year, the jury is out on whether OReGO will move beyond a small voluntary program to a statewide mandatory one. Legislative action will be required to move in that direction. A lot will depend on public support, revenue forecasts, as well as program results going forward.

By Adrian Moore, Vice President, Policy, Reason Foundation, Vice President, for Education, MBUFA

TESTING A BETTER WAY TO PAY FOR ROADS

This op-ed was originally published in the Orange County Register.

This month California launched a new "Road Charge Pilot Program" to test replacing the gas tax that drivers pay at the pump with a fee based on the number of miles they drive.

It's not the first transportation funding experiment of its kind. Other states including Oregon, Washington and Minnesota have already conducted similar tests in recent years, but it is important. Cars - and even trucks and SUVs - are getting more fuel efficient with each passing year. As fuel efficiency goes up, we drive as much or more while using less gas and thus paying less in gas taxes.

But there is still more wear and tear on roads, and inflation, labor, land and other rising costs make roads increasingly expensive to maintain and build.

Transportation should be funded through user fees - the people who pay to use roads should be the ones to pay for them. And the fees charged to use roads should go into dedicated accounts. Gas taxes, for example, should be spent on roads and shouldn't be treated as an income source that the state Legislature can divert to other purposes. As the gas tax becomes less viable as a user fee, we need a new user fee to replace it.

The Road Charge Pilot Program is designed to test mileage fees, which would replace gas taxes. The experiment already has over 5,000 volunteers from all over the state so it can measure how the system might work in all kinds of conditions. To implement a new reliable revenue stream for transportation, it's crucial that the state get this project right.

First, California needs to measure how to replace the gas tax with a mileage charge, not create a fancy way to tax everyone twice. The Road Usage Charge Program is explicitly mandated to replace the gas tax with a per-mile charge, but people are naturally suspicious it will wind up being a tax hike or open the door to double taxation through a gas tax and mileage fee.

Second, the system must protect drivers' privacy. A per-mile charge cannot require that people be tracked by a state agency wherever they go. Nor can it be a mandate that the government put a "black box" in every car. The fee system has to provide individuals with choices about the technology they use. One driver may want GPS to track everything, while another driver may want to go to the DMV for annual odometer readings. Choice is key.

The system must also give drivers control over their data. Ideally the state will use private parties, separate from the government, that provide the technology and collect fees. Oregon has done a great job of this in its mileage charge system and California, so far, is adopting similar approaches.

Third, the experiment needs to explore how fair a per-mile charge is relative to gas taxes. We don't want a new system that shifts the burden of paying for the roads away from the people who use them. The good news is that previous mileage fee experiments indicate they are more fair than gas taxes. But it's important that rural and urban drivers, rich and poor, all believe the system is fair.

Fourth, the mileage fee can't spawn a new state collection bureaucracy or be overly expensive to collect. The gas tax has many failings, but one positive is that it is very inexpensive to collect. Mileage fee experiments thus far have been more expensive in this regard, so the state needs to explore ways to reduce collection costs, especially as the system scales up in the nation's most populous state.

California's new experiment is off to a good start. A well-functioning road system is essential to our lives, job prospects, state economy and mobility, so developing and implementing a sustainable method of funding the transportation system would be a major boost to the state.

Interview with Nate Bryer, Vice President of Innovation, Azuga

MEMBER SPOTLIGHT: AZUGA

MBUFA: What is Azuga's role in the Oregon and California pilot programs?

Nate Bryer: We serve the nation's first pilot program, OReGO in Oregon, as well as the California Road Charge Pilot Program, the world's largest pilot of this kind. Through our service of these programs, I can tell you that we have learned a lot about the needs and expectations of both the government body and the end consumer.

Azuga provides account management services for the road usage charge (RUC) programs. What this entails is providing all the customer facing processes to consumers for supporting road usage charging. This includes onboarding, enrollment, collecting mileage, collecting fees, logistics and customer support. We also provide all of the backend services to the state to ensure all mileage is captured as well as all associated mileage fees. We provide detailed reports to show direct reconciliation between miles captured and fees collected.

Lastly, we provide a level of separation between consumers and the state to ensure the consumer's data stays private. The only information we provide to the state is aggregated mileage and fees, never any location information.

MBUFA: What have you learned and what has been the biggest challenge?

Nate Bryer: We have learned quite a bit about what it takes to get a RUC program up and running successfully. We have experience running large customer facing products, so the most significant lessons we've learned have been around the technology and processes for the actual road usage charging itself, like road differentiation and getting a back office set up to handle the rigors of handling taxes. However, the biggest challenge has not been technology centered, but consumer awareness about the need for road usage charging. There are many misconceptions and misunderstandings of what RUC is and is not. We have found ourselves to be in the position of champions of RUC to help people get up to speed on how roads are paid for now and how RUC will be used in the future - to everyone's benefit.

MBUFA: What are the keys to consumer acceptance?

Nate Bryer: Every person has his or her own preferences when it comes to sharing sensitive information - especially in regards to their physical location and the government. This is why it is imperative to offer a wide variety of easy mileage collection options from which the different pilot program participants may choose. For example, volunteers in the two current pilots may choose from several options ranging from our Basic device - which is a non-GPS, no-frills-just-the-facts, plug-and-play device - to our Advanced GPS-enabled device with location-based bonus services such as SafeZones. We have also partnered with third party vendors to collect mileage data from an outside mobile app or the vehicle's pre-existing onboard telematics system.

MBUFA: What do you see as the keys for scaling up these pilots to a state and national level?

Nate Bryer: There are quite a number of things that need to be in place before existing pilots can be scaled to handle a statewide mandate:

A dedicated team in the state to handle the new program
Standards for mileage collection that are agreed upon across all states
Integration with DMVs to ensure seamless verification and enrollment process

As you can imagine, a program such as an alternative funding pilot requires complex billing and payment mechanisms. The government needs an easy-to-follow, error-proof means of collecting data and transforming that data into a reliable billing system for its users. We've developed a simple, user-friendly platform which translates all mileage and fuel usage data into clear and succinct road usage billing for consumers and the government alike. And, to make the process even easier, we have a cloud-based solution which subtracts taxes paid at the pump. Then, on the state's behalf, we automatically invoice the consumer and collect net amounts due via a prepaid wallet system.

MBUFA: What are you learning about the cost of providing a VMT (Vehicle Miles Traveled) system versus the current excise tax model?

Nate Bryer: We've only built a VMT system so I can't compare it exactly to the current excise tax model, but what I can talk about is that the comparison is not exact beyond the fact that both systems function to bring in money to pay for roads. With a VMT system you can do so much more than what a straight fuel-based taxing system can do. You can pursue things like congestion pricing, dynamic parking and integration with tolling. With this new technology, things like V2V and V2I will be possible which could have a huge impact on driver and pedestrian safety - things that the existing tax system could never hope to achieve.

MBUFA: We are highly focused on developing and refining mileage-based systems but know that the technology and systems involved are a small part of what is happening in the industry. How do mileage-based technologies fit into the future of connected vehicle technology? In addition to the work you are doing in support of the two pilots, can you say more about the future of connected vehicles and the benefits to businesses and drivers?

Nate Bryer: Our connected future, as I imagine it, is here. Today's technology demands are speeding up as people discover the convenience and money-saving power of connected vehicle systems that improve fuel usage, driver safety and vehicle repair costs. Fleet businesses are becoming more automated with vehicle monitoring systems, maintenance notifications, and driver behavior reports. The technology-centric consumer continues to gain more power through better knowledge of what is happening under the hood with engine diagnostics, remote emissions testing and vehicle health reports.

Consumers today can complete a full array of tasks from their smartphone, such as setting their home thermostats or security cameras with smart home technology. It is no surprise consumer demands are expanding from the home out to the road...

MBUFA: Any prediction about the future of mileage-based systems?

Nate Bryer: My number one prediction isn't really much of a prediction but rather an observation - and that is doing nothing to replace the current fuel-based taxing system is not an option. So, some sort of mileage-based fee system is going to happen, and when it does it will open the doors to other consumer type products that would not have been possible otherwise. This is an exciting time to be in the connected car space!

MBUFA QUARTERLY MEETING SLATED FOR SEPTEMBER 28

With the FAST Act Section 6020 grants awardees now announced, a focus of the September 28 Quarterly Meeting for MBUFA in Washington, D.C. will be on those successful applicants. Additionally, a tentative debrief is scheduled for USDOT officials to provide information on the pros and cons they saw in the application process and expected changes for the next round of grants.

MBUFA Quarterly Meetings are for Members Only, but if you are interested in joining MBUFA please contact Barb Rohde at barbara.rohde@mbufa.org and we will make arrangements for you to attend this meeting.

The meeting will be held in Washington, D.C. from 10 a.m. EDT to 4 p.m. EDT and a full agenda will be available in early September.

By Jack Basso, Chair, MBUFA

CHAIRMAN'S LETTER

The Road to Implementation

I'm sure none of us expected a bidding war between the two presidential candidates over how much funding their administrations will invest in the nation's transportation infrastructure. But that is what we are seeing. And it is long overdue!

That makes the work our members are doing and the state pilot projects even more significant. We all know that the key to either candidate's pledge will be a plan for generating sufficient and sustainable revenue to make these needed investments.

Mileage-based user fees continue to be the strongest long term option. It falls on us not to just launch and administer pilots but to keep our focus on how these pilots lead to nationwide implementation.

Congress will face a steep funding challenge in the next authorization bill and the alternative financing pilot program was designed to generate sufficient data to make the case for whether to continue to move towards implementation of new revenue methods including a mileage-based system.

We will need all MBUFA members to keep this focus. We must continue to work and think together to meet this extremely challenging goal. We can also encourage the candidates and the upcoming new Congress to convert pledges into action.

Change is always an exciting time in Washington as it creates new opportunities. We owe a great debt to those in office now who provided the funding needed to support pilots with scale and we will have an obligation to the future Congress to deliver solid results.

By Barbara Rohde, Executive Director, MBUFA

EXECUTIVE DIRECTOR'S REPORT

Finally the wait is over!

Our congratulations to all of the grant winners of the USDOT Section 6020 grants that were announced last week. We know that the information that will be provided from these grants will give the nation much needed data and background on the issue of mileage-based user fees. These grant announcements will be a major focus of our upcoming meeting in September.

On September 28 we will be holding the Quarterly Meeting at our offices in Washington, D.C. and plan to focus on the winning grants and plan to get a "debriefing session" on the entire grant process - what worked and what did not. These meetings are for "Members Only" but we do allow guests to attend one Quarterly Meeting as non-members. The meeting will be held from 10am to 4pm EDT and we plan to offer the full agenda in early September.

The Volunteer Participation Committee co-chaired by Frederic Charlier, emovis, and Norma Ortega of Caltrans has been actively meeting for the past several weeks and we expect the Co-Chairs to provide an update at the September 28 Quarterly Meeting. This committee is focused on trying to help provide a template to states as they move into deployment phases for successful efforts to recruit participants to be involved in these pilots. A final report is expected before the end of the year.

On August 16, Craig Soutar, Chief Information Officer of the New Zealand Transport Agency and Richard White, Programme Director of the New Zealand G2G Know-How Programme met with me to discuss ways that New Zealand could work together with MBUFA. We look forward to the potential linking of the New Zealand government knowledge with MBUFA as these new test programs are developed and piloted under the Section 6020 grants.

Hope you have been having a great summer and look forward to seeing many of you at

the September 28 Quarterly Meeting!