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Eno Transportation Weekly

Guest Op-Ed: Usage Time (UT) – A Road Pricing Concept Overlooked?

On July 23, House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) submitted a legislative proposal toward a long-term solution to the funding challenges of the Highway Trust Fund. Shuster frames his bill as a discussion draft to “reignite a dialogue” about resolving many transportation sector issues, including funding. The legislation would raise fuel taxes, then them expire entirely in 2028—giving Congress ten years to implement a new funding measure that can replace fuel taxes as the primary funding source for federal surface transportation.

Many experts think that the next funding mechanism will be a vehicle miles traveled fee (VMT), which would charge drivers based on the mileage they drive. However, policymakers should explore and consider a different revenue mechanism that appears to have several advantages over VMT. Rather than charging fees for distance traveled, the usage time (UT) fee would be based on time the vehicle is in use; fees start accruing when the engine starts and stop when the engine shuts down.

UT v. VMT Pricing Comparison

The basic UT pricing concept is to charge motorists for the time they use their vehicle, rather than the distance they use it or the gallons of fuel they use Like VMT proposals, the UT fee could charge differential fee rates across a variety of vehicle types based on their costly adverse impacts—emissions, road space, and road wear. Higher rates might be assessed to trucks, commercial vehicles, Uber (and other transportation network companies), and older non-air-quality compliant vehicles. Similar to toll road schedules, differential rates would be simple to administer because they are linked to vehicles.

The most significant advantage of UT pricing over VMT is that it can differentiate between road use during high congestion periods and low-demand hours. Congested corridors (including center cities) typically have higher negative externalities and require high-cost capacity enhancement improvement projects. The costs of maintaining transportation infrastructure directly correlates with heavier use, and pricing should reflect this nexus. By UT design, off-peak, non-commute direction (reverse commuters), and rural motorists pay less while commuters in congested corridors pay more.

Using a chosen 10-mile segment connecting suburban communities to medium-sized work destination Santa Cruz, we can see how UT and VMT fees are assessed differently. At a 3 cents per mile rate, any one-way trip, regardless of time of day, collects 30 cents in VMT user fees. At 1.5 centsper minute rate, UT fees vary based on both the time and direction traveled. During the busiest commute hour trips (8 a.m. and 5 p.m. peaks), UT fees are much higher than those assessed during shoulder times—precisely tying the user fee amount to road capacity and congestion.

Table 1

COMPARISON OF VMT AND UT CHARGES

CALIFORNIA STATE ROUTE 1, WEEKDAY TRIPS, SELECTED TIMES

Travel Minutes (estimated time) VMT Fee

(3 cent per mile)

UT Fee

(1.5 cents per minute)

NORTHBOUND

6 AM 10 30 cents 15 cents
8 AM 30 30 cents 45 cents
10 AM 10 30 cents 15 cents
3 PM 11 30 cents 16.5 cents
5 PM 9 30 cents 13.5 cents
7 PM 11 30 cents 16.5 cents
Off peak 9 30 cents 13.5 cents
 

SOUTHBOUND

6 AM 10 30 cents 15 cents
8 AM 13 30 cents 19.5 cents
10 AM 10 30 cents 15 cents
3 PM 15 30 cents 22.5 cents
5 PM 45 30 cents 67.5 cents
7 PM 13 30 cents 19.5 cents
Off peak 9 30 cents 13.5 cents

Consider an Uber or taxi operating for 9 hours in a slow-speed, center-city road network. At a rate of 3 cents per mile and 8 mph average speed, the daily VMT cost calculates to $2.16. The UT fee for this same operation at 1.5 cents per minute adds up to $8.00—nearly four times higher than VMT. Then if a surcharge to the basic UT rate is levied to increase hired ride specific costs to 3 cents per minute, the daily charge for nine hours would run $16.20.

Administration and Enforcement Ideas

The basic UT concept is very simple, and it opens an easy opportunity to track location of use to properly allocate revenue. It might eventually replace fuel tax revenues, but would likely start by augmenting current fuel tax, tolls, vehicle registration, sales taxes, general funds, and private sector transportation funding strategies.

Conceptually, UT fee administration is similar to VMT rollout proposals. A simple electronic clock, retrofitted in old and new vehicles, would record time in use. Each vehicle could be required to have a funded debit account that imposes fines in order to discourage overdrawing, and the Global Navigation Satellite System (GNSS) could log the time for revenue calculation. These choices would mirror the design of Singapore’s electronic road pricing program in terms of payment and technology.

A 5-minute minimum off-time allowance could discourage motorists from shutting down at traffic signals or when stalled in stop-and-go traffic. The low per minute cost of UT fees would not encourage temporary shutdowns at traffic lights.

Because Americans are increasingly interstate drivers, it makes sense for a national agency to set program eligibility rules, program compliance, and the process for updating participant fees. At the state level, each government would then decide how UT revenues might complement their portfolio of transportation revenues and which vehicles to exempt according to their jurisdiction’s local conditions. Small e-scooters and bikes likely would be exempt, but it might make sense to tax heavy motorcycles (weighing more than 100 pounds) in certain states.

Public Acceptance

Any transportation user fee, including UT, must be presented holistically and have a rational basis in order to build public acceptance of the policy.

User Fee Resistance: The public has learned to resist higher user fees and seems to prefer to pay hidden transportation costs buried in sales tax or general funds. As a consequence, policymakers have moved away from user funding and disproportionately relied on non-motorists to cover transportation costs. The Shuster proposal, along with the looming Highway Trust Fund shortfall, put the spotlight on the urgent need to replace fuel taxes. It is unlikely that motorists will favor increasing user fees, particularly if governments continue to bail out transportation funding shortfalls with other general funds. To curb such action and force the public to grapple with direct user fees, new statute should mandate dedicated use of user revenues for transportation investments to the Trust Fund and prohibit use of federal and state non-user revenues to fund transportation.

Privacy: The UT brings up inherent privacy concerns. To address public fears, policymakers can configure a pricing proposal that uses macro-level state or city vehicle location data linked to the vehicle for the purpose of allocating revenues, which would not list specific roads used or addresses visited. However, given today’s pervasive telematics in cars and phones, some say the privacy issue has become largely moot.

Environmental Distinction: The greatest non-transportation livability impacts tend to occur along congested slow speed urban corridors. VMT opponents believe that it fails to recognize the environmental and other benefits of low emission and energy efficient vehicles and provides a weak nexus to congestion costs and non-transportation impacts. UT would address these weaknesses by upcharging and discouraging slow speed congested travel. Why should motorists traveling in uncongested rural areas pay the same fee as a motorist traveling in a congested corridor in the peak direction and during the peak commute time? The logic of UT pricing seems clear. Invariably, high-cost congested travel corridors in urban areas offer viable public transit services as an alternative travel option to avoid paying higher road user fees. Thanks to private sector innovations, consumers are getting more accustomed to paying a premium for peak-hour services—Uber and Lyft variable pricing currently includes fare surges in peak travel times.

Equity: Road user fee increases are often criticized as regressive taxes exacerbating social and environmental justice inequities. UT outperforms VMT in this regard as it provides lower rates for off-peak, non-congested travel conditions. The congested corridors during peak commute times often provide some form of fixed-fare, public transit service for low-income travelers.

The public will not approve of any new fees without open discussion of the entire user fee framework, including fuel taxes. Transportation funding should be compared to utility funding—electric, gas, phone, water, power, sewer, and communications. It is unlikely that most motorists understand the extremely low cost they pay for use of the road network. Of the average 60 cents per mile cost of owning and operating a vehicle, road user fees account for just 4 percent. Motorists are getting a bargain that underappreciate. This distorted bargain and the safety hazards of ill-maintained need to be properly communicated to the public, and UT should be considered as a possible avenue for drivers to pay their fair share.

The views expressed above are those of the author and do not necessarily reflect the views of the Eno Center for Transportation.

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