Rising costs and inflation, along with increased fuel efficiency and electric vehicle adoption, have created a major problem for state transportation revenues. Many states are examining funding alternatives to fuel taxes, such as mileage-based user fees, to help bridge the gap between transportation system needs and revenue projections.
Seventeen states have received federal Surface Transportation System Funding Alternatives (STSFA) grants to examine mileage-based user fees (MBUFs), which are also called road usage charges (RUCs).
Two coalitions, RUC America and the Eastern Transportation Coalition, are multi-state partnerships of transportation agencies that share research and pool funding to help member states study mileage-based user fees. More states plan to evaluate MBUFs in the near future.
However, implementing a state MBUF program is complex, and pilot programs are the first step in analyzing how a permanent program could be implemented. With some state departments of transportation already struggling to repave roads, let alone run mileage fee pilot programs, gleaning the highest value of data from these pilot programs is essential.
To maximize the effects of pilot programs, states need to learn from best practices and what has been done across the country. Roadmaps outline stages for a mileage-based user fee pilot program and what the program should be designed to address: ideally, questions that can’t be modeled in other ways.
While revenue and rates, for example, can be modeled and estimated on paper, questions like how drivers will react to a road usage charge and which mileage-reporting option they will prefer are at the heart of a pilot program’s goals.
Scale is also important. In this context, scale means both the program’s size (participant numbers, participating agencies, departments, etc.) and its funding.
Another important question previous pilot programs have raised is how funds would flow through various state agencies and departments, for instance.
Hawaii, which has transitioned to a permanent program, may be the clearest example of a roadmap executed successfully. The Hawaii Road Usage Charge (HiRUC) had five program stages: designing the program, mailing driving reports, recruiting volunteers, testing reporting technology, and evaluating results. Each stage of Hawaii’s road usage charge pilot program had a clear goal.
For example, the recruiting stage sought 2,000 volunteers to “test various technologies and reporting methods,” but ensuring pilot participants reflect the broader public is challenging. People who volunteer for a pilot may be more favorable toward an MBUF than the population at large, and an MBUF pilot needs to measure skeptics as well.
The second stage of Hawaii’s HiRUC pilot involved sending driving reports to more than 350,000 drivers statewide. It showed drivers what they would pay under a mileage-based user fee, an estimate of what they currently paid in fuel taxes, and why the state was pursuing an MBUF. This gave Hawaii broader reach and helped inform future decision-making.
The five-stage test culminated in a final report with recommendations for the Hawaii legislature, forging the permanent road usage charge program Hawaii operates today.
States that maintain some form of informal driving record to show an estimate of fuel tax those drivers pay now can emulate Hawaii’s approach as a first step in trying to recruit volunteers for an MBUF program, sending them a simulated invoice of their gas taxes paid versus what they could pay under an MBUF program.
Michigan also addressed participant buy-in by sending surveys to a sample of 20,000 residents and measuring changes in opinion before and after the residents watched an explanation of the state’s highway funding problem. Of note, the survey showed that 37% of respondents had a positive opinion of MBUFs before the video, moving to 43% afterward. Negative opinions went from 43% to 34% after the video. The survey offered a $10 gift card to any eligible resident.
Another real-life example is California’s Road Charge Pilot Program, which ran from July 2016 to May 2017 and looked to test the feasibility of MBUFs, data privacy safeguards, collection methods, and public acceptance. The final report provided detailed information on those elements. However, it also stated that, while charges were simulated, actual revenue flowing through the state’s system could have an impact on numerous state agencies and departments. Ideally, this is something that would have been considered for research in the initial pilot program in some form barring cost constraints on the program.
With cost savings in mind, Texas designed its pilot program to minimize per-participant costs. Texas’ Miles Matter pilot, run by Carma Technology with the Texas Department of Transportation, enrolled 41,000 participants using a smartphone app. Funded through a $5 million grant, the program was the largest pilot in the country at the time. No third-party physical devices to install, no device pairing, and no proprietary equipment were required for the program. A pilot program that buys new devices and ships them to participants will run out of money far faster than one that is more cost-conscious.
Communicating the results of an MBUF pilot is as important as carrying one out. Final reports should be delivered to the relevant agencies and lawmakers, preferably in a committee setting so lawmakers can ask questions. These reports can contain whatever data are relevant, but three elements are crucial:
- Key findings;
- Remaining questions and barriers to implementation; and
- Recommendations to move forward for implementation.
Pilot programs should have a purpose, not just be research done for the sake of research. Well-constructed pilots will produce enough relevant information for lawmakers to make an informed decision about implementation or how to address identified barriers to implementation.
Pilot programs are essential for state leaders to determine if a mileage-based user fee is a realistic alternative to fuel taxes. It’s unwise to begin a permanent MBUF program without first conducting in-state testing through pilot programs. State practitioners need to design pilot programs carefully, based on available funding, state-specific concerns, and lessons learned from earlier pilots across the country. Eroding fuel taxes and highway funds are problems today that will be worse tomorrow, so the sooner states start exploring alternatives, the better.