Alternative Solutions to Shrinking Tax Revenues ITS Virginia Annual Meeting May 4, 2017

A Very Brief History 4th Millennium BCE – Wheel invented Peak of Roman Empire – 50,000 miles of paved roads 1885 – Invention of car with internal combustion engine 1919 – First state fuel tax (Oregon) 1932 – Federal fuel tax initiated (1¢ / per gallon) 1993 – Last increase in federal fuel tax (18.4 ¢) Last several years – Congress has transferred approximately 70 billion from the general fund to the transportation fund 2017 – the transportation fund continues to be insolvent

Fuel Tax is No Longer Sustainable Increased fuel efficiency of vehicles CAFE standards (average 35.5 mpg in 2016; average 54.4 mpg in 2025) Emerging fleet of electric vehicles and plug-in hybrids Pay little or no fuel tax Concept of “fairness” “User pays” principle All vehicles contribute to congestion Treat transportation like a “utility”

Potential Solutions Increase the gas tax Tolling existing interstates A short-term (and needed) solution Several states have increased their state fuel taxes the past few years, some with indexing Tolling existing interstates P3s Replace gas tax with a mileage-based user fee (MBUF) Also known as Road Usage Charge (RUC), Road Charge (RC) Some western states have implemented and tested pilot systems (OR, CA, CO) I-95 Corridor Coalition starting a project to investigate and implement MBUF pilots Other Registration fees (highly fuel efficient vehicles required to pay more) Wholesale and sales taxes Weight-mile taxes

Issues for Any Alternative Solution Revenues Technology Options Privacy Concerns Political Will System Costs (Administration) Fairness (urban vs. rural drivers; has fuel tax become regressive?) “Double Taxation” (MBUF is a replacement of fuel tax) Interoperability Between States (charging out-of-state mileage) Potential synergies with toll facilities and agencies Standards Compliance and Enforcement Roles of Public and Private Sector Role and Concerns of Automotive Industry (and “Connected Vehicles”)

Section 6020 of the FAST Act Provide grants to States to demonstrate user- based alternative revenue mechanisms that utilize a user fee structure to maintain the long-term solvency of the Highway Trust Fund” “State or group of States shall submit to the Secretary (USDOT) an application in such form and containing such information as the Secretary may require.” Other entities (MPO, City) may also participate Annual application process 5 years: $15 million in 2016, $20 million / year thereafter ($95 million) 50% federal share Tolling is not applicable