Tag Archives: roads

Alternative transportation funding mechanisms gaining traction

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CC licensed by flickr user Caveman 92223

Mission, Kansas and the State of Rhode Island are both exploring alternative methods for funding road construction, maintenance and transit.  The Rhode Island Senate will be studying how a mileage tax, or VMT tax would work in the state.  A VMT tax isn’t new in concept, Oregon has studied it, and the Dutch are doing it, this would add another US state to the list.  Rhode Island is apparently feeling the effects of falling gas tax revenue, and searching for a better funding mechanism.

In Kansas, the city of Mission is considering a new fee based on the trips assumed to be generated by your specific property.  Single-family properties generate on average fewer trips than a big box store, and thus are taxed less.  This type of trip-generation model is the basis for how engineers currently develop city and regional traffic models.  This is similar to a mileage tax, but using a slightly different (less accurate) method of estimating how much individuals are using the roads.  In Mission, a single-family residence would pay $72 per year of this tax.  The City figures that this new tax would bring in about $800,000 per year.

Using 2008 Census estimates, a similar tax on Twin Cities-area single-family homes only would net the region over $62.8 million per year, or over $100 million if you extended the same tax to all units.  Keep in mind that in Mission they believe the burden will actually fall more heavily on commercial properties than residential, so this amount is probably less than half of what a hypothetical Twin Cities program might net.  For some reference, spending in the state on roads and bridges in 2007 was over $2 billion.

These use-based fees may becoming more common as it becomes more obvious that road users are not paying their way (and haven’t for a while).  In addition, as we switch from gasoline to other fuels, funding sources based on one particular fuel will be less and less useful.

Cities prepare for the electric car, but are they thinking about the roads?

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Potholes - courtesy flickr user MSVG

The New York Times describes a number of cities, mostly in California, that are preparing their communities for the adoption of more electric vehicles. Primarily this means installing charging stations in public places and addressing code issues related to charging stations at single family homes. According to the article, San Francisco will soon have a new ordinance that requires new structures have the wiring to accommodate charging stations.

The article doesn’t address the other half of the auto infrastructure: the roads. To “prepare” for the electric car, and probably even an efficient system that doesn’t include the electric car, road funding needs to change. We already know that users now only pay about half of the cost of roads, which means there are no market signals for road users to choose the most efficient mode or “consume” an appropriate amount of transportation service (miles traveled). We also have some serious deferred maintenance issues.  If electric vehicles are adopted in large numbers funding for roads, which comes in large part from the gas tax, will continue to dry up.

So besides building charging stations and beefing up transmission infrastructure, cities, counties and states (and users, if they want good roads) should be advocating for a mileage-based fee, similar to what has been studied in Oregon and implemented in the Netherlands, to pay for road building and maintenance. The gas tax would probably have to stay, but as a way to put a price on carbon pollution rather than fund transportation.

This new mileage fee could be tacked unto your home electricity bill if you had a charging station, but that would probably mean a lot of creative solutions would pop up (solar panels) to avoid the fee. While this would have it’s environmental benefits, it wouldn’t solve the transportation funding problem. So the fee should be based purely on mileage, not the fuel used. Existing technology is adequate to provide a method to assess the fee, including addressing privacy concerns. The Oregon pilot has shown that this can work, it’s only a matter of political will to implement it.

US Road Funding From Non-Users At All Time High

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According to a new report by Subsidy Scope from the Pew Charitable Trusts, user fees for the construction and maintenance of US highways were at an all time low in 2007.  In other words, fees from non-users are at an all time high ($70 billion).  In 2007, 51% of funds for construction and maintenance was generated from user fees, down from 71 percent 40 years ago.  User fees include the gas tax, while non-user fees are things like bonds from local governments and sales and property taxes.

The main causes of this change according to Subsidy Scope?  No increase in the federal gas tax since 1993 and an increasing reliance on state and local governments to pay for roads.  People also drive less as fuel prices increase.  No mention of increasing use of alternative fuel vehicles, but surely that will play an increasing role in revenue declines in the future.

In contrast, I think 25% of transit’s costs are paid through user fees, although please correct me if I’m wrong.  Here is some data to wade through if you’re interested.  It should also be noted that both of these percentages include only internalized costs of roads and transit, not externalized (non-monetized) societal costs (pollution, congestion, etc).