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42 F I NA NC I NG S U R FA C E TR A NSPOR TA TION IN T HE U NIT ED ST A T ES ing knowledge and opinions on transportation funding. unit was used but that they would still be significantly Fifty-one percent of the participants thought that the fuel higher than administering the fuel tax. The added costs tax should be increased, and 45 percent were in favor could only be justified if there were significant benefits of instigating a VMT fee. However, support for a VMT beyond revenue collection. Current GPS has imperfect in- fee dropped to only 26 percent if the technology used to location accuracy, especially in cities, but it will improve collect the mileage traveled involved Global Positioning as new GPS signals become available. The key issues System (GPS) satellites. are privacy concerns and the cost of the onboard units, which could be greatly reduced if they were installed in cars during the manufacturing process. Implementation Costs for a VMT System Jack Wells of the U.S. Department of Transportation (DOT) Transitioning to Mileage-Based User Fees: indicated that road user charges are perceived to have signif- An Assessment of Institutional Issues icant advantages over fuel taxes as a financing mechanism, but there are concerns about the high cost of collecting the Richard Baker reported on work that the Texas Transpor- fees. U.S. DOT has investigated the costs of administering tation Institute (TTI) has undertaken on the institutional a VMT fee by using video tolling technology, automatic issues associated with implementing a VMT fee in lieu of vehicle identification (AVI) transponder-based systems like the motor fuel tax. The research has involved the use of E-ZPass, GPS technology, and variations within those tech- focus groups to explore framework issues and arrive at nologies. The research found that different technologies a workable approach. Implementing a VMT fee would performed better depending on the application. involve navigating predevelopment issues including pro- There are strong economies of scale for systems of this gram goals, public acceptance, and definition of public size. For 10-mile corridors, GPS is the less costly solu- and private roles, as well as the challenges of developing a tion, with costs totaling 4 to 5 percent of revenues. AVI system architecture and administrative procedures. collection technology would require 16 to 25 percent of Mr. Baker stated that TTI's research has found that revenues, and video tolling would be the most expensive, the biggest challenges are the lack of public awareness requiring 33 to 50 percent of revenues. For a longer cor- of how transportation is funded, the role of the existing ridor of 1,000 miles, the costs would vary on the basis of motor fuel tax, and distrust of government. To imple- the number of exits and tolling locations. GPS and AVI ment the VMT fee, he believes that the public sector technologies would require 2 to 3 percent of revenues, should establish goals and standards for system opera- while video tolling would be more expensive at 3 to 5 per- tions and privacy. The private sector should develop the cent of revenues. The cost of collecting cordon pricing fees technology for the onboard unit, enforcement systems, was also investigated, but the findings were not expressed and data transmission systems as well as the data man- as a percentage of revenues. AVI and GPS technologies agement and billing platforms and any other value-added would both cost approximately $2.1 million per year for services to be offered in conjunction with the VMT fee. 10 entry or exit points. Operation of a similar video toll- According to Mr. Baker, policy goals need to be defined ing system would cost approximately $4 million per year. at the onset and will have an influence on technology U.S. DOT's research concluded that AVI and video choices. The primary program goal has to be revenue tolling technologies would be inappropriate for collect- generation and the ability to increase the revenue base. ing a national VMT tax. The only solution for this type Additional decisions will be needed concerning the pric- of application would use GPS technology, and the cost ing of various facilities, charges by vehicle type, and the of collecting the fees would be largely dependent on distribution of fees once they are collected. the type of onboard unit used. While transaction costs Three steps are involved in the assessment of the VMT would be low at 0.07 percent of revenues, capital costs fee. First, roadway use is determined by collecting odom- would be comparatively high, ranging from 7.9 percent eter data, speed information, and time and location of revenues if less costly onboard units were used to 33.2 information from the GPS. Then the data are processed percent if more expensive units were deployed. The less to determine the amount of the fee charged. Finally, the expensive units cost $195 each but introduce greater data are transmitted to the back office for billing pur- privacy concerns. These devices use mapping software poses. Important administrative issues also need to be with data off-loaded to a host computer and have higher finalized, such as whether the program will be voluntary data transmission costs. The more substantial units cost or mandatory, whether implementation will be immedi- approximately $650 each and generate fewer privacy ate or gradual, whether cash payments will be used, and concerns but require more complex mapping software. who will run the back office. The U.S. DOT study concluded that administrative Mr. Baker observed that the VMT fee would also costs would be feasible if the least expensive onboard introduce important equity issues. Would rural drivers