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Summary: Session 3
Policy Issues

Monday, June 13, 2011

KEN BUCKEYE, Moderator (Bio)
Minnesota Department of Transportation

ADRIAN MOORE, Panelist (Bio)
Reason Foundation

MARK MURIELLO, Panelist (Bio)
Port Authority of New York and New Jersey

MARK BURRIS, Panelist (Bio)
Texas A&M University

TERRI BINDER, Panelist (Bio)
Club 20

This session focused on the significant challenges related to MBUF implementation, including the fundamental purpose of mileage-based fees; complex multi-jurisdictional charging issues; and geographic, income and rural equity concerns.

Adrian Moore

Mileage Fees as a Revenue Replacement versus a Supplemental Revenue Source

High-level political leaders who champion MBUF run into extreme opposition and risk the possibility of losing their elective office. In response to questioning about the source of transportation finance, many senior-level congressional staffers did not comprehend that driving more equated to paying more in gas taxes.

Public Acceptance is a critical toward the implementation of mileage-based user fees.

• Trying to gain public acceptance by first asking, "How do you educate the public?" will likely lead to failure.
• The public is skeptical about why and how government plans to use revenue.
  • The gas tax is not perceived as a user fee at all.
  • Government agencies are not seen as being efficient with finances
  • The public will only vote to increase transportation-based taxes and fees when they see what the funding will support.
  • Any change to the current taxation structure is believed by the public to be a tax increase.
  • The public is confused about how much they pay into the transportation system.

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Mark Muriello

PowerPoint Presentation: Multi-Jurisdictional Charging, from the I-95 Corridor Coalition

Mileage-based user fees have numerous issues from a fee collection administrative standpoint:

• Data processing
  • Data and administrative requirements will differ substantially based on system functionality.
  • The scale of the data management challenge must be recognized.
  • Re-engineering of processes and systems will be required for registration, payment collection and reconciliation.
  • Calculating and reconciling state and facility mileage (and distributing accurate revenues) will be key new functions.
• Customer relations
  • Enhancements will need to be done to customer contact portals, such as call centers and web sites.
  • The interface to the user will be one of the most important and costly system components.
  • New enforcement processes will be required to ensure that vehicle mileage charges are paid and collected.
• Institutional
  • It is essential that State motor agencies interact, engage, and coordinate among themselves.
  • Enrollment under a mileage fee system is a critical requirement that may be integrated with state vehicle registration processes.
  • The potential institutional models for mileage fee implementation range from the department of motor vehicles, the E-Z Pass interagency group, to other new potential public and private sector roles.
  • The arrangement of having sole government institutions operate a mileage fee system is unlikely without private sector involvement.
  • The collection of Federal mileage charges may be done through the states where vehicle registration information is collected.
• Administrative cost
  • Actual experience with vehicle mileage fee collection costs are limited, however, bids from the Netherlands provide the best estimate.
  • The key factors of administering a mileage fee system include: the system functionality and the extent to which existing registration and fee collection systems can be built upon.
  • Currently, the administrative costs associated with various revenue collection systems are:
    • Motor vehicle fuel tax = $1.20 per vehicle (0.82% of revenue)
    • Motor vehicle registration = $13 per vehicle (11% of revenue)
    • VMT-based charges = $30 to $40 per vehicle (6 to 20% of revenue)
• Legal issues
• There are no major legal or constitutional issues associated with the implementation of vehicle mileage fees.
• Mileage-based charges would benefit from authorizing legislation that would address:
  • The characterization of mileage-based charges and use of mileage-based revenues, and whether the charge will be viewed as fee or a tax
  • What administrative entity has the authority to issue charges?
  • The rates for using the system and the use of revenues
  • Provisions for enforcement
  • Mechanisms to processes adjudication
  • Privacy protections for users

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Mark Burris

PowerPoint Presentation: Geographic and Income Equity

An equity evaluation on mileage-based user fees was done on potential users within the State of Texas. An assessment was made in replacing the fuel tax with a mileage-based fee using national household travel survey data, weighted to reflect all households in Texas. The principal conclusions from the evaluation were:

• Small differences were found in vertical equity (in terms of household income, proportion of income spent on transportation fees and taxes) for the mileage fee scenarios versus the current State gas tax.
• Some negative horizontal equities were discovered (in terms of geographic household location, rural or urban) for rural households under most fee scenarios, but most mileage-based fee systems were more equitable than the current State gas tax.
• A scenario favoring fuel efficient vehicles was the least equitable with regard to proportion of household income, but the most progressive in promoting geographic equity.

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Terri Binder

PowerPoint Presentation: Rural Issues

Rural users from Colorado had the following perspective on a transition to a mileage-based system:

• Drivers from rural populations are believed to drive more than drivers from urban centers. For example, a citation was made to a statement that rural users travel 44 miles per day as opposed to urban drivers traveling 11 miles per day.
• Incomes from rural households are generally lower than incomes from urban households, and rural populations are believed to spend more on transportation-related purposes than urban areas.
• Rural residents have no access to transit and other alternatives.
• Taxes and fees generated from using transportation services goes to purposes not directly related to transportation.
• Problems will only get solved when the users are forced to directly face the issue. In other words, an initiative will be created when there is "A problem in your driveway."

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