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22 October 2013 Latest developments on Distance-based Road Usage Charging “RUC” Jack Opiola D’Artagnan Consulting LLP.

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Presentation on theme: "22 October 2013 Latest developments on Distance-based Road Usage Charging “RUC” Jack Opiola D’Artagnan Consulting LLP."— Presentation transcript:

1 22 October 2013 Latest developments on Distance-based Road Usage Charging “RUC” Jack Opiola D’Artagnan Consulting LLP

2 22 October 2013© D’Artagnan Consulting LLP2 Transportation Funding in the Age of Fuel Efficiency  Fuel tax receipts are now in permanent decline and will decline dramatically over the next several years.  US CAFE standards for 2016 and 2025 are impacting the entire future passenger vehicle fleet composition and fuel efficiency for ICEs, Hybrids, and advanced Hybrids  Standard passenger vehicles with 100 percent electric motive power entered marketplace in 2010  Four main models in 2012  More than 11 models being commercialized in 2013  models announced by all automobile manufacturers and introduced by 2015  Plug-in hybrid vehicles entered marketplace in 2012 and will be offered across all manufacturing brands and models

3 22 October 2013© D’Artagnan Consulting LLP3 USA National Review & Support

4 22 October 2013© D’Artagnan Consulting LLP4 Gas Tax is Not Sustainable % -50% 0 50% 100% 150% 200% 2006 Gas Tax Revenue Population Vehicle Miles Traveled Source: Trends based on data for Southern California (SCAG LRTP)

5 22 October 2013© D’Artagnan Consulting LLP5 Revenues Have Not Kept Pace With VMT Growth Current Risk Scenario: additional $2.2 Billion drop ½ ¢ gas tax increase Nov. ’09 Forecast: $1.6 Billion drop Source: WS Joint Transportation Committee – Implementing Alternative Transportation Funding Methods, Original 2007 Funding Study Forecast Unintended Consequence

6 22 October 2013© D’Artagnan Consulting LLP6 “The historical tools and tax- based charges currently at governments’ disposal to raise revenue for infrastructure provisions are: out of date, inefficient, create false pricing signals to users, and are inadequate to fund increased accessibility and future growth.” New Funding Sources – Plenty of Studies Source: Roads Australia Road Reform by Consult Australia & D’Artagnan Consulting LLP, 2011

7 22 October 2013© D’Artagnan Consulting LLP7 Revenue Generation per Alternatives Revenue Generation per annum - $000 M X ~3.5 X ~5 X ~9-10 X ~10-12 X Source: SCAG and HNTB team of HNTB, CDM Smith and D’Artagnan Consulting LLP

8 22 October 2013© D’Artagnan Consulting LLP8 VMT Financial Analysis GRP and Employment Annual Percentage Increase from the Baseline ( ) Source: SCAG and HNTB team of HNTB, KPMG and D’Artagnan Consulting LLP

9 22 October 2013© D’Artagnan Consulting LLP9 Repeating Themes against VMT / RUC charging  Too complicated and expensive to operate;  Inequitable to rural drivers;  Technology invades privacy of the driver;  No business case for it; and,  No Politician brave enough to adopt it!

10 22 October 2013© D’Artagnan Consulting LLP10 Major Cost Categories Administration and Collection  Program administration  Account management  Information technology (IT)  Enforcement  Lost revenue due to evasion  Cost of recovering unpaid tax debt  Cost of audit  Public relations  Cash flow 10

11 22 October 2013© D’Artagnan Consulting LLP11 Example of Road Usage Charge Costs by Category 11 High early year costs due to startup Account management Source: WSTC Road Usage Charge Business Case Analysis, October 14, 2013, D’Artagnan Consulting LLP

12 22 October 2013© D’Artagnan Consulting LLP12 Financial / Operational Cost Model Source: ODOT Road Usage Charge Financial Viability Report, June 2013, D’Artagnan Consulting LLP

13 22 October 2013© D’Artagnan Consulting LLP13 Repeating Themes against VMT / RUC charging  Too complicated and expensive to operate;  Inequitable to rural drivers;  Technology invades privacy of the driver;  No business case for it; and,  No Politician brave enough to adopt it!

14 22 October 2013© D’Artagnan Consulting LLP14 Source: GAO Report GAO Pilot Program Could Help Determine the Viability of Mileage Fees for Certain Vehicles, December 2012 Equitable? Or, more Equitable ? Rural — Urban Equity Needs Pick-up Trucks $34B $54B $78B

15 22 October 2013© D’Artagnan Consulting LLP15 Urban and Rural Road Usage Charge Impacts Average Self-reported Trip Distances (Miles) Trip PurposeUrbanMixedRural Medical appointments Clothes shopping Work or school Grocery shopping Restaurants Rural residents tend to drive longer distances for all trips including medical appointments, shopping, and school Source: Oregon DOT, Rural-Urban Study, Augmentation 1, June 2013 by DHM Research & D’Artagnan Consulting LLP

16 22 October 2013© D’Artagnan Consulting LLP16 Urban and Rural: Self-reported Distance Driven Annually (Miles) Count y Type Total miles driven (A) Miles off road (B) Total on- road miles (C = B - A) Miles driven out- of-state (D) Total miles on Oregon public roads (C - D) Urban12, , ,357 Mixed13,8651,07712,7881,49511,293 Rural12,5111,09011,4211,9399,482 The difference in miles driven among urban, mixed, and rural counties is not substantial. Rural motorists drive more off-road and out-of-state miles than other motorists. This holds true for “border” and “non-border” counties. These figures are self reported, but nevertheless illuminate individuals’ collective impressions of their own situations Source: Oregon DOT, Rural-Urban Study, Augmentation 1, June 2013 by DHM Research & D’Artagnan Consulting LLP

17 22 October 2013© D’Artagnan Consulting LLP17 Repeating Themes against VMT / RUC charging  Too complicated and expensive to operate;  Inequitable to rural drivers;  Technology invades privacy of the driver;  No business case for it; and,  No Politician brave enough to adopt it!

18 22 October 2013© D’Artagnan Consulting LLP18 Options for Road Usage Charging Option 2: The Smart Phone Plan Option 1: The Basic Plan (without GPS) Option 3: The Advanced Plan (with GPS) Option 4: Read Odometer at start and end of year 35,551 miles —15,151 miles = 20,400 miles 20,400 miles x 1.55¢ per mile = $ tax October ‘12October ‘13 Option 5: Pre-paid Flat Rate Plan October 2013 Five Hundred and 00/100 State Department of Transportation Joe Motorist Road Usage Charge Technical Non-Technical

19 22 October 2013© D’Artagnan Consulting LLP19 Minnesota Public Opinion on “Solutions” “High Tech” = GPS device “Low Tech” = Odometer reading Source: The Dieringer Research Group Inc. for Minnesota Department of Transportation, June-July 2009

20 22 October 2013© D’Artagnan Consulting LLP20 Minnesota Public Opinion on “Features” Source: The Dieringer Research Group Inc. for Minnesota Department of Transportation, June-July 2009

21 22 October 2013© D’Artagnan Consulting LLP21 Repeating Themes against VMT / RUC charging  Too complicated and expensive to operate;  Inequitable to rural drivers;  Technology invades privacy of the driver;  No business case for it; and,  No Politician brave enough to adopt it!

22 22 October 2013© D’Artagnan Consulting LLP22 Present Value of Net Tax Revenue Sensitivity Analysis, Alternative Concepts and Scenarios All road usage charge concepts have considerably higher net present value than gas tax

23 22 October 2013© D’Artagnan Consulting LLP23 Simplified Business Case – Gas Tax vs RUC (net) Notes Base=4M vehicles Fuel Efficiency = Global Insight Rate (2015) = 1.55¢/mile [revenue neutral in 2015] NPV RUC = $20.5 Billion NPV Gas Tax = $13.8 Billion Revenue neutral rate equals ~ 20 MPG at start

24 22 October 2013© D’Artagnan Consulting LLP24 Repeating Themes against VMT / RUC charging  Too complicated and expensive to operate;  Inequitable to rural drivers;  Technology invades privacy of the driver;  No business case for it; and,  A Political System is not brave enough to adopt it!

25 22 October 2013© D’Artagnan Consulting LLP25 USA Distance-based Pilots & Study Legislative Mandate Active Formal study Program/Study Completed or finishing Beginning Inquiry Western Road Usage Charge Coalition (WRUCC)

26 22 October 2013© D’Artagnan Consulting LLP26 Closing Remarks  New automotive technologies are eroding the gas tax as a proxy for road usage, while other new technologies are removing the administrative and cost barriers to collect RUC.  Change is beginning at the State level — just as the gas tax did in 1919  The focus is revenue sustainability. RUC may also include other objectives such as:  Environmental considerations or  Congestion reduction  Caveats  Does not preclude increase in state or federal gas taxes first  Does not preclude new toll facilities  May phase in over time, and  May never include all internal combustion engine (ICE) vehicles

27 22 October 2013 Thank you! Jack Opiola (703) ; (703) Jack Opiola (703) ; (703)


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