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Reason Foundation

Surface Transportation Innovations #29

Topics include: TRB committee concludes tolls should replace fuel taxes; getting serious about traffic congestion; the future of ITS; electronic toll collection for rental cars; urban sprawl myths; and other news.

Robert Poole
February 1, 2006

In this issue:

Tolls Should Replace Fuel Taxes, TRB Committee Concludes

For the past two years I've served on a special committee of the Transportation Research Board, charged with looking into whether fuel taxes will remain viable as the major funding source for highways in the 21st century. Our report, "The Fuel Tax and Alternatives for Transportation Funding," was released during the TRB annual meeting late last month. There's been some confusion about what we did and didn't say, so let me try to clarify this for you.

The committee was not asked to assess whether there is a crisis in the level of funding of the highway system�though a number of us think there is. Rather, our charge was (1) to identify the extent to which the fuel-tax-based system might break down, and (2) to recommend what should supplement or replace it, if necessary. And on that basis, the report comes to some pretty strong conclusions.

First, we found that although the present system can get by for the next 10 to 15 years, it is gradually losing its viability. That's due to two key factors. One is changes in fuel economy and propulsion technology, along with rising oil prices. We looked at reams of data and crunched some of our own numbers and concluded that in the near term, fuel tax revenues will keep coming in, though unless public officials are willing to increase the tax rates, highway trust fund revenues may start to decline. But even if hybrids or other alternatives really take off in coming years, the impact on overall fuel consumption (and hence revenues) will be moderate, because it takes about 20 years for the whole vehicle fleet to turn over. So the further out you look, the more likely that fuel tax revenues will be declining. The other troubling factor is a gradual erosion of the gas tax = user fee principle that prevailed for most of the 20th century. But recent decades have seen increasing diversion of highway-user revenues to non-highway (and sometimes even non-transportation) uses, along with a growing use of local sales taxes for highways and transit.

Overall, we concluded, the user-pays principle has a lot going for it, and should be preserved and strengthened in any reform. Further, we think the public would greatly benefit if America shifted to a stronger version of this principle: namely, charging all road users per mile driven, with the road owner in each case retaining the revenues. Under such a system, higher revenues generated in specific corridors would indicate where more capacity is needed, and would provide funding to add that capacity. And highways would directly generate their own funding for proper maintenance and repair. And of course direct charging means that value pricing could be used to better manage traffic flow.

So we concluded that America should head in the direction of this kind of system, with federal and state policy fostering greater use of value pricing and toll finance, to enable both highway customers and public officials to gain more experience with these approaches. That way, when fuel tax revenues do start declining, we will have a much better basis for developing the transition to a road user charge system.

There's a lot more detail in the report, and I may be writing about other implications in future newsletters. Meanwhile, I hope you will get a copy and read it. You can find it on the TRB web site: www.trb.org/publications/sr/sr285.pdf.


Getting Serious About Traffic Congestion

In the previous issue of this newsletter, I introduced Reason's new Mobility Project, whose aim is to get policy-makers and the public focused on urban traffic congestion as a solvable problem. There's a lot of good news to report on this front, just one month later.

First, when I attended the TRB annual meeting in Washington last month (just after sending out the newsletter), I picked up TRB's new "Critical Issues in Transportation" booklet. It summarizes what the TRB Executive Committee has decided are the most important current issues in transportation. Heading the list is congestion, and the write-up includes both new capacity and more-sophisticated user fees as key factors in reducing congestion.

Second, I had the privilege of addressing the U.S. DOT's two-day leadership retreat at the end of January. In my luncheon talk, I put considerable emphasis on the need to reduce, rather than tolerate, traffic congestion, highlighting some of our key Mobility Project themes. I was delighted to learn, soon afterwards, that the DOT leaders decided to make congestion their central theme during the next three years (as reported in the Feb. 20 issue of Traffic World, so I'm not breaking any confidences here).

This message is starting to be taken seriously at the state level, too. I reported in Issue No. 11 (September 2003) that thanks to the efforts of the Governor's Business Council in Texas, that state's DOT was setting a long-term goal of a major reduction in the travel time index or TTI (the ratio of how long it takes to make a trip at rush hour compared with uncongested conditions). This is revolutionary, because the long-range transportation plans of nearly all large metro areas show higher TTIs several decades from now, rather than lower ones.

Texas has been the lone practitioner of serious congestion reduction until recently, but things are starting to change. In Georgia, the Governor's Congestion Mitigation Task Force issued its report in December, calling for a significant reduction in the TTI for the Atlanta metro area. And on January 20, 2006 the George State Transportation Board adopted a resolution giving congestion relief the highest priority in transportation project selection, and directing GDOT to implement a cost/benefit methodology to implement that approach. (The Task Force recommended that the TTI be reduced to 1.35 by 2030, compared with 1.48 in 2003�and a projected 1.67 in 2030 based on the current long-range plan.)

Could California be next? Gov. Arnold Schwarzenegger's ambitious infrastructure investment program includes a major emphasis on transportation that would include 1,200 miles of new highway and HOV/HOT lanes in congested areas. A briefing paper for the Governor's Strategic Growth Plan projects that business-as-usual will lead to a 35% increase in congestion—but that implementing the plan will reduce congestion 18.7% below current levels. I have not seen the analysis and hence cannot vouch for the numbers. But I'm encouraged to see this administration talking about expanding capacity, using value priced tolls, and aiming at actual reductions in congestion, not merely trying to prevent it from getting much worse.


Whither ITS?

The term "Intelligent Transportation Systems" means the application of communications, control, electronics, and computer technology to improve the performance of surface transportation systems. Originally called "Intelligent Vehicle Highway System," it first went public in a 1992 "Strategic Plan for IVHS in the United States." It was a very ambitious attempt to master-plan the widespread introduction and use of traffic management systems, electronic tolling, traveler information systems, commercial truck data systems, etc. In addition to providing ongoing financial support for the overall program, the U.S. DOT in 1996 launched "Operation TimeSaver," an effort to ensure the installation of complete ITS infrastructure in the 75 largest metro areas within 10 years. DOT Secretary Pena predicted that Operation TimeSaver would reduce urban travel times by at least 15%.

Well, that clearly didn't happen. As we know from the Texas Transportation Institute's annual urban mobility reports, travel times have gotten longer every year since then, as congestion has reached new highs. And last fall the Government Accountability Office released a report assessing what these ITS deployment efforts have accomplished to date. GAO found that 62 of the 75 metro areas have met the deployment goal . . . well, sort of. A metro area could achieve "medium" implementation, according to DOT, if it had outfitted at least 20% of its freeway miles and 33% of its signalized intersections�hardly what any sensible person would term deployment of a complete, integrated ITS infrastructure. And even Chicago, one of the acknowledged leaders in deployment, has full-time staffing at only four of its 10 traffic management centers. The GAO report concludes that institutional barriers must take much of the blame for the slow pace of making use of ITS�too many officials would rather be developing new bridges or light-rail lines that are highly visible, rather than quiet back-office stuff that makes things work better.

I agree that although ITS has often been over-hyped, there is a lot that technology can do to make transportation systems work better for their customers. An excellent primer on the subject is MIT professor Joseph Sussman's 2004 book, Perspectives on Intelligent Transportation Systems (Springer). Sussman has been involved right from the start, including being a co-author of the 1992 strategic plan. Besides walking you through the basics of ITS, he also offers his current perspective on the original plan, "What We Know Now That We Wish We Knew Then," as the book's concluding chapter.

I first became convinced that ITS was not just a government/contractor boondoggle when I toured the then brand-new traffic management center of the privately developed 91 Express Lanes in Orange County in 1996. They made use of a lot of this stuff because it made business sense to do so, to deliver greater value to their paying customers. I imagine that as we see more highway privatization, we'll learn which ITS technologies actually add value�and which are just nice things we can do with technology.


At Last: ETC for Rental Cars

Sooner or later, it had to happen. And I'm pleased to say that it looks as if 2006 will be the year that electronic toll collection transponders become available in rental cars. It's long troubled me that when I'm in, say, Orlando in a rental car�and nearly every expressway is a toll road�I have to stop and throw coins in a bin, when at home I zip through express lanes with my SunPass.

Interestingly, as often happens with innovation, it is not the leading ETC companies that are moving into rental car transponders. Instead, it's several start-up companies. Highway Toll Administration of Great Neck, NY has a demonstration project under way to equip 1,000 Budget cars at Newark airport. And it is talking with Budget's parent company, Cendant Car Rental Group (which also owns Avis) about a nationwide deal. That would be great for me all over the Northeast and Midwest, but also in Florida, Texas, and California where I also pay tolls when I rent cars.

Two other companies are pursuing a different approach, not relying on transponders at all. American Traffic Solutions is testing a service called PlatePass. Members would provide the license plate number of their personal car as well as any rental car they use. The company would make its member database available to toll roads, who would detect those license plates using video cameras already in use to catch violators, billing their credit cards instead. The company has a pilot project set up with Houston's Harris County Toll Road Authority, to begin this spring. And a third start-up company, Rent a Toll, is planning a system using both transponders and license-plate reading, to be offered to car rental firms nationwide.

I've been saying for some time that 21st century tolling would be very different from 20th century tolling. This is another case in point.


Urban Sprawl Myths

The conventional wisdom is that "urban sprawl" (a.k.a. low-density, suburban development) is a quintessentially American phenomenon, so different from the way our sophisticated European cousins live and work. But would you believe that "Britain pioneered both producing sprawl and trying to stop it"? That's one of the many revelations in a fascinating piece that appeared in The Guardian on January 28, 2006. (www.guardian.co.uk/print/0,,5385986-103677,00.html)

Author Robert Bruegmann, a professor of architecture and urban planning, debunks misconception after misconception about suburbanization. To begin with, it's a well-nigh universal phenomenon, wherever people begin to acquire the means to escape from overcrowded, noisy, polluted cities. London was one of the first large cities to experience this, beginning in the 18th century and "exploding outward" in the 19th. The term "sprawl," says Bruegmann, originated in Britain after World War I, as many started to decry the spread of semi-detached houses to the outskirts of the metro area. By the end of the second World War, sufficient anti-sprawl sentiment existed for the imposition of serious land-use planning, including the creation of a green belt around London. But, ironically, "the greenbelt was saved only at the price of forcing more of the population out beyond the greenbelt altogether, in effect urbanizing the entire southeast of England . . . and leading to the highest commuting times in Europe."

Speaking of which, Bruegmann reminds us that, contrary to the predictions of anti-sprawl folks, commuting times are not shortest in the most dense cities and greatest in the most sprawling ones. "In fact, the reverse is closer to the truth. Commuting times in American cities are substantially lower than those in European cities." Because, "As cities have spread out, jobs as well as houses have moved from the center."

As you may know, The Guardian is considered a left-wing paper. So I give its editors a lot of credit for publishing such a politically incorrect article.


Ominous UK Vehicle Tracking Plan

At first I thought it must be a joke, but it was December 23, not April 1st. Across my computer screen came an article from The Independent headlined, "Britain Will Be the First Country to Monitor Every Car Journey." (http://news.independent.co.uk/uk/transport/article334686ece)

According to the article, UK authorities plan to link together the information from thousands of traffic-monitoring video cameras into "a huge database of vehicle movements so that police and security services can analyze any journey a driver has made over several years." The national data center is justified as being key to an operation designed to "drive criminals off the road."

The article says that more than 50 local authorities have signed on to the scheme, and chief constables are recruiting supermarkets and petrol station owners to incorporate their own video cameras into the system, along with those of the Highways Agency. The idea is the brainchild of the Association of Chief Police Officers and apparently has the backing of government ministers who have authorized 24 million pounds to be spent on equipment this year.

This Big Brotherish nightmare vision may, if enough Brits raise a fuss, end up torpedoing unrelated plans by the Ministry for Transport to implement nationwide road pricing via GPS satellite tracking. (Conceptual plans for GPS pricing systems in this country, by contrast, give scrupulous attention to protecting privacy by not creating government records of vehicle movements.) But then again, maybe not. The UK has no Bill of Rights, and its citizens seem far more complacent about the already widespread use of video surveillance cameras in most urban areas.

Footnote: Last issue I wrote about a UK technology that can apparently detect human skin through windshield glass and thereby provide a way of counting vehicle occupants to check on HOV lane eligibility. Almost immediately I got feedback from one reader who suggested that this might fly in the UK, but he doubted the ACLU would stand for it here. He may well be right.


News Notes

One-Stop Tolling/Pricing/PPP Service. With the welcome proliferation of opportunities to use pricing, toll finance, and public-private partnerships on federal highway projects, the Federal Highway Administration has created a Tolling and Pricing Team to provide a single point of contact for all the various pilot programs. The contact person is Wayne Berman (202-366-4069 or wayne.berman@fhwa.dot.gov). The related website is: www.ops.fhwa.gov/tolling_pricing/index.htm.

Trucking and Road Pricing Article. Last summer Randy Mullet of CNF and I put together a session at the TRB summer meeting in Boston. It provided a unique opportunity for many of us who've been involved with road pricing to have some serious discussions with people from the trucking industry. It was a lively and useful session, and Randy and I were asked by Pat Jones of the International Bridge, Tunnel, and Turnpike Association to produce an article on these issues. We wrote it last fall, and it now appears in the Winter 2006 issue of IBTTA's excellent new journal, Tollways. You can email Lori Gorman at IBTTA for a free copy (lgorman@ibtta.org) or go to (www.ibtta.org/tollways/currentissue.cfm?navItemNumber=907)

New Public Works Financing Website. Since the very early days of the modern era of PPP toll roads, there has been one indispensable source for keeping up with this field, especially for those interested in the financing aspects. For nearly two decades, Public Works Financing has done yeoman work covering this field, thanks to the energy and contacts of Editor Bill Reinhardt. And for the last several years, I've enjoyed a monthly column through which I can comment on related issues. At last, there is a PWF website, where you can sample the latest issue and order your own subscription. Go to www.pwfinance.net.


Conference

I am chairing a panel next month at IBTTA's big Transportation Improvement Forum in Santa Monica, CA March 19-21. Reason Foundation is a co-sponsor of this event. The goal of this two-day forum is to promote innovative ideas to solve the most critical problems in surface transportation infrastructure. It builds on previous IBTTA Transportation Finance Summits and the July 2005 Future Forum. The Forum will be held at the Fairmont Miramar Hotel, a short walk from the beach. You can register on-line by going to: www.ibtta.org/events and clicking on 2006 Transportation Improvement Forum.


Quotable Quote

"For a country that leads in free enterprise, we are surprisingly far behind the rest of the world in private investments in infrastructure. . . Greater acceptance of tolls — provided the motoring public gets what it's paying for and has choices about paying — is inevitable. We must allow for greater freedom in private investment to give our transportation infrastructure a revitalizing boost, with greater flexibility to leverage bonds, tolls, and private dollars."

--Editorial, Engineering News-Record, January 16, 2006.


Robert Poole is Searle Freedom Trust Transportation Fellow and Director of Transportation Policy


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