With California and Oregon having completed pilots for the their road usage charging (RUC) strategies, and Washington State poised to be next, states are starting to take the threat of reduced gas tax receipts seriously. The challenge starting to emerge is that improved fuel economy, greater adoption of electric vehicles (see Tesla Model 3), and little appetite for increasing the gas tax, will ultimately lead to budget shortfalls in transportation departments.
The Tax Policy Center most recent statistics1 for 2014 indicate that states collected over $42.0 Billion in gas tax revenue. Federal fuel taxes raised an additional $35.2 Billion in this same time frame (including diesel and special fuels). The gas tax has been the workhorse for funding road construction, and providing maintenance and operations support. Filling potholes, clearing incidents, and managing congestion are all elements that go into maintaining a roadway.
There are essentially three ways to raise revenue based upon usage fees:
RUC is similar to tolling in that both systems use technology to identify vehicle and drivers, both use transaction-based systems to assess charges, and both have account management systems to bill users.
Among the challenges that RUC brings is the concern of users that they are being “tracked”. RUC systems are looking at approaches to address this issue. One approach is to not identify the vehicle’s location, but to just track their odometer mileage---in this case, an Oregon RUC participant, for instance, will pay for all miles driven whether in Oregon or California. If a user is willing to use a GPS version of the RUC transceiver, the system can differentiate the mileage, and know not to charge for mileage when the vehicle is out of state. A third, low-tech approach, is to let the user simply write a check for the maximum annual charge. States are considering setting the maximum charge based upon 35,000 miles per year—so at 1.5 cents per mile a vehicle would pay $525. Implementing a system such as this will require the ability to audit.
Road use charging technology brings the ability to augment the revenue collection process with value added services based on predictive and prescriptive analytics. Participants in a RUC system could take advantage of telematics services, wireless data telemetry which provides dynamic information about the roadway, and support location based services. With the coming wave of connected and automated vehicles, these benefits could be a significant component of the value story. It’s also part of the continuing integration of transportation services overall – visibility to transportation options and true costs, especially the cost of road use and parking in an urban environment, allows travelers to make informed choices about the best way to travel.
Governments will need approaches to raise revenue to fund the building and maintenance of road. States need to consider approaches to manage their risk associated with declining gas tax revenues. Tolling and road usage charging represent two important but very different tools that they have at their disposal.
For more information on tolling solutions, visit Conduent.com/tolling