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

2. 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

3. Fuel Tax is No Longer Sustainable
Increased fuel efficiency of vehicles
CAFE standards (average 35.5 mpg in ; average 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”

4. 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

5. 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”)

6. 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