The Best Way to Fund the U.S. Surface Transportation System

The Senate Environment and Public Works Committee will soon mark up its surface transportation bill, legislation that addresses the federal role in rail, roads and transit. A key issue in any reauthorization is funding, and this time Congress needs to address the lack of sustainability of the federal gas tax in supporting the federal Highway Trust Fund. To do so, the Senate should embrace innovation and charge the Department of Transportation with establishing a national road user charging system that starts with, or at least includes, trucks.

Currently, America’s roads are paid for through a variety of means: fuel taxes, tire taxes (for trucks), vehicle registration fees, tolls, general fund revenues (including sales taxes), and others. In the last decade, as technology has improved and gotten significantly cheaper, a number of governments—including some foreign and U.S. state governments—have begun experimenting with collecting revenue directly from drivers on the basis of their travel. There are many terms for this policy, including mileage-based user fees, distance-based user fees , vehicle miles traveled tax, and road user charges. The idea is that payments should be based on actual travel. A number of states — including California, Colorado, Delaware, Hawaii, Minnesota, Oregon, Pennsylvania, and Washington — have launched pilot RUC programs, most with partial federal funding, while a number of other states are considering such programs. A major factor motivating interest in an RUC system is the concern that, with the expected rise of more fuel-efficient vehicles, especially electric vehicles, that the gas tax will become an increasingly unsustainable way to fund transportation infrastructure.

As the congressionally mandated National Surface Transportation Infrastructure Commission – which I had the honor of chairing – stated in its final report to Congress, the ideal funding “framework should cause users and direct beneficiaries to bear the full cost of using the transportation system to the greatest extent possible.” And to do that, the commission strongly endorsed an RUC system. While many states are now implementing pilot programs, a national program requiring all new vehicles and all heavy trucks to pay through an RUC system is the only way to effectively implement such a system.

An RUC system works by charging drivers by the mile. Optimally new cars and both existing and new trucks would have on-board units that incorporate a connection to the vehicle’s onboard diagnostic port, cellular communications, and a GPS receiver. In new vehicles, the onboard unit would contain a database with all the roads in the United States and information on prices for each segment, including by time of day and what entity (local, state, and federal government or private toll operator) would receive the payment. The OBU would calculate payments to all the jurisdictions based on the road segments the vehicle drove on and the price of the segment at the time of travel (e.g., $1.30 to Montgomery County, MD; $5.15 to the state of Maryland, and $6.47 to the federal government). At the end of each month, the vehicle’s onboard unit would aggregate the various fees and send a payment to the appropriate local, state, or federal agency — or a private-road owner — by automatically charging the vehicle owner’s credit card or bank account.

There are two principle benefits from moving to an RUC system: collecting adequate revenues from highly fuel-efficient vehicles (including electric vehicles) and implementing pricing based on actual costs imposed on the system. Economists and real-world pilot experiments have shown that this kind of real-time variable pricing would have a wide range of benefits, including shifting some vehicle trips from peak to off-peak periods, reducing total vehicle trips and trip distances, increasing shifts to other modes like public transit and walking, improving reliability of the system, reducing road damage from heavy trucks, and improving air quality.

Opponents of such a system raise a number of concerns, all of which are easily addressed. Perhaps the most common concern is the fear that an RUC system would threaten privacy. In fact, such a system would be more privacy protective than toll transponders, which record when a car passed by a certain point in the road. The only information shared with government is how much the vehicle owes, not the time of day traveled or routes taken.

Road user charges are the most viable and sustainable long-term “user pay” option for the federal government to both raise adequate and appropriate revenues and provide the federal share of funding for the nation’s surface transportation system. It’s time for Congress to get on board.

Robert D. Atkinson is president of the Information Technology and Innovation Foundation, the world’s top-ranked think tank for science and technology policy.

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