Implementable Strategies for Shifting to Direct Usage-Based Charges for Transportation Funding (2009)

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96 10. PREPARING FOR IMPLEMENTATION BY 2015 From the past several chapters, one may infer that the task of preparing to implement a national VMT fee system by 2015 will be complex and demanding. Yet with focused effort and attention, this goal should nonetheless be possible. To bolster the prospects for success, however, it would be extremely beneficial – likely necessary – to undertake a coordinated set of preparatory activities, spanning the areas of planning, research, technology development, larger-scale trials, and education and outreach. This chapter considers specific investments in each of domains that would support the goal of implementing VMT fees by 2015. 10.1. Planning Investments Planning, developing, and implementing a national system of VMT fees will be a massive effort, involving far too many planning and oversight activities to enumerate in this document. What is clear, however, is that the effort will require a designated entity, granted the requisite level of authority. Likely responsibilities would include overseeing research efforts, interpreting results, making programmatic design decisions, formalizing technical and functional system requirements, identifying legislative and administrative actions needed at the federal and state levels, and interfacing with private sector participants. While several administrative forms might prove possible – a commission, a committee, a joint powers authority, or an expanded role for an existing agency – it would be advisable for the entity to include representation for a broad range of stakeholders, including U.S. DOT and Treasury, congressional staff, the states, relevant advocacy groups (e.g., road user groups and environmental organizations), subject matter experts within the research community, and the private sector (with care taken to avoid potential conflicts of interest). The entity would also require funding sufficient to accomplish its tasks. 10.2. Analytic Studies As noted in Chapters 8 and 9, there are remaining uncertainties surrounding many of the possible implementation options that might be pursued. To better understand the likely costs and benefits of alternate system design options, the following targeted analytic studies would be beneficial: • Study the behavioral response to alternate forms of pricing • Develop revenue projections for alternate forms of pricing • Estimate the cost of alternate in-vehicle equipment configurations produced at scale • Estimate the installation costs for alternate in-vehicle equipment configurations • Estimate the likely market penetration of in-vehicle GPS-based navigation systems which could be used to support mileage metering • Estimate the cost of equipping fueling stations with electronic readers • Estimate the cost of collecting revenue via the pay-at-the-pump model • Estimate the per-vehicle cost of cellular service in support of VMT fees

97 • Estimate the cost of developing and operating a central billing agency • Estimate the cost of developing and operating a debit card payment option 10.3. Technical Research and Development Though many of the potentially relevant implementation technologies have already been proven in real-world trials and are well understood, further research and development efforts on the following components would help ensure feasibility of VMT-fee options. • Develop and demonstrate the use of cellular equipment to meter travel by location • Evaluate AVI configurations for pay at the pump and tolling via DSRC gantries • Develop effective, low cost enforcement options to prevent OBU tampering 10.4. VMT-Fee System Trials Several significant VMT-fee system trials – in Oregon, in Puget Sound, at the University of Iowa, and at the Georgia Institute of Technology – have already been completed or were underway as this research was being conducted. While these efforts offer valuable insights and information, it would be beneficial to invest in additional VMT-fee trials on the path to implementation in 2015. To gain greater insight on what would be most helpful in these trials, research team members spoke with James Whitty (2009) and Jon Kuhl (2009b), the two individuals responsible, respectively, for the Oregon and University of Iowa pilot programs. Several key themes and suggestions emerged from this interaction: • Shift from exploratory pilot programs to directed research trials. Prior trials have demonstrated that several implementation options are feasible and provided a rough understanding of the relative advantages and limitations of the alternatives. Additional trials should be specifically targeted to provide greater clarity on design and implementation issues central to the development of an effective and efficient national-scale VMT-fee system. Some of the most important questions include the cost of alternate collection channels, the effectiveness of different enforcement strategies, and the robustness of alternate technical configurations. • Develop set of baseline technical specifications to support VMT fees along with an “open system” architecture. The idea here would be to establish, based on what has already been learned through prior research and trials, a minimum set of technical requirements for the in-vehicle equipment designed to support a national system of VMT fees. The exact set of specifications would depend on policy goals but might include, for example, a requirement that any in-vehicle devices used in the trials would be able to meter mileage by state to allow for accurate apportionment of fees. Note that with this approach it would still be possible to examine and test different technical designs for the in-vehicle equipment provided that they met the basic technical specifications, thus allowing for continued innovation and improvement. • Pursue a large-scale national trial of the baseline VMT-fee functionality. This suggestion involves a trial program that includes a much larger number of participants than in prior pilot studies – perhaps on the order of 20,000 to 50,000 – as well as more states. Organized at the

98 national level, states would have the opportunity (rather than a requirement) to participate in the trial, in which case they would receive the resources needed to fund their efforts. The large-scale trial would focus principally on the functionality called for within the minimum technical specifications described above. • Make the large-scale trial as realistic as possible. The large-scale trial should involve the collection and apportionment of actual VMT fees to test certain system attributes, such as the costs of alternate collection mechanisms and the effectiveness of different enforcement strategies (to avoid double-taxation, participants would of course need to be reimbursed for any fuel taxes incurred during the trial). • Fund additional smaller-scale trials to test extensions to the baseline functionality. Trials in this vein would focus on “value-added” features for the base VMT fee system used in the larger national trial. Such trials might, for instance, explore more flexible pricing capabilities, such as varying the fee by time, by location, or by specific route of travel. Alternately, the trials might involve the provision of additional services to users such as route guidance based on real-time conditions or pay-by-the-minute parking. Both states and private firms should have the opportunity to compete for grants to perform such trials. The feedback from Whitty (2009) and Kuhl (2009b), along with other insights gained during the research and analysis conducted for this project, suggests the following tasks for future VMT fee system trials: • Develop agreement, in the form of a baseline technical specification for in-vehicle metering equipment, on the pricing functionality to be supported by a national system of VMT fees. • Fund a large-scale, multi-state trial to test the baseline pricing configuration. Use this trial to gain greater clarity regarding key system design issues – including alternate technical configurations for in-vehicle equipment, alternate revenue collection avenues, and alternate enforcement strategies. To fully exercise all system components, make the trial as realistic as possible, including the collection and apportionment of actual VMT-fee revenue. • If a national system of weight-distance truck tolls is envisioned, include trucks within the trial program (or, alternately, develop a separate weight-distance truck tolling trial). • Fund additional, smaller-scale trials to test additional functionality that might be used to augment the baseline VMT-fee system configuration, including more sophisticated forms of road pricing along with value-added user features. 10.5. Public Education and Outreach In considering the public acceptability of VMT fees, experts contacted by the research team offered two salient observations. First, there is little public understanding of the current challenges in transportation finance, and in turn the motivations for a transition to VMT fees. Second, the privacy concerns associated with GPS remain a potent obstacle to the acceptance of sophisticated in-vehicle metering equipment. To bolster the political prospects for transitioning to a VMT-fee system, concerted public education and outreach will likely be imperative. It is not clear, however, what may be the best avenues along which to pursue this effort. Participants in the expert panel suggested the idea of a “grass tops” approach, in which initial education and

99 outreach would focus on state and local elected officials, who in turn would be able to build support among their own constituencies. It was also suggested that educating the press will be valuable, but this might occur at a later stage. Responsibility for leading education and outreach efforts would presumably be assigned to the designated entity planning, developing, and implementing a national system of VMT charges, but that entity might delegate responsibility to others.