EdRegan - North Carolina League of Municipalities

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EdRegan - North Carolina League of Municipalities
The Transportation Finance
Dilemma
One Possible Solution:
A National Pricing System
Presented To
NCLM Meeting
October 26, 2009
Greenville, North Carolina
Presentation Overview
• A quick look at Federal Re-authorization
• A possible step toward solving the
transportation finance dilemma
Re-Authorization or New Authorization
• Whatever you call it, it still hasn’t happened
• SAFETEA-LU Expired on Sept. 30, 2009
• Currently working of a 30-day extension (?)
• House is pushing for full new bill quickly
• Administration and Senate favor 18-month
extension of current program
• Growing pressure to generate jobs may
accelerate the process
Some Background
• Federal Transportation Authorizations
normally come in 6 year cycles
– ISTEA
 1997 – TEA -21
 2003 – SAFETEA-LU
 2009 -- ???
 Almost always late
 1991
• Last bill was 2 years late
What to Expect In New Legislation
• Many believe it will be “new authorization”,
not re-authorization

Much restructuring and re-focusing
• Hopefully an increase in funding for
transportation
• Increased emphasis on performance
• Decreased emphasis on the gas tax
Major Policy Inputs from
Congressional Commissions
• Two National Commissions created in SAFETEA-LU to provide
comprehensive review of transportation policy and funding

Intended to specifically provide direction for new authorization
• National Transportation Policy and Revenue Study Commission

Recommended continuing strong federal role, considerable
simplification and refocusing of Federal priorities, emphsis on
performance and a significant gas tax increase
• National Transportation Infrastructure Finance Commission

Focused on funding and finance and recommended increased use of
tolling and pricing and the transition from the gas tax to a “per mile”
fee structure by 2020
• Bipartisan Policy Center – National Transportation Project

Focused heavily on performance based decision and funding
frameworks.
House T&I Proposal
• Surface Transportation Authorization Act of 2009
• Total Funding up to $500 Billion (6 years)




$337 Billion for highways
$100 Billion for transit
$50 Billion for High Speed Rail
$13 Billion for Motor carrier Safety
• Passed in Committee – starting point in the
process – but expect major changes
STAA of 2009
• Office of Public Benefit

Oversight of toll rates – public and private
• New rules on PPP projects


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No non-compete clauses
Value-for-money assessment
OPB oversight
• Tolling – giveth and taketh away


Some new opportunities
More restrictions and elimination of several pricing
related pilot programs
• Not much new on national infrastructure bank
• Increases project share limit on TIFIA program
The Gas Tax: A System at Risk
• Without major changes, the motor fuel tax will not be able generate the
revenue needed to maintain and expand our nation’s transportation
infrastructure in the future
• An ominous trend

Political reluctance to raise tax rates

Increasing fuel efficiency

Search for alternative fuels
• Major inconsistency in national policy

The backbone of all transportation finance is dependent
on the taxation of a commodity we seek to discourage
the use of !!
• Federal policy to increase fleet fuel efficiency to 35 MPG by 2020
• We’re about to get very serious about Climate Change in the US
Increasingly Clear National
Policy Direction
• National Policy Commission suggests gas will only be sufficient until 2025

Suggested strong consideration of VMT fees

Calls for major planning effort in next reauthorization
• National Transportation Infrastructure Finance Commission recommends
moving off gas tax by 2020

Most detailed and specific recommendation yet

Stresses urgent need to move to direct road user charging to provide
- Sustainable revenue source
- Mechanism to manage demand
• It is increasingly clear: US will likely transition off the gas
tax between 2015 and 2025
Key Point
• The problem with the gas tax is not that it is inefficient

It is efficient
• The problem with the gas tax is that it is not sustainable
--- in the face of:






Need to reduce congestion
Increasing fuel efficiency
New alternative fuels
Global warming
Need for energy independence
Political realities
The Gas Tax:
Unsustainable Revenue Source
$0.020
Gas tax indexed
for inflation
Tax Revenue Per Mile (2010 $)
1.8¢
No gas tax increase
$0.015
$0.010
0.9¢
$0.005
0.3¢
$0.000
2010
2020
2030
Year
2040
2050
One Vision for the Future: A National
Transportation Pricing System
• Every vehicle in America equipped
 New
vehicles equipped at the assembly line
• Fully automated electronic fee collection
 VMT
fees to replace fuel tax
 Tolling and Pricing
 Transit fare Payment
 Parking charges
• Potential for integration with ITS
services
Many Challenges
• Perceived overwhelming technical complexity
• Privacy issues
• Enforcement and security
• Perceived high cost of deployment and operations
 Especially
as compared with gas tax
• Payment and collection issues
• Revenue distribution issues
• Equity issues
One Potential Part of the Solution:
National Travel Card
National
Travel
Card
Individual
Smart
Card
Travelers Choice
National
Travel
Account
• Maximize convenience where
privacy not a concern
• Linked to credit card or
bank account
• Requires no action by user
once opened
Private
Stored
Balance
• Fully anonymous
• No travel data stored; not
linked to person or vehicle
• Network of stored balance
replenishment options
• No credit card or bank
account needed
VMT Fee Functions
(Replacing the gas tax)
GSM
Automated
Cellular
Connection
OBU
4 3 1 6 5 2
I
Ignition
Interlock
GPS
In –Vehicle
Display
Card
Reader
State-Level VMT Fee
Distribution Networks
State
VMT
State
Network
State
Network
Regional
VMT
State
Network
National
Clearinghouse
Local
VMT
Special
Pricing
Zones
VMT
State
Network
State
Network
Federal
Agencies
National Pricing Jurisdiction -Replacing the Federal Gas Tax
Typical Jurisdictional
Pricing Levels - State
Typical Jurisdictional
Pricing Levels - State
Typical Jurisdictional
Pricing Levels - State
Winston-Salem
Greensboro
Durham
Raleigh
Charlotte
Fayetteville
Typical Jurisdictional Pricing Levels Municipal and Special Pricing Zones
Congestion
Charging
Zone
Hypothetical Illustration,
VMT Charging Levels
Travel Area
Charge
Component
Cost/
Mile
Federal Fee
$0.010
Statewide Fee
0.020
Triangle Region Fee
0.010
City Raleigh Fee
0.005
Congestion Fee
0.250
Total Per Mile Change/Mile
Outside
Southeast
Region
Southeast
Region
Within
Miami
Congestion
Charge
Zone
$0.030
$0.040
$0.045
$0.295
Illustrative Revenue and Distribution
• Hypothetical 50-mile trip (all NC)

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30 miles outside Triangle Region
20 miles inside Triangle Region
10 miles inside Raleigh
4 miles inside Congestion Zone
• Charges and Distribution
• Federal ([email protected] $0.010)= $0.50

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State (50 @ $0.020) = $1.00
Triangle Region (20 @ $0.010) = $0.20
Raleigh (10 @ $0.005) = $0.05
Congestion Zone (4 @ $0.250) = $1.00
Total trip charge = $2.75
Strategic Pricing Options
• Alternative Charge Rates to Promote
Fuel Efficiency
• Alternative Charge Rates to Encourage
Low Emission Vehicles
• Vary Charge Rates by Time of Day
• Other Strategies to Make Use of more
Direct “Price Signals”
What about the Region’s Toll Facilities?
Adding a DSRC Link for
Direct Data and Revenue Transfer
GSM
DSRC
Roadside
Reader
OBU
4 3 1 6 5 2
I
Ignition
Interlock
GPS
In –Vehicle
Display
Card
Reader
Other Direct Pricing Functions
• Toll Facilities
• HOT / Managed Lanes
• Cordon Pricing
• Parking Systems
• Transit Payments (Direct card)
• Taxis (Direct Card)
• Toll Operators and other 3rd party service providers
simply “tap into” the national system

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Greatly reduces the cost of collection
Greatly increases ease of pricing deployment
Roadside Infrastructure Provided by
Toll Operations or Service Providers
In Vehicle ITS Services
• Vehicle-Infrastructure Interface (VII)
• Dynamic Route Guidance
• Access and Security Control
• Provided by 3rd parties

Charges for services collected through system
Potential VII and Other ITS Services
GSM
DSRC
OBU
4 3 1 6 5 2
I
GPS
National Network Concept
Revenue Claims
State
Networks
Toll
Operators
Stored
Balance
Network
DMV’s
Congestion
Management
Zones
Parking
Operators
National
Clearinghouse
Transit
Systems
Regional
Service
Centers
Taxis
ITS
Services
State
Networks
Federal
Agencies
Revenue Transfer to Federal,
States and Service Providers
Payments to
State
Networks
Toll
Operators
Stored
Balance
Network
DMV’s
Congestion
Management
Zones
Parking
Operators
National
Clearinghouse
Transit
Systems
Regional
Service
Centers
Taxis
ITS
Services
State
Networks
Federal
Agencies
National Travel Account Management
Credit
Card
National
Clearinghouse
Account
Data Base
EFT
Direct Billing
(Commercial
Accounts)
Stored Balance Replenishment Options
Major
Employers
Bank
ATM’s
Regional
Service
Centers
Retail
Centers
Transit
Centers
Retail
Partners
ACCEPT
Kiosks
DMV’s
Stored
Balance
Network
Parking
Facilities
• Cash
• Credit Card
• Debit
Rough (very rough) Costs??
• Probably $150 - $250 per vehicle
 Less
than 1% of vehicle cost
 About 2% of revenue collected over life of device
• Initial Cost to equip national fleet
 About
$50-$70 billion
 Forecasts say $200-$300 billion will be needed for transportation finance
each year
 System could replace virtually every form of transportation revenue now
collected
 Only OBU’s and Clearinghouse Structure Financed through
National System
roadside and other local system equipment cost paid by 3rd party users
“tapping into” the national system
 All
• Future net annual costs about
$15-$25 billion per year
 About
5-10% of annual revenue collected
 Major part of operating cost offset by third party
service providers “tapping into” system
In Summary…
• A national pricing system is needed to provide a
sustainable foundation for transportation finance
in the future

A system based on user fees and charges per mile instead of
per gallon

A system designed to provide a single device means of
electronically paying all forms of transportation fees and charges

A system which will link road use with payment to enable better
management of demand through variable pricing

A system that will be seamlessly intermodal

A system which will preserve privacy and allow for
anonymous operations for those whose choose it
In Summary…
• A pricing system framework designed to provide DSRC
access to 3rd party service providers and facility operators


Toll and parking operators simply “tap into” the system
VII and other ITS services provided “on demand” – paid thru
system
• A pricing system for which a large part of the operating cost can
be paid by fees from 3rd party users who will find it very cost
effective to tap into the system

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Toll facilities
Parking facilities
Transit systems
ITS providers
Access control systems
In Summary…
• It will be a big investment
…and certainly more complex and costly than the gas tax
• But it will provide a sustainable future for
transportation finance
• Technology is essentially here today
• All it will take is the political vision (and courage)
to decide to do it
…to start the long process of planning, design, consensus
building, education and deployment
• The time to start is NOW!

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