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.

15 sec promotions for transit reform

Easily some of the best 15 sec promotions for transportation reform I have seen.

Funding
Congestion
Million
GHGs
Cars

Thank you, Translink.
Wish Toronto's Metrolinx would run these...

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...

Locational Privacy

Andrew Blumberg and Peter Eckersley are right to be concerned about your privacy. They are wrong that GNSS-based road tolling systems naturally invade your privacy. They don't need to. In most countries, they won't be allowed to.

My reply to their concerns:

I agree absolutely that privacy, and specifically locational privacy should be guarded. ... In the EU (one of the regions that constrain our [GNSS-road-tollling system] designs), location data is generally not allowed to leave a vehicle in the case of the private automobile (not so for commercial vehicles – yet). This problem is easily solved by moving price map segments to the vehicle and calculating usage fees (based on time, location and place) inside the vehicle. In one extreme, what comes out of the vehicle is an encrypted message that effectively lists the road authorities to whom money is owed and how much – never when or where the vehicle used their infrastructure. In some jurisdictions, we are not permitted to re-use location data, in some we can build aggregate O-D maps as long as we destroy end point data that could be used for inferencing location.

However, even with these constraints a person living in Pennsylvania who takes a trip into New York might have on their bill, which is discoverable, a line that says they paid money to a New York road authority. Even if the bill does not disclose where or when the vehicle visited New York, it is still evident New York was visited. If this is a problem, do what is done in Singapore – pay in the vehicle with a smart card. All that remains to do in that case is to tell an enforcement authority that that vehicle has paid it’s bill, and no one needs to know it ever visited New York. Location data in the telematics memory can be deleted immediately on payment, and if the user has a prepaid account the location data can be deleted ongoingly, just like your Garmin forgot where you were a few seconds ago.

I submit that autonomous, self enforcing, satellite-based systems that pay privately and do NOT permit location data to escape, are most private – there is NO need to track vehicles for the purpose of road taxation any more than I should be tracked because I have a Garmin NUVI on my windshield. Tolling systems using license plates, RFID, DSRC are less private than properly designed GPS-based systems. It is these systems that we should watch, as well as the privacy design components of satellite-based systems.

Do economists reach a conclusion on road pricing?

Robin Lindsey finds that on the main issue of using pricing to manage congestion, there is a strong consensus among economists working in the field. But there is little consensus on secondary issues—how to price road usage, whether to subsidize, whether to earmark revenues, whether to privatize. The conclusions at page 384 on, are important to note. From...

Hybrids, eh?

So far, the edge hybrids promise isn't. As with a lot of things that lay claim to green-guilt, hybrid hype probably uses more pulp that it saves in GHG.

First, a UBC prof criticizes rebate programs that encourage the purchase of hybrids:

Hybrid vehicles produce scant environmental benefits, high cost

“If the intention of rebate programs is to replace gas guzzlers with hybrids, they are failing,” says Ambarish Chandra, a professor at UBC’s Sauder School of Business and study co-author. He says large vehicle sales have risen steadily since the introduction of hybrid rebates.

The study finds that hybrid sales have come largely at the expense of small, relatively fuel-efficient, conventional cars, rather than large SUVs, trucks and vans, which produce substantially greater carbon emissions.

“People are choosing hybrids over similarly priced small- and medium-sized conventional cars, which are not far behind hybrids for fuel efficiency and emissions,” says Chandra. “The reductions in carbon emissions are therefore not great."

Then Seth Zeren over at World Changing starts off a parking article by asking When does a Prius have the same environmental impact as a Hummer? and answers: "The 95 percent of the time it’s parked."

And to cap it off, my favorite London Congestion Charge non-supporter, supporter Mayor Boris Johnson is reported by ITS International to be up some new and inconvenient truths.

Review of London congestion charge rules
Monday 10 August 2009

The Mayor of London, Boris Johnson, and Transport for London (TfL) have announced a review of existing exemptions from the congestion charge for motorists coming into central London, due to increasing pressure from campaigners that the current system is unfair. At present, only electric and hybrid cars are exempt from the charge, while many petrol and diesel-powered cars now have lower carbon emissions than hybrids due to significant advances in technology.

There are 20 non-hybrid cars with lower emissions than a second generation Toyota Prius, which emits 105g/km of CO2. The new Ford Fiesta, meanwhile, emits just 98g/km and the Volvo C30 104g/km. However, there are also hybrids that are exempt but have much higher emissions than most normal cars, such as the Lexus RH450x (148g/km) and GS300 (226g/km). Johnson said that he and TfL are considering changing the exemption rules so that the congestion charge is based on actual emissions, rather than technology.

I am all for more efficient and/or cleaner energy sources. But how will the gas-tax fare by the time we get there?

Resisting the increase in motor fuel tax

After my critique of Congressman Oberstar’s highway revenue comments at Humphrey, a colleague wrote:

… I believe that your support for a VMT based fee and your opposition to increasing the motor fuel tax (a view you share with Ed Regan as a recent article noted and quoted), in my view, are deficient as they fail to relate to goals and objectives. What are you trying to achieve? For example, would a VMT based tax discourage use of petroleum for motor fuel? Would it help get rid of polluting clunkers? Etc. - MH

My objective is to most effectively achieve the tax shift from gas-use to road-use. But my utopia and the US surface transport reality are two different places. There are three ways to argue the “tax the road” vs “tax the fuel” conundrum in the immediate, US circumstance.

Tax the road
This argument, repeated ad infinitum, says that paying by time-of-day, distance, place and vehicle type (IF private, secure and affordable to collect) is the “economic-man” solution – i.e., economically optimal. This needn't be repeated, because the creeping, green-force, electrification of our fleet will turn the tax-ship, rather than the platitudinous Adam Smith arguments. In other words, Obama’s investment in battery technology will do more to force the TDM-pricing-solution than any bleating blogger.

Realistically, “tax the road” – i.e., “tax all the roads, everywhere” – while feasible technically by 2011 (in my opinion, and using now-developed technology), is not feasible logistically for perhaps 3 or 5 years, more importantly, it will not be feasible politically in a single, wrenching shift, ever. The Dutch shift is five years long, hasn’t started, its jury is out, and Holland ain’t America. Even, if I was the president of the United States and both the house and senate were all of my party, it would still take me ten years for the full shift. So “big picture” VMT charging is for the next administration (or the next, or the next, as Oberstar so clearly pointed out in a part I did not transcribe). So while I, Ed Regan and many others may strongly favor this solution, we have not found a convincing path to get there, yet.

And the total progress made since the February 2009 release of the NSTIFC report, taking everything into account, has been zero (not including any incremental profits realized by the pulp and paper industry…).

Tax the gas a bit more
Not only is this the most transparent route and the fairest in the immediate circumstance and it is the one that will happen after about two or three more general fund bailouts – i.e., circa 2011.

Every gas tax increase, every RFID gantry that is installed, and every general-fund bail-out begged and granted, cements the wrong tax architecture in place and delays the day of solution. As Mary Peters put it: “Relying on the gas tax is like relying on cardboard to keep the rain out – the longer you use it the less it works.”

General Fund Bailout
This is the easiest, most uncomplicated, and now-habitual route. It is the one we will use this time and twice more, before a sufficient number of people get that it is unsustainable AND that the problem is not going away.

And I hope President Obama makes me eat my words in his second term.

As to discouraging the use of petroleum-based fuels and clunkers, this is handled by setting different road use fees for different vehicle types -- when the time comes. And if you must, you can still provide incentives.

Oberstar at Humphrey Institute August 2009

Congressman Oberstar, Chairman of the House Transportation and Infrastructure Committee, spoke at length at the Humphrey Institute on August 5, 2009. A video of Getting America to Work: Opportunities and Challenge in Transportation Policy is here.

After his talk, Congressman Oberstar was interviewed by Lawrence Jacobs, Director of the Humphrey Institute Center for the Study of Politics and Governance. Halfway through that (timemark 53:00), the ensuing few minutes make it clear that the fuel tax will likely be raised and that VMT taxes will be delayed – at least for the next couple of years…

Lawrence Jacobs: Let turn to the revenue issue – that is obviously the big question. There’s a structural deficit now in the … highway trust fund, because you’re getting less of the gas tax paying the needs… it’s partly good news, we have more fuel efficient cars out there, we’ve got alternative fuel sources, you’ve also got obviously less driving during a recession, and you’ve laid out some different options – you’re clearly leaving your own options open as to how things break down, but I’m curious: when you look at the White House, President Obama ran a campaign and they repeated it – he’s repeated just recently – that he’s unwilling to support taxes that land on Americans that earn less than $200,000 a year. Increasing the user fee – the tax on gas – would obviously fall on that part of the population. How’s that going to be resolved?

I found this $200,000 figure startling. VMT tax, if a revenue neutral replacement for fuel tax, is projected at less than $300/year/vehicle or $0 net average tax increase. At perhaps twice this – a net-new $300 – which is what some analysts think is actually needed to balance the books – is about what the average American spends on cigarettes per day. I am hard pressed to see how a driver earning a measly 100,000 per year would be thrown into poverty at a new $1 per day tax burden. Crazy as it seems, I would hazard that the projected savings of “several days” of annual idling in traffic for the average driver should more than offset the $300. What am I missing, here?

James Oberstar: That’s why I brought together all the interest groups, the user groups who have a stake in the outcome to get their input. The US Chamber of Congress testified at the Ways and Means Committee hearings in support of an increase in the user fee. The American Trucking Association has expressed their support for increase in the user fee, including indexing it to the construction cost index. The Association of General Contractors has done the same. Well, if the biggest business groups in America who support increasing user fee – gas tax – that takes away a great deal of the sting or the fear that the Administration has and will continue to have about the program. I’ve told the groups that they have to lead, because the White House isn’t. And they have to develop a consensus around an approach. And we have to take into account political realities but if the Chamber and the manufacturers and the Truckers Association and the Association of General Contractors, and all the building trades unions and the American Public Transit Association all come around in favor of a financing scheme then the White House problem is solved, the Senate problem is solved, we’ll move ahead and do this Bill.

LJ: Thank you. One of the options you mention briefly, and that’s gotten some attention in a variety of different communities is the idea of creating a tax on miles traveled. How do you view that issue? …I realize that’s something under consideration, there a lot of political forces on it… there are some that are really concerned that while this may deserve attention that it may also raise privacy issues because your gonna have the government tracking your travel … the miles. Do you see a way outta that or do you just kinda prefer to put that to a side and let it kinda simmer for a bit?

JO: That issue took on a life of its own. I simply mentioned it at a committee hearing, as one of a range of options being considered and one that had already been tested in Oregon, and it somehow took on a life of its own, that I was advocating it. I just laid it out … that this is one of a range of options that we ought to consider.

LJ: … and do you favor that option….

JO: … and I went on to say, which never was reported, that Oregon tried out the idea – 280 drivers – they found a number of concerns … the technology needed to be perfected. The Center of Transportation Studies here at the University of Minnesota, has tested a technology of their own using [making?], something the equivalent of a cell phone. Oregon said we need to protect privacy – that can be done by a certain computer technology. But it needs a wide scale, nationwide, test run. Well, that might take 3 or 4 years.

The significance of VMT is that it really does measure your use, each person’s use, of the roadway and impact on the roadway.

Now rural folks say, well, we travel longer distances so we might pay more. No. It would be calibrated to the existing gas tax raising similar revenue … as I said a little while ago … 50% of the vehicle miles traveled occur in urban centers, in metropolitan areas of the country. They’re the ones putting the most miles on. In rural areas – 70% of the national highway system is in rural areas – and much of that is used by trucks. Those are the kinds of issues that need to be weighed, evaluated, thought-through. And its too new a concept, too untested a concept, to advocate. We laid it out as one option. I don’t think at this time we should be terribly experimental with the funding. I think we need to stick with what we know has worked.

LJ: Well, here’s something we know that has worked, and that is general revenues. The Obama Administration has talked about pumping in perhaps 68 billion or 70 billion and relying on general revenues for some of the transportation…

JO: I think that would be a terrible mistake. We have had a long, sustained connection between the use of the roadway, revenues to sustain its construction and maintenance, and a trust fund that is protected against diversion to other governmental purposes. Once we slip over that divide and go into …

All in all, I can see Oberstar’s arguments, but I am sorely disappointed that he is distancing himself from VMT charging. Perhaps he needs to do that to force the gas tax increase that he clearly argues well for. Perhaps he recognizes that there are sufficient technology and trust issues that he risks embarrassment pushing a program now that still needs 4 or 5 years to develop. But I am certain that off camera, he knows well that funding through fuel taxes is even less unsustainable than funding through the general fund as fuel efficiency and alternate fuel sources continue to erode the current funding foundation. No amount of politics and no length of recession can stop the eventual collapse of the gas tax.

GMAR

If you wonder how GPS, which you may know has some difficulties in built-up urban areas, will perform as a road-pricing meter, you will be happy to know that an international group of scientists is working to formalize performance metrics for this.

If people are writing international standards for this stuff does that mean we are getting close?

Commentary on Reauthorization

Commentary by Marcus Lemon, guest on tollroadsnews

Jerry Hart on Bloomberg news

Robert Poole from Reason Foundation

Biking view from Portland

Transportgooru listing

Its all about the money, Virginia

In the US, road tolling and congestion pricing is not REALLY about congestion (or emissions).

Matt Rosenberg explains why Wyoming, the least congested state in the union, needs tolling.

And US DoT Secretary Lahood explains Highway Trust Fund 101 to the 400M transportation experts who live in the United States.


And here, above, from the Secretary's handy notes, you can see not only a picture of what running out of money looks like, but how the picture has gotten worse a little each year over the four years shown. It is this year-over-year decline that is at issue, not the spot fixes of last year and the one required again this that are the issue. Those are just $8B symptoms.

Its payback time.