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OCR for page 108
108 The fuel tax system is the most cost-effective revenue system system, with the cost estimate for the Dutch system rang- among those examined and has the lowest operating cost for ing from 785 to 7140 ($106 to $175). While the technology all unit measurements. The operating cost for fuel taxes is costs are significant with these alternative revenue-genera- only approximately 1% of tax revenue and averages approx- tion systems, there is widespread expectation that technol- imately $1.20 per vehicle to operate and manage. ogy costs will continue to decline. Most of the companies Although the annual operating cost may reach $75 per vehi- responding with cost estimates for the Dutch VMT system cle, the cost for the proposed VMT system in the Nether- projected lower cost per unit at future times due to techno- lands is still reasonable when measured by the share of cost logical advances. to revenue, which is approximately 7%. It would be a larger Privacy and security measures are also key considerations share of typical revenues in the United States. Further, the for the alternative revenue-generation systems that require capital cost would be quite high if the system must be the tracking of vehicles and establishment/monitoring of installed for the collection of VMT fees. accounts for the purpose of revenue collection. The failure Although it may cost only $0.54 per transaction to operate of such systems would result in additional costs and other and maintain the tolling systems, tolling agencies spent consequences. nearly 33.5% of revenues for toll collection, administra- The technology selected for revenue collection will generate tion, and enforcement activities in 2007. Among the sys- different user perceptions, depending on the use of data col- tems examined for this study, the operating costs for tolling lected, privacy concerns, costs to the user, and the relative and cordon pricing are comparable at 33.5% and 38.7%, invasiveness of the technology used. This can have both a respectively. revenue and cost impact. The costs to operate the Westminster parking pricing system Administrative, collection, and enforcement cost estimates are 56.6% of total revenue. Thus, of the five revenue systems for existing systems are subject to great uncertainty, so the explored in this report, parking pricing was the most expen- estimates for proposed systems will be even more open to sive to operate based on the very limited data collected. debate. While the Dutch cost estimates included a 15% con- For VMT fee systems, the biggest spending item is adminis- tingency allowance, cost overruns for many projects far tration cost, which may reach 3.4% of revenue. Compara- exceed this amount. tively, collection and enforcement costs for maintaining a While technology advancement requires capital expen- VMT fee system are relative small. They may be near or less ditures, these investments often lower administrative and than 1% of revenue. Collection costs for tolling systems are operations costs over the long-term. For example, there are much larger than administration and enforcement costs. a number of facilities that have implemented AETC systems, The evidence from the tolling agencies examined indicates including the 183A (Austin, Texas), the 407 ETR, and the that approximately 20% of revenue may be spent on collect- recently converted E-470 (Denver) and President George ing tolls. Bush Turnpike (Dallas). In contrast, other toll agencies are still transitioning from cash collection to electronic tolling. For these agencies, technology costs are a function of the 6.3 Policy Implications implementation rate, the use of off-the-shelf technologies This report examines the administrative, collection, and versus customized products, and the amount of time the enforcement costs associated with several alternative revenue- technology being implemented has been on the market. Pol- generation systems. This section explores the policy implica- icy analysts should consider the long-term financial impli- tions of these findings and identifies a number of considerations cations of alternative investments in new technologies prior that policy makers should take into account when implement- to making them. ing revenue-generation systems: There are trade-offs between the costs of enhanced enforce- ment and increased collections through reduced evasion. A good accounting system is necessary to accurately separate For example, enhanced motor fuel tax enforcement efforts out administrative, collection, and enforcement costs. A bet- have been found to net positive returns on investment. ter understanding of the cost of each activity can permit a FHWA reported that it receives $10 to $20 for each dollar more accurate assessment of efficiency and efficacy with and spent on audits and criminal prosecutions (FHWA, 1999), across revenue-generation systems. and a state-level study estimated that diesel tax revenues The technology selected for revenue collection strongly were enhanced at the rate of $321 per auditing hour (CSG & affects collection and enforcement costs, and the cost of CGPA, 1996). each alternative revenue-generation system depends to The administrative, collection, and enforcement costs pre- some extent on the cost of the technology required to imple- sented in this report vary significantly between facilities and ment it. For example, the OBU will be a major cost of a VMT jurisdictions. When implementing revenue-generation