Nine Lives of VMT Fees

A 150-page US study, “Implementable Strategies for Shifting to Direct Usage-Based Charges for Transportation Funding”, commissioned by AASHTO through the National Cooperative Highway Research Program was released early in September 2009. The NCHRP study, conducted by the RAND Corporation with the University of Minnesota answered the question: “How can the US deploy VMT fees by 2015?”

Only 20 months prior, the National Surface Transportation Policy and Revenue Study Commission published a two-year, 258-page report that called for a fuel-tax increase and indicated that we eventually need to start thinking about VMT charges as a user-fee in lieu of fuel taxes. VMT fees were so remote for this Commission that the then Secretary of Transportation and Commission co-Chair, Mary Peters – who appreciated that they could not be forestalled much longer – wrote a dissenting view with two other of the 12 commissioners that stated that the gas-tax was unsustainable and that VMT fees need to be looked at more critically.

In February 2009 – 13 months later – a second US congressional body, the National Surface Transportation Infrastructure Financing Commission, published another 2-year, 235-page report. This one was more assertive about the VMT fee idea, essentially agreeing with Peters’ earlier dissenting view. In little more than a year, the US thinking went from “Raise the gas-tax now and consider VMT charging someday” to “Start thinking about VMT fees in time for 2018, and raise the gas-tax as an interim measure.”

The message contained in the NCHRP report from last month was alarming by comparison: “Here are nine ways to implement the VMT charge by 2015”. By comparison, a fuel-tax increase was treated as ‘nice-to-have’.

Buried on page 120 is the single, clearest evidence of political mischief I have seen regarding fuel taxes and road user charging:
“If there is a major need for short-term revenue, it is not clear how implementing a poorly thought-out VMT fee is superior to raising the gas tax. There is a lot of room to raise the gas tax without affecting behavior… However, Congress seems very focused on what they can do besides raise the gas tax, such as implement a flat VMT fee based on average mileage.”

That statement, which I was greatly relieved to read, should be highlighted in your copy. I hope it gives enough pause to policy makers to recognize that the single greatest mistake the US can make now is to kludge its way out of a congested, under-funded, oil-dependent, gas-tax-broken, surface transportation mess with a pure VMT charge and assume it can be retrofitted for congestion management later. The United States would be better served by an effective time-distance-place (+vehicle-type) charge scaled to address the funding requirement.


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Perfectly Shapeable Charge

Chris Davis, over at blogs.discovery.com recently wrote one of the more intelligent pieces on the contentious subject of road pricing. As evidenced by the comments made to his post, one of the problems with this discussion is the number of variables that need to be considered.

  1. The move to improved or alternate power plants makes the gas-tax less useful every day. Mary Peters put it best: “Relying on the gas tax is like relying on cardboard to keep the rain out – the longer you use it the less it works.”
  2. Taxing the resource (oil) we want people to use less of in order to fund our roads is plainly shooting ourselves in the foot as is funding hospitals solely on cigarette taxes.
  3. Are we trying to fund roads? Then we can tax anything you’d like such as property tax or sales tax as is now done in some jurisdictions (a great congestion-builder, by the way).
  4. Are we trying to manage congestion? Then tax by time of use, distance driven and place of use (TDP).
  5. Are we trying to reduce emissions? Then tax road use by vehicle type/size.
  6. Are we trying to move people to electric cars? Then tax gas AND roads.
  7. Are we trying to balance the damage from trucks? Then charge trucks more (to be reflected at retail anyway; sorry, Virginia, no free lunch).
  8. Are we trying to open highways for more effective commerce? Then charge cars more.
  9. Are we trying to get people to use transit or walk or bike or telework or move closer to work? Then charge by time of use, place of use, and distance driven.

If you want to do all of these things in some reasonable measure, then Time, Distance and Place (TDP) charging is your ticket – your only one. The technology now available to do this can be made private (even anonymous), and can handle parking, insurance, driver rewards and credits and a dozen other user-attractive features, so that the cost of metering for road-use charging can be reduced to the current cost of collecting gas tax.

The fact that the gas tax is unsustainable is incontrovertible. We can patch it with an increase. We can even index it to the cost of road build and maintenance (that would be an astonishing achievement wouldn’t it?). But as soon as we reach 10% fleet electrification (which is coming in the decade after next – if not sooner), then what?

The gas tax simply will not work much longer. Far-sighted organizations like James Whitty’s ODOT are asking “How can we prepare for that?” ODOT’s and Jim Whitty’s work has been pioneering as has Puget Sound’s and Matthew Kitchen’s. Is this work perfect? No. Does anyone have the perfect answer? No. Can we diddle the gas-tax to get there? Not for long. Can the current administration side-step this? Maybe.

Can the next one?


The Return of Gridlock

Anthony Downs (Brookings) wrote in his book Still Stuck in Traffic that a good recession is the best cure for congestion. Dude was right. Seems that gridlock may be on its way back to us...