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NATIONAL
NCHRP REPORT 689
COOPERATIVE
HIGHWAY
RESEARCH
PROGRAM
Costs of Alternative
Revenue-Generation Systems
OCR for page R2
TRANSPORTATION RESEARCH BOARD 2011 EXECUTIVE COMMITTEE*
OFFICERS
CHAIR: Neil J. Pedersen, Administrator, Maryland State Highway Administration, Baltimore
VICE CHAIR: Sandra Rosenbloom, Professor of Planning, University of Arizona, Tucson
EXECUTIVE DIRECTOR: Robert E. Skinner, Jr., Transportation Research Board
MEMBERS
J. Barry Barker, Executive Director, Transit Authority of River City, Louisville, KY
Deborah H. Butler, Executive Vice President, Planning, and CIO, Norfolk Southern Corporation, Norfolk, VA
William A.V. Clark, Professor, Department of Geography, University of California, Los Angeles
Eugene A. Conti, Jr., Secretary of Transportation, North Carolina DOT, Raleigh
James M. Crites, Executive Vice President of Operations, Dallas-Fort Worth International Airport, TX
Paula J. Hammond, Secretary, Washington State DOT, Olympia
Adib K. Kanafani, Cahill Professor of Civil Engineering, University of California, Berkeley
Susan Martinovich, Director, Nevada DOT, Carson City
Michael R. Morris, Director of Transportation, North Central Texas Council of Governments, Arlington
Tracy L. Rosser, Vice President, Regional General Manager, Wal-Mart Stores, Inc., Mandeville, LA
Steven T. Scalzo, Chief Operating Officer, Marine Resources Group, Seattle, WA
Henry G. (Gerry) Schwartz, Jr., Chairman (retired), Jacobs/Sverdrup Civil, Inc., St. Louis, MO
Beverly A. Scott, General Manager and CEO, Metropolitan Atlanta Rapid Transit Authority, Atlanta, GA
David Seltzer, Principal, Mercator Advisors LLC, Philadelphia, PA
Lawrence A. Selzer, President and CEO, The Conservation Fund, Arlington, VA
Kumares C. Sinha, Olson Distinguished Professor of Civil Engineering, Purdue University, West Lafayette, IN
Daniel Sperling, Professor of Civil Engineering and Environmental Science and Policy; Director, Institute of Transportation Studies; and Interim
Director, Energy Efficiency Center, University of California, Davis
Kirk T. Steudle, Director, Michigan DOT, Lansing
Douglas W. Stotlar, President and CEO, Con-Way, Inc., Ann Arbor, MI
C. Michael Walton, Ernest H. Cockrell Centennial Chair in Engineering, University of Texas, Austin
EX OFFICIO MEMBERS
Peter H. Appel, Administrator, Research and Innovative Technology Administration, U.S.DOT
J. Randolph Babbitt, Administrator, Federal Aviation Administration, U.S.DOT
Rebecca M. Brewster, President and COO, American Transportation Research Institute, Smyrna, GA
Anne S. Ferro, Administrator, Federal Motor Carrier Safety Administration, U.S.DOT
John T. Gray, Senior Vice President, Policy and Economics, Association of American Railroads, Washington, DC
John C. Horsley, Executive Director, American Association of State Highway and Transportation Officials, Washington, DC
David T. Matsuda, Deputy Administrator, Maritime Administration, U.S.DOT
Victor M. Mendez, Administrator, Federal Highway Administration, U.S.DOT
William W. Millar, President, American Public Transportation Association, Washington, DC
Tara O'Toole, Under Secretary for Science and Technology, U.S. Department of Homeland Security, Washington, DC
Robert J. Papp (Adm., U.S. Coast Guard), Commandant, U.S. Coast Guard, U.S. Department of Homeland Security, Washington, DC
Cynthia L. Quarterman, Administrator, Pipeline and Hazardous Materials Safety Administration, U.S.DOT
Peter M. Rogoff, Administrator, Federal Transit Administration, U.S.DOT
David L. Strickland, Administrator, National Highway Traffic Safety Administration, U.S.DOT
Joseph C. Szabo, Administrator, Federal Railroad Administration, U.S.DOT
Polly Trottenberg, Assistant Secretary for Transportation Policy, U.S.DOT
Robert L. Van Antwerp (Lt. Gen., U.S. Army), Chief of Engineers and Commanding General, U.S. Army Corps of Engineers, Washington, DC
Barry R. Wallerstein, Executive Officer, South Coast Air Quality Management District, Diamond Bar, CA
*Membership as of March 2011.
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NATIONAL COOPERATIVE HIGHWAY RESEARCH PROGRAM
NCHRP REPORT 689
Costs of Alternative
Revenue-Generation Systems
Patrick Balducci
BATTELLE
Portland, OR
Gang Shao
MACROSYS
Washington, D.C.
Albert Amos
JACOBS ENGINEERING GROUP
Austin, TX
Anthony Rufolo
PORTLAND STATE UNIVERSITY
Portland, OR
Subscriber Categories
Finance · Policy
Research sponsored by the American Association of State Highway and Transportation Officials
in cooperation with the Federal Highway Administration
TRANSPORTATION RESEARCH BOARD
WASHINGTON, D.C.
2011
www.TRB.org
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NATIONAL COOPERATIVE HIGHWAY NCHRP REPORT 689
RESEARCH PROGRAM
Systematic, well-designed research provides the most effective Project 19-08
approach to the solution of many problems facing highway ISSN 0077-5614
administrators and engineers. Often, highway problems are of local ISBN 978-0-309-21316-5
interest and can best be studied by highway departments individually Library of Congress Control Number 2011928176
or in cooperation with their state universities and others. However, the © 2011 National Academy of Sciences. All rights reserved.
accelerating growth of highway transportation develops increasingly
complex problems of wide interest to highway authorities. These
problems are best studied through a coordinated program of COPYRIGHT INFORMATION
cooperative research.
Authors herein are responsible for the authenticity of their materials and for obtaining
In recognition of these needs, the highway administrators of the written permissions from publishers or persons who own the copyright to any previously
American Association of State Highway and Transportation Officials published or copyrighted material used herein.
initiated in 1962 an objective national highway research program Cooperative Research Programs (CRP) grants permission to reproduce material in this
employing modern scientific techniques. This program is supported on publication for classroom and not-for-profit purposes. Permission is given with the
understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA,
a continuing basis by funds from participating member states of the
FMCSA, FTA, or Transit Development Corporation endorsement of a particular product,
Association and it receives the full cooperation and support of the method, or practice. It is expected that those reproducing the material in this document for
Federal Highway Administration, United States Department of educational and not-for-profit uses will give appropriate acknowledgment of the source of
any reprinted or reproduced material. For other uses of the material, request permission
Transportation.
from CRP.
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requested by the Association to administer the research program
because of the Board's recognized objectivity and understanding of
NOTICE
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COOPERATIVE RESEARCH PROGRAMS
CRP STAFF FOR NCHRP REPORT 689
Christopher W. Jenks, Director, Cooperative Research Programs
Crawford F. Jencks, Deputy Director, Cooperative Research Programs
Andrew C. Lemer, Senior Program Officer
Sheila Moore, Senior Program Assistant
Eileen P. Delaney, Director of Publications
Doug English, Editor
NCHRP PROJECT 19-08 PANEL
Field of Administration--Area of Finance
Alan J. Arceneaux, Salem, OR (Chair)
Amy K. Binkley, Missouri DOT, Jefferson City, MO
Jeff Doyle, Washington State DOT, Olympia, WA
Rachel Falsetti, California DOT, Sacramento, CA
Norman S. J. Foster, City of New Orleans, New Orleans, LA
Jannine M. Miller, Georgia Regional Transportation Authority, Atlanta, GA
Jonathan R. Peters, The City University of New York, Staten Island, NY
Victor Paulo Saltao, Brisa North America, Inc., Norcross, GA
John Svadlenak, Oregon DOT, Salem, OR
Patrick T. DeCorla-Souza, FHWA Liaison
Ralph Erickson, FHWA Liaison
Martine A. Micozzi, TRB Liaison
AUTHOR ACKNOWLEDGMENTS
The research documented in this report was performed under NCHRP Project 19-08 by Battelle, with
Jacobs Engineering and Portland State University acting as subcontractors.
Mr. Patrick Balducci was the principal author of Chapters 1 and 6, and authored all sections of Chap-
ters 2 and 4 dealing with motor fuel taxes. Dr. Gang Shao was the principal author of Chapters 3 and 5.
Dr. Anthony Rufolo was the principal author of all sections of Chapters 2 and 4 focused on VMT fees.
Mr. Albert Amos was the principal author of all sections of Chapters 2 and 4 focused on tolling, cordon/
congestion pricing, and parking pricing systems.
The authors wish to thank the tax administrators and industry experts who were interviewed for this
study. The authors also wish to thank the NCHRP Project 19-08 Topic Panel for the thoughtful guidance
they provided in support of this project.
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FOREWORD
By Andrew C. Lemer
Staff Officer
Transportation Research Board
NCHRP Report 689 presents an analysis of the direct costs incurred in generating the rev-
enues that support federal-aid and state highway construction, operations, and mainte-
nance. Federal and state taxation of motor-vehicle fuel is presently the primary mechanism
for generating such revenue. Alternative revenue-generating mechanisms are used or have
been proposed, including tolling and fees for road usage [for example, vehicle-miles of
travel (VMT) fees]. There are costs associated with administering any of these revenue
mechanisms, collecting the taxes, and ensuring compliance. This report presents a frame-
work for analysis of these costs and uses that framework to estimate unit costs for fuel taxes,
tolling, VMT fees, and cordon pricing schemes. The analysis will be helpful to departments
of transportation (DOTs), departments of motor vehicles (DMVs), and other responsible
agencies and policy makers concerned with generating revenues to support the surface
transportation system.
The current system for generating the revenues to support federal-aid and state highways
depends largely on federal and state fuel taxes. Tolling is used in a relatively few instances
to generate funds to support particular roads, bridges, and tunnels. Several decades of pub-
lic policy discussions, legislative actions, and executive decisions account for how these taxes
and tolls are collected and by whom.
There are costs associated with administering any revenue system, collecting the taxes,
and ensuring compliance. Administrative costs accrue to operations of the government
agency, private company, or independent authority that implements and oversees revenue-
producing activities. Collection costs are associated with receiving tax payments, placing and
operating the equipment for tolls, and other such activities. Compliance costs are the result
of efforts to ensure that taxes and charges are paid in full when they are due, to reduce
evasion, and to collect past-due amounts. These costs may be incurred by multiple agen-
cies. How costs are recorded and presented may vary from one agency to another. Under-
standing these costs and comparing costs among agencies and alternative revenue-generation
systems is challenging.
Various proposals for alternative revenue-generation mechanisms are being considered
in public-policy forums. Such schemes as tolls that vary over time, tolls that vary based on
distance, area-based licensing, and charges based on VMT will each have their own pattern
of costs, and those costs will influence the amount of revenue ultimately available for high-
ways. This report is the product of NCHRP Project 19-08, research undertaken to provide
information to support discussions by state officials and other policy makers of the costs of
implementing and administering alternative revenue-generation mechanisms. While this
research draws on practical experience of agencies in the United States and abroad, alterna-
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tives being considered exceed the scope and scale of that experience. In addition, much of
the information required for comprehensive analysis is considered sensitive and private by
government agencies and private operators concerned with protecting taxpayers' privacy
and corporate competitive advantage.
The objective of NCHRP Project 19-08 was to develop a methodology that can be used
to analyze and compare the administrative, collection, and compliance costs of highway
revenue-generation mechanisms and to apply that methodology to a selected set of alter-
native mechanisms. Although the range of revenue systems is potentially quite broad,
this project was limited to five usage-based charges: motor fuel taxes, tolling, VMT fees,
congestion and cordon pricing, and parking fees.
A team led by Battelle relied initially on existing literature and discussions with knowl-
edgeable experts to develop an accounting framework for the analysis and to gain under-
standing of the limitations faced in making cost comparisons. The team collected informa-
tion from recent VMT-fee trials in Europe and the United States and from the experience
of toll authorities. However, the research was limited by reluctance of private operators and
government agencies to release data on their operations, as well as by the lack of experience
with proposed alternative revenue-collection methods.
To facilitate comparisons of alternative methods, the research team worked to develop
estimates of five indicators of efficiency or severity of the cost burden associated with each
mechanism analyzed: (i) average cost per lane-mile, (ii) average cost per centerline-mile,
(iii) average cost per thousand VMT, (iv) average cost per transaction or vehicle, and (v)
percentage of total costs to total revenues. Using this last measure, for example, the current
system of fuel taxation is very effective.
This report may be useful to analysts and policy makers at all levels of government, both
as an initial assessment of the potential effectiveness of particular revenue-collection
methods and as a template for developing more specific estimates of costs associated
with particular methods.
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CONTENTS
1 Summary
5 Chapter 1 Introduction
5 1.1 Research Objectives
6 1.2 Report Audience
6 1.3 Report Structure
7 Chapter 2 Overview of Existing and Alternative
Revenue-Generation Systems
7 2.1 Motor Fuel Taxes
7 2.1.1 Motor Fuel Tax Administration and Enforcement Practices
10 2.1.2 Previous Administrative Cost Estimates
10 2.2 Tolling
10 2.2.1 Overview of Tolling Systems and Current Practices
12 2.2.2 Practices and Trends Affecting Tolling Systems
12 2.2.3 Change in Governance Structure of Toll Agencies
12 2.2.4 Electronic Toll Collection and Video Tolling
16 2.2.5 Congestion Management
17 2.2.6 Leakage Rates
19 2.2.7 Administrative Fees and Criminalization of Toll Violations
20 2.2.8 Tolling Administrative Cost Estimation and Comparisons
21 2.3 VMT Fees
21 2.3.1 Prices Set to Improve Management of the Road System
22 2.3.2 Review of U.S. Experience
25 2.3.3 Review of International Experience
25 2.3.4 Discussion of Issues Related to VMT Fees
26 2.4 Cordon Pricing
26 2.4.1 Singapore
28 2.4.2 London
31 2.4.3 Oslo
33 2.4.4 Stockholm
35 2.4.5 Milan
36 2.5 Parking Pricing Systems
36 2.5.1 Westminster City Council's Parking Program
38 2.5.2 SFpark Smart Parking Management Program
41 2.5.3 Chicago Parking System: Chicago Parking Meters, LLC
44 Chapter 3 Revenue Enabling Technologies
44 3.1 IntelliDrive Technology
44 3.1.1 Background of IntelliDrive System
44 3.1.2 IntelliDrive Preliminary Proof of Concept
45 3.1.3 Technology Components of the System
48 3.1.4 Tested Functionalities of the System
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50 3.1.5 The Current Status of the System
50 3.2 Fleet Management Systems
50 3.2.1 Objectives and Benefits of Fleet Management Systems
51 3.2.2 Satellite-Based Fleet Management: Expanded Satellite-Based Mobile
Communications Tracking System
53 3.2.3 Cellular Technology-Based Fleet Management System
53 3.3 Commercial Vehicle Information Systems and Networks
53 3.3.1 Objectives of CVISN
54 3.3.2 Specifications of CVISN
55 3.3.3 Technology Components of the System
55 3.3.4 The Current Status of the CVISN
56 3.4 Electric Cars and Smart Charging Software
57 3.4.1 Objectives of Using Electric Cars
57 3.4.2 Technology Components Related to Electric Cars
57 3.4.3 Electric Vehicle Implications for Revenue Collection
58 3.4.4 Regional Influences on Electric Vehicle Market Penetration
59 3.4.5 The Current Status of the System
59 3.4.6 Funding Sources
61 Chapter 4 Administrative Cost Estimates for Motor Fuel Taxes
and Alternative Revenue-Generation Systems
61 4.1 Cost Accounting Framework
62 4.2 Cost Estimates for Motor Fuel Taxes
62 4.2.1 Administrative Costs Reported in Highway Statistics
62 4.2.2 Determination of Sample States
64 4.2.3 Identification of Responsible Agencies Within Sample States
65 4.2.4 Collecting Cost Data from State Agencies
65 4.2.5 Analysis of Cost Data
65 4.2.6 Summary Data for 2003 through 2007
66 4.2.7 State-by-State Data for 2007
66 4.2.8 Data Grouped by Different Characteristics
66 4.2.9 Data from Eight Sample States
68 4.2.10 Analysis of Survey Results
70 4.3 Cost Estimates for Tolling
70 4.3.1 Methodology
71 4.3.2 Toll Agencies Analyzed and Selection Criteria
71 4.3.3 Data Sources, Coverage, and Limitations
72 4.3.4 General Findings--Operational Costs
74 4.3.5 Administrative Costs
75 4.3.6 Collection Costs
77 4.3.7 Enforcement Costs
77 4.3.8 Summary of Operating Costs
77 4.3.9 Capital Costs
78 4.4 Cost Estimates for VMT Fees
78 4.4.1 Types of VMT Fees
81 4.4.2 Method for Generating Cost Data for Dutch VMT Fee Systems
82 4.4.3 Cost Classification and Cost Data
85 4.4.4 Costs of Other Mileage-Based Systems
85 4.5 Cost Estimates for Cordon Pricing Systems
86 4.6 Cost Estimates for Parking Pricing Systems
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88 Chapter 5 Cost Comparison Analysis
88 5.1 Unit Measurements for the Cost Comparison Analysis
88 5.2 Comparison Within Revenue Systems
89 5.2.1 Motor Fuel Taxes
89 5.2.2 Tolling
90 5.2.3 VMT Fees
90 5.2.4 Cordon and Parking Pricing
92 5.3 Comparison Between Revenue Systems
93 5.4 Sensitivity Analysis
93 5.4.1 Motor Fuel Taxes
95 5.4.2 Tolling
101 5.4.3 VMT Fees
104 5.4.4 Cordon Pricing
105 5.4.5 Parking Fees
106 Chapter 6 Conclusions
106 6.1 Overview of Existing and Alternative Revenue Generation
106 6.1.1 Motor Fuel Taxes
106 6.1.2 Tolling
107 6.1.3 VMT Fees
107 6.1.4 Cordon Pricing
107 6.1.5 Parking Pricing
107 6.2 Costs to Administer the Current and Alternative Revenue-Generation
Systems Examined in This Report
108 6.3 Policy Implications
109 6.4 Implementation Plan
109 6.4.1 Potential Impediments
110 References
114 Appendix A Oregon VMT Pay-at-the-Pump System Case Study
118 Appendix B Survey Questionnaire for Collecting
Fuel-TaxRelated Cost Data
121 Appendix C Parameter Data and Detailed Cost Estimates
125 Appendix D Acronyms
