IN THE NEWS
President Obama to Appoint New Secretary of Transportation
Transportation Secretary Ray LaHood has announced that he will step down from his post once his successor is confirmed. Just before the beginning of LaHood's tenure at DOT, the RAND Corporation hosted a panel discussion in which three former Secretaries discussed several topics, including which issues should be the new Secretary's top priorities. The discussion is recorded in the document "Transportation Challenges for the New Administration: Perspectives of Past DOT Secretaries." Whoever President Obama appoints to succeed LaHood, the new secretary will have to consider many of the issues discussed in these proceedings.
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Mileage Fees: Options for Policymakers
Federal and state fuel taxes--paid at the pump on each gallon of gas or diesel--have provided most of the funding for U.S. highway construction and maintenance and, more recently, have supported transit investments as well. But increasing fuel efficiency and the rise of alternative fuel vehicles that do not use gasoline have led to growing shortfalls in federal and state funding for surface transportation programs--shortfalls that are likely to become even more acute in coming years. As a result, some states and federal policymakers have begun to explore a transition from taxing fuel to taxing vehicle miles of travel.
A new primer, drawing on past RAND research, presents state and local decisionmakers with a short, easy-to-understand guide that outlines the potential advantages of mileage fees, functional requirements and technical options for implementing mileage fees, core challenges in replacing fuel taxes with mileage fees, and recent innovations that states are exploring in mileage-fee pilot tests.
Beyond the advantage of providing a fair and more sustainable revenue source, mileage fees could also help to reduce traffic congestion, harmful emissions, and excessive road wear; improve driver experience through technology-based navigation, safety, and cost-saving features; and collect travel data to support better planning and operations.
Transitioning from taxing fuel to taxing miles of travel raises two key challenges: reducing the system (administrative) costs of collecting mileage fees from tens or even hundreds of millions of drivers, and overcoming public resistance to mileage-fee collection, including privacy-related concerns.
Drawing on recent state and local mileage-fee trials and studies, the primer offers 15 promising strategies for reducing cost as a percent of revenue (either by increasing system revenue or by decreasing system costs) and fostering public acceptance.
- Conduct trials and educational outreach.
- Include elected officials in trials.
- Engage stakeholders in system planning.
- Enroll privacy watchdogs (e.g., the ACLU).
- Begin with a simple odometer-based system to reduce privacy concerns.
- Provide drivers with a choice of metering technologies.
- Make mileage fees a smartphone app to reduce the costs associated with dedicated metering devices and communication services.
- Design the system to support value-added features.
- Integrate with intelligent transportation system investments.
- Encourage competition among vendors.
- Initiate a transition with voluntary adoption.
- Focus initially on alternative-fuel vehicles.
- Provide a fixed-fee option.
- Convert other funding mechanisms (e.g., auto registration fees) to per-mile fees.
- Work with other states to develop a multi-jurisdictional mileage-fee system.
For states or localities just beginning to consider the idea of mileage fees, these strategies can help them determine whether shifting to mileage fees merits further consideration. For jurisdictions already doing detailed assessments of mileage fees, these concepts can help them refine system design.
What Should the Federal Role Be in Developing Mileage Fees?
Paul Sorensen, is associate director of RAND's Transportation, Space, and Technology Program, with research interests in transportation, energy, and urban planning. His recent work includes evaluating mileage-fee implementation options, assessing the potential effects of evolving energy sources and vehicle technologies on state departments of transportation, and examining performance-based accountability as a strategy for improving public service delivery in transportation and other policy arenas. He received his M.A. in urban planning from the University of California, Los Angeles, and his Ph.D. in geography from the University of California, Santa Barbara. Read more about Paul Sorensen >>
Why is shifting to mileage fees important to the nation as a whole?
Federal and state fuel taxes--the primary source of highway funding in the United States--are typically levied on a cents-per-gallon basis, so the rates must be periodically increased to offset the effects of inflation and improved fuel economy. Raising fuel-tax rates has grown more politically challenging in recent decades (federal fuel-tax rates were last increased in 1993, for example); failure to raise them since them has led to significant funding shortfalls in the federal Highway Trust Fund and in many comparable state funds. Looking forward, more stringent federal fuel-economy standards and a potential shift to alternative fuels threaten to further accelerate the erosion of fuel tax revenue. By replacing fuel taxes with mileage fees, federal and state highway revenues would be pegged to vehicle travel, which is expected to grow in the coming decades, rather than to petroleum consumption, which is expected to flatten out and ultimately decline.
Is there a logic for developing a national system of mileage fees?
You could envision a national system of mileage fees that includes a federal per-mile fee and allows interested states to layer on their own mileage fees. An important advantage of such a system is that it would be able to meter interstate travel and properly allocate fees from drivers to the various states they traveled in. Also, the cost of setting up and administering the system in relation to total revenue could be much lower given scale efficiencies. Finally, the federal component of a national system would be helpful in addressing Highway Trust Fund shortfalls.
The primer presents state examples in exploring mileage fees. Why has the focus been at the state and not the national level?
Both the Federal Highway Administration and members of Congress from both parties have shown an interest in mileage fees in recent years, and the federal government has provided funding to help support past studies and trials of mileage fees. But given current divisions in Congress, many suspect that it may take time before the House and Senate can decide on whether to institute a new system of federal road use fees. In contrast, a growing number of states, facing the prospects of reduced federal and state fuel tax revenue, are focusing more on mileage fees as a replacement for fuel taxes, and there is a realistic possibility that one or more states could implement them at the state level in the next few years.
Other than working to develop a national system, are there ways the federal government could help states develop mileage fees?
Providing funding to assist states in developing and staging mileage-fee trials could be very helpful. Although some states have already conducted their own trials in recent years, federal funding of a more comprehensive program of trials across multiple states is critical in determining whether the concept can gain enough public support and how to develop and administer mileage fees most cost-effectively.
Any other things the federal government could (should) do?
Beyond funding trials and related research, the federal government could convene an effort bringing together states, private industry, and other stakeholders to develop performance and interoperability standards for mileage-fee metering devices, payment channels, enforcement processes, and privacy protection mechanisms, along with a process for private firms to certify their devices and services as compliant. This would ensure that if mileage fees are implemented by a handful of states, the systems in those states would be able to communicate with each other and apportion revenue for interstate travel as appropriate. Such standards could also lay the groundwork for an eventual emergence of a national system of mileage fees.
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