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31 BREAKOUT SESSION 3 Aligning Transportation Funding with Climate Change Strategies and Sustainable Planning How Can It Be Done? Asha Weinstein Agrawal, Mineta Transportation Institute (Moderator) David L. Greene, Oak Ridge National Laboratory Astrid Glynn, TPRG Kendra Breiland, Fehr and Peers Sarah McMillan Ross, South Coast British Columbia Transportation Authority Peter Mills, Perrin, Thorau & Associates WHat iS greener tHan a veHicle mileS traveled tax? David L. Greene of the Oak Ridge National Laboratory discussed an indexed energy user fee as an improvement over the current motor fuel tax. It would help to make the transportation sector more sustainable from the view- point of energy and climate change. The political feasi- bility of implementing a vehicle miles traveled (VMT) tax remains challenging, and the outcome is uncertain. Inflation, fuel economy improvement, and increased use of alternative fuels and transit threaten the amount of revenue for road finance generated by the motor fuel tax. Use of motor fuel excise tax revenues for funding transit and subsidizing ethanol has eroded highway reve- nues to a lesser degree. Fuel economy improvements due to increased corporate average fuel economy standards and higher oil prices further the disconnect between VMT and fuel use, and future improvements will widen this gap. While a VMT tax would link the distance traveled with vehicle use, a user fee on energy would be greener. The energy fee has an equivalent effect on vehicle use but promotes energy efficiency and encourages motorists to purchase more energy-efficient vehicles. This can be con- sidered an indexed roadway user toll on energy. To remain effective, an energy tax would need to be levied on all energy used to propel vehicles (electricity, biofuels, compressed natural gas, etc.), and it would need to be indexed to energy efficiency and inflation. Fleet fuel economy is easily predicted, and the average energy efficiency of highway vehicles allows a calculation to be made from available information in a relatively straight- forward manner. Mr. Greene stated that the energy tax could have four to five times more impact on greenhouse gas emissions than a VMT tax, since drivers pay more attention to fuel economy when prices are high. On the basis of todayâs conditions, the energy tax would save approximately 50 million tons of carbon dioxide per year nationwide com- pared with a VMT tax. By itself, the energy tax would be ineffective in reduc- ing traffic congestion, but it could be combined with other measures including automated tolling to achieve that end. Similarly, it does not reflect environmental and congestion burdens created by trucks, but this could be addressed by implementing universal road pricing for heavy vehicles. Even with the energy tax, Mr. Greene noted, carbon would still need to be priced and emission standards enforced. The energy tax would be practical, reliable, and pre- dictable and would have a low implementation cost. It would generate important environmental benefits, accus- tom motorists to paying by the mile, and really function as an enhanced version of a VMT tax. Question: How would electricity use on the road be taxed? Answer: Electric vehicles will remain a small seg- ment for the vehicle fleet for a while, but the fee would be assessed on the utility company that generated the power. Eventually, there will have to be a smart grid.
32 FINANCING SURFACE TRANSPORTATION IN THE UNITED STATES funding tranSPortation imProvementS for climate cHange: SHared SuPPort or Zero-Sum game Astrid Glynn of TPRG discussed the conundrum that the transportation and climate change legislative agen- das tend to be at odds with one another. The federal transportation authorization bill is overdue and intended to reinvent highway, transit, and rail programs and to fix the Highway Trust Fund, which is running on empty. The climate change bill lays plans for new fuel infrastruc- ture for transportation, allocates some funds to transpor- tation, and establishes goals for transportation emission reductions. But there is tension between the policy and pragmatic goals of traditional transportation funding, and climate change and the transportation system will not change without massive amounts of new money. She stated that there are strategic choices as reautho- rization approaches with regard to a proposed climate change bill that can build and maintain a transporta- tion system to support the shared goal of sustainable mobility. Cross-modal choices can help inhibit the effects of traditional modal silos. The traditional fund- ing approach has inhibited our ability to pick the âbestâ option to fulfill a mobility need. Forty percent of metro- politan trips that are made by car do not need to be, and this figure should be reduced. More freight and people should move on rail for trips exceeding 500 miles, and broader costâbenefit analysis should be incorporated into our funding decisions. At the same time, Ms. Glynn added, communities should be reshaped to reduce sprawl and dependency on automobiles. We also need to use new revenue options that promote environmentally friendly and sustainable outcomes such as parking taxes and fees and dedicated local âgreenâ taxes, and we need to seize opportuni- ties to match and leverage federal livable communities grants. Rights-of-way should be used to generate green energy through wind farms and solar panels, regenera- tive braking systems with storage capacity, living snow fences, recycled bridges, and LED lighting and traffic signals. Ms. Glynn suggested that to create a transportation system that will be both financially and environmentally sustainable, the United States needs to begin the tran- sition away from todayâs fuel and funding system and to bring energy policy and transportation funding into accord. Furthermore, the nation needs to invest new funds in cross-modal choices that align with policy goals and address mobility needs, and it needs to acknowledge that traditional funding will not suffice for the system to provide nonautomobile alternatives. Ms. Glynn believes that these actions will help harmonize transportation and energy policy and will generate both revenue and positive environmental and climate impacts. Question: How can bus transit be made more attractive for livable communities? Answer: One way to do that is integrating service into a complete bus system. Question: How did New York State dedicate regional greenhouse gas initiative cap-and-trade revenue to the transportation sector? Answer: Allocations were made following recommen- dations by the New York State Energy Office concerning elements that have some connection to the electric sys- tem, such as subways and traffic light LEDs. financing a SuStainaBle future: aligning tranSPortation finance metHodS WitH climate cHange Policy Kendra Breiland of Fehr and Peers discussed how trans- portation financing methods can be aligned with climate change policy. Many states have passed greenhouse gas reduction targets. Washington State law now requires greenhouse gas emissions to be equivalent to 1990 levels by 2020, 25 percent below 1990 levels by 2035, and 50 percent below 1990 levels by 2050. At 47 percent, the transportation sector is the larg- est source of greenhouse gases in Washington State. It is followed by power generation and buildings of all types, both of which generate 20 percent of the stateâs green- house gas emissions. Farming, industrial processing, and waste generate between 3 and 6 percent of the stateâs emissions. Managing transportation emissions is a four- legged stool involving VMT reduction, transportation system operations, vehicle efficiency and fuel technol- ogy, and the carbon content of fuel. Washington State is concentrating on reducing average daily VMT from 27 miles in 2020 to 13.5 miles in 2050, but this will have a negative impact on transportation funding, which is largely derived from gasoline taxes. Ms. Breiland believes that the United States will need revenue enhancements, including increased taxes on fuels and tolling, with the ultimate vision of migrating to a VMT tax. Land useâ based utility fees with properties in lower-density areas paying a higher rate can also be tried. Revenue alterna- tives should be implemented in an integrated approach. fee to fund tranSPortation imProvementS and reduce greenHouSe gaS emiSSionS Sarah McMillan Ross of the South Coast British Colum- bia Transportation Authority and Peter Mills of Perrin, Thorau & Associates discussed the possible use of a fee to fund transportation and reduce carbon dioxide emis- sions in Vancouver, British Columbia. TransLink, the
33ALIGNING WITH CLIMATE CHANGE STRATEGIES AND SUSTAINABLE PLANNING local transportation authority, has the power to levy taxes. The Vancouver region updates its long-range (30- year) plan every 5 years. The current goal is to reduce nonhighway trips by 50 percent, but this is without the benefit of a motor vehicle fee. The region also updates its 10-year fully funded plan on an annual basis and needs $150 million per year to maintain its current infrastruc- ture system without significant expansion. To upgrade the current system, the region needs to invest $275 mil- lion per year, and to expand it, $450 million per year would be required. Currently, the regionâs $2.00 per gallon motor fuel tax is its primary source of transportation funding. The region is examining a variety of revenue options for their ability both to generate new funding and to sup- port greenhouse gas reductions. The goal of the Brit- ish Columbia Climate Change Action Plan is to reduce greenhouse gas emissions by 33 percent by 2020; cap- and-trade will be the primary tool in achieving this reduction. The province is also exploring the feasibility of a new vehicle registration fee. It believes that it can make this option palatable to the public by showing tan- gible benefits that the option would facilitate. Elected officials have a range of more or less palat- able options in front of them. The province believes that vehicle registration is an efficient and moderately equi- table source of revenue. At the same time there is little tolerance for added burdens outside transportation such as property taxes. British Columbia is not wedded to pay-as-you-drive but does want the ability to adapt to the added costs and recognizes the virtue of including the costs of carbon dioxide emissions. Question: How will the province generate electricity in the future? Answer: The electricity sector has to be decarbonized. It is the largest source of greenhouse gas emissions. Question: Does a vehicle fee make a car more likely to be used since cost is already incurred? Answer: A flat fee just raises annual costs, but link- ing it to efficiency will make a difference when vehicles are replaced. Not many people will give up driving alto- gether. Question: Has Washington State considered needs reduc- tion through asset management? Answer: Not yet, but Washington should look at how to reduce needs as well. Question: Will linking and indexing the gasoline tax affect greenhouse gas emissions? Answer: Yes. Comment: Many of the strategies discussed today do not address rural areas. Comment: Value capture is not necessarily the same as tax increment financing where the beneficiary pays rather than the user.
