Oberstar Gets It

Minnesota Representative James Oberstar may have been somewhat tentative about VMT pricing a year ago. But he is now very clear indeed. With Mary Peters no longer on stage, Oberstar has become to the US what Livingstone was to London and Eurlings is to NL. At a recent symposium re Mileage-Based User Fees, Oberstar's positive influence and encouragement was clearly felt during the final round table.

I will return to this article shortly and discuss its assumptions in depth.
Full Text Here for Archival Preservation purposes only. The original is here.

Minnesota Rep. Jim Oberstar advocates mileage-based tax

GPS would track driver use of roads
By Joan Lowy
Associated Press
Updated: 04/28/2009 11:39:36 PM CDT

A House committee chairman said Tuesday that he wants Congress to enact a mileage-based tax on cars and trucks to pay for highway programs now rather than wait years to test the idea.

Rep. Jim Oberstar, D-Minn., said he believes the technology exists to implement a mileage tax. He said he sees no point in waiting years for the results of pilot programs since such a tax system is inevitable as federal gasoline tax revenues decline.

"Why do we need a pilot program? Why don't we just phase it in?" said Oberstar, the House Transportation and Infrastructure Committee chairman. Oberstar is drafting a six-year transportation bill to fund highway and transit programs that is expected to total about a half-trillion dollars.

A congressionally mandated commission on transportation financing alternatives recommended switching to the vehicle-miles traveled tax but estimated it would take a decade to put a national system in place.

"I think it can be done in far less than that, maybe two years," Oberstar said at a House hearing. He was responding to testimony by Rep. Earl Blumenauer, D-Ore., who recommended that the transportation bill include pilot programs in every state to test the viability of a mileage-based tax.

Blumenauer said public acceptance, not technology, is the main obstacle to a mileage-based tax.

Pilot programs "would be able to increase public awareness and comfort and it would hasten the day we could make the transition," Blumenauer said.

Oberstar shrugged off that concern.

"I'm at a point of impatience with more studies," Oberstar said. He suggested that Rep. Peter DeFazio, D-Ore., chairman of the highways and transit subcommittee, set up a meeting of transportation experts and members of Congress to figure out how it could be done.

The tax would entail equipping vehicles with GPS technology to determine how many miles a car has been driven and whether on interstate highways or secondary roads. The devices would also calculate the amount of tax owed.

"At this point, there are a lot of things that are under consideration and there is also a strong need to find revenue," Oberstar spokesman Jim Berard said. "A vehicle miles-traveled tax is a logical complement, and perhaps a future replacement, for fuel taxes."

Gas tax revenues — the primary source of federal funding for highway programs — have dropped dramatically in the past two years, first because gas prices were high and later because of the economic downturn. They are forecast to continue going down as drivers switch to fuel-efficient and alternative-fuel vehicles.

Transportation Secretary Ray LaHood has ruled out raising gas taxes to make up for the funding shortfall, and the White House has rejected a mileage-based tax. They have not offered an alternative.

"The funding of the highway trust fund is a complex issue that will require consultation with Congress and consideration of a number of creative ideas," said Transportation Department spokeswoman Jill Zuckman. "The secretary looks forward to working with Chairman Oberstar and others as they consider how to keep the highway trust fund going."

A mileage-based tax has been unpopular in some states where it has been proposed. Critics say it unfairly penalizes drivers who live in rural areas and intrudes on privacy.

"When we can solve the equity issues to a majority's satisfaction in the Congress, when we can solve the privacy issues to the satisfaction of the American people, we can look at moving forward, but I just don't think we have the data or the experience right now to say we can set a timeline or a deadline," DeFazio said in a recent interview.


John Wayne Nation

Field Report: April’s Mileage-Based User Fee Conference in Austin Texas.

When I was nine I liked to poke a stick into ant nests I’d find in sidewalk cracks. Ants scattered in every conceivable direction. They ran in circles, they ran over and through each other. They screamed without logic. I was fascinated.

The state of the professional transportation opinion in the US today is pretty much the same. The stick poked at the nest in this case was the report released by the National Surface Transportation Infrastructure Finance Commission this February. The opening ant-scream was the spanking Obama’s Press Secretary Gibbs gave to Transportation Secretary Lahood. We professionals cringed in unison. Gibbs was in turn spanked next day by Congressman Oberstar, chair of the Transportation and Infrastructure Committee. We cheered. Of course the press went in every ant-direction imaginable for that and for the release of the NSTIFC’s Paying Our Way report 5 days later. Joe Motorist will have gleaned no real insight, and after fears were supplanted by next days’ tedious economic headlines will have simply forgotten, secure in the fact that opinion was sufficiently variable that no leader could possibly find a coherent position.

It seemed to me that in the weeks following the release of the report, US transportation professionals were – among friends – largely in favor of the key message in the report: “The gas-tax is a clever and simple idea whose time has run out and paying-for-use is the tax-shift to fix it.” We mocked Gibbs, commiserated with LaHood, and delighted in Oberstar’s defense – which had just vindicated all of us. On the whole we nodded in unison at the work of Rob Atkinson’s Congressional commission. Of course we would not all recommend spending the revenue the same way, but we all seemed aligned with the principles: meter all road use and pay according to number of miles traveled weighted by when and where the driving happened and of course by type of vehicle used.

With that in mind, I attended the April 14-15 Symposium on Mileage-Based User Fee, hosted in Austin by the Texas Transportation Institute’s University Transportation Center for Mobility, Hubert H. Humphrey Institute of Public Affairs, University of Minnesota, and Center for Transportation Studies, University of Minnesota. This would be about my 20th symposium dealing with Road Use Charging in five years.

I have come to view Road Use Charging symposia as prayer meetings. We preach to the Converted, whine about Congestion (you should see the pictures!), decry the free-road Infidels, mock the road-building Atheists, re-explain the evident Dogma of Adam Smith’s market economics, and await the messiah of Multimodal Commuting – led by transit and bicycles, of course.

So this time, I expected a real love-in. I foresaw the celebration of a tremendous breakthrough after, depending on one’s professional age, 10 to 40 years of economic argument for internalizing externalities, for transportation demand management (TDM), for correcting outmoded taxation and for resolution via a tax-shift. We were about to have our own little “Yes, We Can!” rally; we’d threaten to break out in song.

After celebrating, I was sure we’d set to work. How could we get started on the Commissions recommendations? What ideas did we have to implement their evident and clarifying direction? How could we help advise politicians who would be reeling from the shock of the unveiled truth? How could we ensure privacy protection? How could we educate? How could we make this affordable? How could we bridge such a massive change?

But that was not to be. Instead, I found ourselves to be 90 people with 90 opinions. I was told during Mayor Bloomberg’s congestion pricing scare that there were 8.3 million transportation experts living in New York City. I thought that couldn’t happen at a transportation conference.

While everyone seemed to agree that the Highway Trust Fund (HTF) was bankrupt – someone from the American Association of State Highway and Transportation Officials (AASHTO) stressed “flat-assed broke” – there were factions in every ant-direction about what to do about it.

The NSTIFC report called for a serious look at GPS-based VMT charging over the next HTF authorization cycle (commencing shortly). Some real investment and a detailed decision whether and how to deploy. It then recommended, assuming it turned out as they hope (the “least stinky option” as one of the Commissioners candidly noted), that the subsequent authorization cycle, six years on, would launch VMT charging so that 250 million American vehicles would have VMT meters by 2020 just like the Dutch will have had by 2016.

But only half of the Austin attendees agreed. 50% assumed the Commission was right and puzzled over how to do it. How should it be packaged for the public? How can we overcome the “privacy problem”, and the cost problem? Should the Fed lead or the States? (…now, that was a hot issue!)

Someone pointed out that Oregon invented the gas-tax in 1919 and by 1928 all the other states had followed, while the Fed took until 1932 to catch up, evidently proving the federal government cannot be responsive. So states that are running out of money fastest should jump-start this (which is already clearly threatening).

Another said we’d soon have a dozen non-interoperable VMT transponders, implying less enforceability, and drivers unable to see out of their cluttered windshield. Another repeated that the Fed is too busy with the economy, and that some states can’t wait. Another proposed a national payment clearinghouse framework that States could opt into. One humorist said we should fold the USDOT into the Department of Health to get the attention this needs.

And that was just one issue.

What we talked about most was trust – or the complete absence of it. Motorists do not trust GPS technology. Governments don not trust it to assure payment. Motorists do not trust that the government will spend the new money on transportation. Governments do not trust that the operating expense will be low enough. Some conference attendees did not trust the USDoT, others the State DoTs.

Then it was: Who’s on first? “Trucks are on first,” said several. “No way,” said a representative of the trucking industry, “there are easier ways to tax if we really need the money, he said, still not clear on the concept. “But no one will accept increased fuel taxes”, lamented someone else.

Is it just me or is this starting to read like the online comments to a road-pricing newspaper article?

It was evident that only three people in the room had read the Commission’s report including one of its authors. Here I was at a prayer meeting and we were arguing over every piece of TDM dogma known to the profession. I had never felt so adrift.

Someone said we need to legislate that location data cannot leave the vehicle except under the motorist’s control. Someone else said that a parent should be able to see where her teenager is. Someone reminded us (again) that privacy was the biggest elephant in the room, but another scoffed: “E-ZPass already keeps all your data.”

A representative of the AAA, who supports VMT charging(!), said: “We’re a John Wayne nation. It will be tough getting people to pay road taxes this way.”

Then the AASHTO speaker said something very sobering (numbers have that tendency). “The gas-tax currently funds 45% of the US surface transportation program requirements. We have three immediate choices (VMT charging is not immediate): we can [1] do nothing, [2] raise the gas-tax, or [3] take it out of the general fund – except there is nothing in the GF either.”

A Representative from Congress made an even more frightening point: “We cannot plan transportation in this country because next year’s transportation budget is set by last year’s gas-tax revenue. Since that is both uncertain and declining, we have no long-range planning guideline.”

Following this, another speaker made the point that if we priced electricity like we priced our roads, we’d have daily brown-outs which is effectively what traffic congestion is.

Then someone declared the biggest stinker: “We are funding a massive and critical system by taxing the very thing we want people to stop using. How stupid can we be?” And we are using less. We buy more efficient vehicles and are starting to drive fewer miles. The first victim of our fledgling green success story is our surface transportation system. [I recall my father’s favorite war story. A German U-Boat had sunk his merchant vessel. He and his shipmates all jumped into one of the lifeboats they were towing, but no one had a knife to cut the line! Tethering our transportation system to the gas-tax has the same effect.]

Someone pointed out that a one-sized VMT charge would be unfair to smaller vehicles. Another that the NSTIFC report said clearly that the fee should vary with vehicle type and size. One said: let’s just read odometers once a year, while another pointed out that many people could not cope with an annual lump-sum payment. The current average annual gas tax payment was reported to be about $240, so we’re talking three or four hundred dollars.

Wait a minute! Are you telling me this whole thing is all about a dollar per vehicle per day, i.e., about we spend per capita on tobacco each day?

Am I still just poking at ants on the sidewalk, here?


Fan Mail

The assumption that George Orwell’s time has arrived with VMT/TDP road pricing is especially visceral in the United States. I am accosted often and bluntly. Yesterday’s exchange with a new fan illustrates two things. Tolerance for tracking is near-zero and willingness to understand is there when explained.

Not one word has been altered in the following email conversation, except that my correspondent's name has been withheld.

Tonight I was in a bar with my best buddy, Malcolm, who, having recently been run over by an elderly lady in an SUV, was having a Guinness when my blackberry buzzed with a email from a satisfied reader of an article I had written for Roads and Bridges Magazine.
Mr. Grush – If you won’t admit that the eventual result of a GPS mileage system will be Orwellian monitoring of movement, you are either a fool or a liar. The U.S. State of Mississippi has recently outlawed ticket-writing red light cameras statewide. This is a very positive development that should be followed by more legislatures to stop the abusive implementation of technologies fostered by the political lobbying of companies that develop them. – K.N.
The perfect way to introduce oneself, I thought. Luckily this Canadian was born in Maryland and bullied in Pennsylvania, so I immediately appreciated the affection: “you are either a fool or a liar”.
Or a genius.
I shot back, certain that this would engender more affection.
The Third Reich and Soviet Union were full of geniuses led by very misguided people whom history has correctly judged very harshly. K. N.
I was right! My turn...
I'll bet you have a deep understanding of how GPS works, too. I suspect you watch a lot of telly. Seriously, Ken the technology is not what you imagine. It is anonymous. Unlike E-ZPass.
Then he started to go a bit soft.
Having graduated on the dean’s list from Georgia Tech and practiced engineering for thirty years, I do in fact have some understanding of technical matters. Running my own company has not left me much time for television. Your description of the anonymity of the system in the article may hold as originally implemented, but you can bet it will be manipulated by officeholders less well intentioned than yourself. My point is that technocrats tend to believe their creations can only be used for good purposes, but history has unfortunately shown otherwise. K.N.
Technocrat?! Now I’m insulted.
Then they will have to use a different device. Mine does not allow position data to exit the device.
Then he really starts losing it. What a spoiler!
Then let us hope if we are to be burdened with this that your device wins the bid and keeps the business in perpetuity. If after a few years one of your competitors underbids you, or sells some politician on their device which may not be so benign, let us hope we can resist them. K.H.
Next thing, he'll want to work at my company. This thing is going too far!

Thank you. I accept that as a blessing. Search "privacy" at www.grushhour.com. You will see I lobby for legislation that forbids location data to exit the vehicle. If you go back to the beginning you will see it was not always so. I have come to this only in the last year. e.g., see skymetercorp.com > Media > Archive and find Data Protection Act. I have since recanted.

The first time data from my system is used for harm, I'd be out of business. Oddly, your privacy is more important to me than it is to you. One mistake and I am exposed to serious and inescapable criticism.

BTW I was asked to build an ankle bracelet for prisoners about 3 years. I refused because I did not want to seen tracking anything. Ever.

I have not seen the article. Is it online?
Finally, he gives up all semblance of healthy disgust.
I am glad to hear you share my concern. The article was referenced in the NSPE email newsletter which aggregates articles from the technical press. Here is the article, and have a good evening:

Squeezing Tolls From Error Bars
Transportation Management & Engineering (04/09) Vol. 14, No. 2, P. 8; Grush, Bern

The tolling of wide areas such as regions, states or continents will be facilitated by a new vehicle-miles-traveled technology founded on processing innovations in vehicle positioning using Global Navigation Satellite Systems (GNSS/GPS). Some jurisdictions already have electronic road tolling technologies implemented including various radio-frequency identification (RFID) or dedicated short-range communications (DSRC) radio technologies, but not all of these systems boast interoperability. GPS signals are free, openly available and de facto standardized, which means that the opportunity for interoperability among toll-payment service providers can be concentrated on road-use metering standards, privacy standards and payment data exchange among metering providers, payment service providers and toll operators rather than interoperability among proprietary equipment providers. By focusing on road-use metering standards, costs can be reduced, operations can become more flexible, extensibility can be eased, and service acquisition and motorist-oriented services and transportation policies can be broadened. Transport authorities starting to toll wide areas using GNSS/GPS technology will face the temporary issue of interoperating between existing DSRC/RFID facilities with long-term management contracts and the more flexible GNSS-based time, distance and place systems. A high-resolution, GIS-based pricing grid overlaying an entire region can serve as an interim solution, and every component of this grid would be assigned a fee for passage through it and an owner or government entity that would receive the fee. Establishing this service only requires an accurate digital map of the facility to be tolled, the toll anticipated for each road segment, any time-of-day differences in charges and a collection, payment and audit agreement with each participating toll agency.

[more] http://www.roadsbridges.com/Squeezing-tolls-from-error-bars-article10268


Vehicle Type Underemphasized in NSTIFC report

The National Surface Transportation Infrastructure Financing Commission (NSTIFC) unnecessarily left themselves open to criticism regarding "one-fee for all vehicles". Leaving vehicle type addressed only in the fine print, many critics made the blunt assumption of a uniform fee regardless of vehicle size, arguing that this would encourage the purchase of large SUVs.

The report does state on page 77: “[Vehicle sales tax] rates could vary to encourage/discourage purchase of different types of vehicles]”; on page 91 Mileage Based User Fees (VMT fees) could be “based on user choice considerations such as … “type and weight of the vehicle, and vehicle emission levels; “type of vehicle” is again mentioned as a mile-based pricing variable on pages 127, 128, 183, 201. So the public criticism is largely because the document enjoys fewer readers than critics and partly because of the report’s emphasis on miles traveled and a lesser emphasis on when, where and what is driven.

There is no need to apply a flat fee, which would indeed make a VMT tax unfair to smaller vehicles and the environment. Unless vehicle type is included with time of trip, distance of trip and place of trip, we will have to leave the fuel tax intact, which will make the application of nationwide road pricing far more difficult politically. Worse, it will not address congestion.

Dr. Gilles Duranton, Economist at the University of Toronto, argues:
“While fuel taxes are not appropriate to deal with congestion or road financing, they are appropriate to deal with carbon emissions and particulates. The external cost of particulates is seemingly much higher than that of carbon emissions (see Parry et al in the Journal of Economic Literature). Those external effects are not related to occupying space on the road but instead caused by releasing pollutants into the atmosphere. How much should a carbon tax on gas be? At a guess, if we think the level of carbon taxation is $50 per ton, this means about 5c per liter. With particulates being more costly to society, we could reach a level of say 20c per liter, which is roughly average gas tax in the US, now. Such a gas tax would be still lower than what we observe everywhere in the developed world.”
While I agree fully with this point, I disagree with an at-the-pump implementation. Isolating a carbon tax on fuel consumption by keeping it hidden at the pump extends the current problem, dilutes the signaling power of VMT pricing, and contradicts some of what the VMT thought-leadership has gained (re shift away from gas-tax). We want to maximize use-signals. But the carbon problem means gas should always have a tax greater than a sales tax. We want fuel tax to become a "sin" tax and no longer a road-tax, which is the point of the NSTIFC work. As a sin tax, it discourages use of the internal combustion engine, while VMT pricing makes road finance sustainable while discouraging congestion.

The VMT party line is that VMT pricing will have a vehicle-type component, and we can reflect the carbon tax in that component, giving us louder signals re congestion. Why? Because (1) the vehicle-type component, IF IT IS SHOWN on the road-use bill, "43% of your road-use bill this month is because you drive a type 6 vehicle” will be more visible; (2) it catches the incremental problem of the internal combustion engine which is exacerbated by congestion (fuel tax at the pump does not catch that, and if it partly does it is not noticed); and (3) taxing this way amplifies my understanding of my driving decisions (spreading and hiding taxes dilutes the social value of taxation).

Of course, I am describing the perfect world, and easy hiding of the tax at the pump may stay as the reality, unfortunately. In either case, the vehicle-type tax-portion will affect ever fewer vehicles as we switch to new energy sources, but a vehicle-type pricing component to VMT pricing will be VISIBLE instead of invisible as the gas-tax is now.


Training Pants for the 21st Century Motorist

Matt Rosenberg, senior fellow at Cascadia Center of the Discovery Institute, wrote a handsome argument for public-private partnerships (PPP) to put us out of our surface transport congestion-funding-emission misery.

Because I am a full-network, Road Use Charging (RUC) advocate (pay every mile driven and end the fuel tax), I prefer to rush headlong into the user-pay world with the revenue split in some network-optimizing way between road and transit financing. So I have long thought that PPPs are simply an interim measure because slow-grinding governments are stuck with a failing (failed!) finance model. I have long assumed that if they could fix that (I am an optimist!) P3s would not be necessary.

Matt’s first conclusion – better management offsets higher private debt costs and the extraction of profit – suggests P3 may be plainly a better model from a total cost of ownership perspective. I accept that. His second conclusion – building sooner brings earlier congestion and emission reduction and earlier restoration of productivity – needs two caveats. First pricing has to be right and shadow-tolls must not be permitted. Second, state and federal programs to move toward full network pricing must continue, otherwise, congestion abatement due to P3 activities will be transient since improved congestion circumstances invites new demand. The Matt Rosenberg article “How to pay for the roads still traveled” makes that point between the lines.

The real reason I prefer P3 investment is that this brings us tolled roads. These train the entitled motorist to see that roads are not free. The more tolled roads we have now, the easier the inevitable tax-shift from fuel-tax to VMT pricing will become.

Long an admirer of past USDOT Secretary Mary Peters, I learned from her that tolled lanes are “…a stepping stone to get people acclimated to paying a fee for use of a section of roadway…” (She was talking about HOT lanes at Brookings in April 2008. Get the video and transcript links here.)

So while the new roads that P3 programs give us may have immediate and visible motoring benefits, they are the training pants for the real surface transportation market of the 21st century.


Road Pricing for Transit Advocates

Very quick-moving overview from perspective of road tolling for transit advocates from a grass-roots forum some months back... Covers a lot in a 3 minute speed-read.

An overview of economics of road tolling from an information perspective and how the technology works.