The Fuel Tax and Alternatives for Transportation Funding Special Report 285 (2006) / Chapter Skim
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5 Finance Reform Proposals: Toll Road Expansion and Road Use Metering
5 Finance Reform Proposals: Toll Road Expansion and Road Use Metering
Pages 121-157
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From page 121... ...
Each of the proposals described in the two chapters concentrates on particu lar aspects of the finance structure -- for example, user fee collection techniques or the definition of federal and state responsibilities -- rather than on comprehensive reform. However, decisions about changing any of these elements of the finance scheme in the future will be unavoidably linked, and proposals sometimes over look these essential connections.
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From page 122... ...
In a finance scheme that relied heavily on revenue from tolls or mileage fees, success or failure would depend on the rules determining the levels of tolls and fees and the fee differentials corre sponding to characteristics of users, traffic, and the facility. Revenue and demand management are not necessarily incompatible pricing objectives; however, both consequences of pricing decisions would have to be taken into account.
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From page 123... ...
. Chapter 6 describes proposed reforms that retain the basics of present arrange ments, in particular, reliance on dedicated revenue from fuel taxes and other exist ing user fees.
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From page 124... ...
These three categories of reforms certainly are not mutually exclusive; rather, they could be complementary: reforms within the present system could be part of a phased transition strategy to a system that relied on tolls or mileage fees. (As an example, the Oregon road user fee proposal described below contains elements of all three categories.)
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From page 125... ...
The underlying concept is similar to HOT networks, but the proposal is concerned with changes in federal law to give impetus to toll lane development rather than with laying out how the toll sys tem should develop. Both proposals call for toll lanes rather than toll roads because offering motorists a choice between tolled and free lanes is viewed as a way to mit igate public objections to placing a toll on previously free facilities.
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From page 126... ...
The authors propose that the federal government take the lead in implementing the plan by offering aid within the structures of the existing federal highway and transit programs. FAST Lanes FAST lanes was a legislative proposal, originally put forth in 2003, to lift the pro hibition in federal law on collection of tolls on federal-aid highways for new lanes, lanes on new highways, or existing HOV lanes that are converted to toll lanes, pro vided that the highway has a free lane parallel to the toll lane.
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From page 127... ...
Estimated construction costs were $57 billion to $84 billion, and toll revenues were estimated to be sufficient to cover between 33 and 57 percent of these costs. It was noted that FAST lanes on high-volume expressways in smaller urban and rural areas might be better able to pay for themselves because construc tion costs would be much lower than in the largest urban areas, although such proj ects would yield lower travel benefits.
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From page 128... ...
In urban areas, relief from freeway congestion should further enhance productivity gains to truckers. The vol untary approach, with free lanes and toll lanes accessible to conventional trucks, might have more success in gaining trucking industry support than mandatory tolls, which the industry has opposed (McNally 2005)
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From page 129... ...
. RMAs can issue bonds backed by toll revenues, develop projects, operate toll roads, and contract with private-sector firms to build and operate toll roads.
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From page 130... ...
Two authorities operate toll roads in the Denver area under the law's provisions, one funded entirely by toll revenue and the other by a combination of toll revenue and a special local vehicle registration fee (E-470 Public Highway Authority 2005; Northwest Parkway Public Highway Authority 2004)
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From page 131... ...
The operator has instituted time-of-day pricing for trucks. The California private toll road projects were developed through the program created by Assembly Bill 680, 1989 California legislation that authorized the state transportation department to enter into agreements with private entities for con struction and operation of four toll road projects, as demonstrations, to be car ried out without state funds.
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From page 132... ...
. However, it emphasizes the impact on toll revenue from competition between free roads and toll roads as the primary obstacle and observes that "absent fundamental changes to current federal trans portation programs, states are likely to continue to devote significant funding including federal funds to building untolled roads." The perspective of GAO's assessment, that private participation should be judged in terms of its ability to increase total funding for transportation, seems to parallel the perspective of the states (for example, in California's AB 680 program described above)
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From page 133... ...
In this case, a subsidy to the toll road, to reduce the distortion of travelers' route decisions, might be economically justified. Such sub sidies, paid from traditional road user fee revenues, could serve as a transitional step toward more widespread dependence on toll revenue.
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From page 134... ...
Government owned airports, docks, and wharves were already eligible for tax-exempt financing, but highways had been excluded.) · Allow tolls on newly constructed express lanes or former HOV lanes on federal-aid highways through the Express Lanes Demonstration Program and HOT lanes provisions described above (Sections 1604 and 1121)
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From page 135... ...
As described, the 2005 surface transportation legislation contained measures in the direction of some of these proposals. Summary With the toll collection technology in use now in the United States, the two main technical limits on the potential of tolls in highway finance are that tolls can be applied on only a fraction of the road system and that toll roads always directly compete with untolled roads.
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From page 136... ...
The responsible government authority must take care that tolls are not set so high that the net effect for all trav elers is negative. The following measures probably are prerequisites for substantial expansion of tolling and recruitment of private-sector participation in toll road development: access to federal aid for toll roads and to tax-favored financing for privately devel oped roads, mechanisms for funding toll facilities that are not expected to have toll revenue sufficient to break even (e.g., the pass-through toll mechanism in the Texas toll road program)
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From page 137... ...
This method of charging for road use would have several advantages. If mileage fees largely replaced fuel taxes, user fee payments would no longer depend arbitrarily on vehicle fuel efficiency or the type of fuel consumed, and revenues would not be vulnerable to shifts in vehicle technology.
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From page 138... ...
Proposals for road use metering and mileage-charging systems must address not only technical plans but also administrative and political problems more chal lenging than the engineering aspects. Among these problems are the following: · Gaining public acceptance of a system that may force some road users to pay more or travel less and that employs technology sometimes regarded as a pri vacy threat, · Managing the transition from the present transportation funding scheme to a new one, and · Learning how to set fees properly so that the potential economic benefits of the new charging scheme are realized.
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From page 139... ...
U.S. Proposals for Road Use Metering and Mileage Charging The Oregon Road User Fee Task Force proposal and the New Approach to Road User Charges study, which were cited in Chapter 1, are the most prominent U.S.
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From page 140... ...
Countries Facility congestion tolls: Toll on a highway segment, bridge, or tunnel that varies with traffic conditions or time of day. 7 4 28 6 Cordon congestion tolls: Road users pay a fee to enter or travel within a geographic zone (e.g., a city center)
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From page 141... ...
. revenue sources would address specific problems related to road revenue and are designed for certain geographical areas, certain road projects, or cer tain road users" (p.
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From page 142... ...
Oregon Road User Fee Task Force proposal, GPS option (source: Whitty and Imholt 2005)
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From page 143... ...
. New Approach to Road User Charges Proposal A proposal developed with the support of 15 state departments of transportation calls for a road use metering system that could be implemented nationwide but that would provide flexibility so that each state or substate jurisdiction could decide independently whether to charge mileage fees and establish its own rate structure (Forkenbrock and Kuhl 2002; Forkenbrock 2004)
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From page 144... ...
After a certain date, all new vehicles would be required to be equipped with the computer and GPS device; however, the authors judge that retrofitting the fleet of existing vehicles with the required equipment would not be feasible. Two technological options for avoiding double-charging of road user fees during the transition are suggested: devices on fuel pumps that would recognize when a vehicle being refueled was equipped for mileage charging and cause the fuel to be sold tax free, and an input to the onboard computer from a sensor measuring fuel added to the gas tank so that the computer could deduct fuel taxes paid in computing the mileage charge owed.
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From page 145... ...
In the second, all meter-equipped vehi cles would be charged by the mile but collection of fuel taxes would be continued. In the final stage, all vehicles would be required to have meters and pay mileage fees (Forkenbrock and Kuhl 2002, 93, 100102)
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From page 146... ...
Although the commis sion was generally influential in setting government policy, the allocation of road user fees to waterways and railroads appears inconsistent with this recommenda tion as long as users of these facilities do not pay fees equal to costs. The effect of the revenue allocation also is questionable, since if the truck fee revenues actually approximate costs, then ultimately the road authority will need to replace the funds used for nonroad purposes (Kossak 2004)
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From page 147... ...
. The Austrian system is essentially a large installation of an advanced version of the automated toll collection technology that has become stan dard on most toll roads.
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From page 148... ...
These three categories of problems and the problem of choosing a technical design are exam ined in the following subsections. Gaining Public Acceptance The likely objections to metering among the public and politicians are the same as those listed above with regard to toll roads: the scheme would be expensive and a nuisance, it would create perverse incentives influencing government trans portation policy (e.g., increasing congestion could increase revenue)
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From page 149... ...
For example, transport vouchers that could be used to pay road tolls or transit fares could be distributed. In defense of tolls and congestion pricing, it may be noted that present high way user fees may be regressive, if low-income drivers are likely to pay a larger share of their income for fuel tax and registration fees than high-income drivers [although the difference in shares among income groups may be small (Parry 2002, 31)
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From page 150... ...
Making the Transition The Oregon Road User Fee Task Force and the New Approach proposals for con version from the fuel tax to mileage charges both envision the need for a prolonged period during which fuel taxes and mileage fees would be collected simultaneously. Most motorists would switch from paying fuel taxes to the mileage fee only when they bought new vehicles with the necessary onboard metering equipment.
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From page 151... ...
The Oregon task force recommended a base fee for automobiles of $0.012 per mile (the present average state fuel tax revenue per mile of light vehicle travel) plus a charge to cover the state's added fee collection
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From page 152... ...
The congestion charge could vary by hour of the day and by city, but not by road and not in response to immediate traffic conditions. Charges would be indexed to compensate for inflation (Road User Fee Task Force 2003, 3141)
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From page 153... ...
(For example, a pri vate operator would have no incentive to subsidize any class of user or exclude any user who was willing to pay the appropriate toll.) Designing and Testing Options The Oregon and New Approach proposals call for trials to evaluate the reliability, flexibility, cost, security, and enforceability of alternative designs for systems to monitor mileage and assess mileage fees.
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From page 154... ...
The following are among the possible benefits of a toll program on this scale: it could serve to concentrate spending on meritorious highway projects, it would improve traffic flow on the tolled facilities, and it might allow the public to learn about road pricing and decide whether more extensive application would be desirable. Attracting private-sector participation to the highway program by fran chising toll roads could have public benefits as well.
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From page 155... ...
2005. Road Pricing: Speech by Transport Secretary Alistair Darling to the Social Market Foundation.
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From page 156... ...
27. Road User Fee Task Force.
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From page 157... ...
2005. Oregon's Mileage Fee Concept and Road User Fee Pilot Program.
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