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5NCHRP Report 377: Alternatives to Motor Fuel Taxes for Financing Surface Transportation Improvements and subse- quent studies have pointed out that continued improvements in fuel efficiency will likely diminish the effectiveness of motor fuel taxes as a method for financing highways. In addition, higher fuel prices, increased congestion, and telecommuting have resulted in shifting patterns of behavior, causing individ- uals to either travel less or switch to alternative modes. As a result of these trends, the motor fuel tax system faces uncer- tainties. Another factor affecting the motor fuel tax revenue system is that fuel tax rates have not been indexed for inflation or increased at the federal level since 1993. From 1993 to 2008, the purchasing power of the federal gasoline tax, which has remained at the fixed rate of 18.4 cents per gallon, has declined by 33%. Given these concerns, the challenge faced by transportation policy makers is how to expand revenue generation beyond the traditional reliance on motor fuel tax revenues. Thus, the implementation of innovative strategies to reduce congestion and generate alternative sources of revenues to finance infra- structure development and rehabilitation has become a top priority. The recent observable efforts have involved the mod- ification of existing pricing schemes of toll systems as well as the examination of potential financing sources for transporta- tion infrastructure. For example, some toll systems have begun to implement variable pricing schedules. There has also been increased emphasis on the development of high occupancy toll (HOT) lanes. Since 2001, an innovative approach has been undertaken by the State of Oregon, which has tested a usage- based fee system by charging fees for vehicle miles traveled (VMT) to complement motor fuel tax revenues. Although the initial tests on area pricing in multiple zones in the state were successful and encouraging, the requirements to install equipment in vehicles and gas stations make the implementa- tion costs high. Internationally, the United Kingdom and Singapore have implemented cordon/congestion (or area) pricing, which charges users that travel by car to central busi- ness districts (CBDs) during peak periods. The high costs of implementing cordon pricing pose a serious issue to policy makers. Although recent reports on the London cordon pric- ing program indicate that the program will generate excess revenues, the capital and operating costs have made this pro- gram more expensive than initially anticipated. In todayâs environment, it is in the publicâs best interest to look beyond existing revenue-generation systems and more closely examine the feasibility of alternative approaches. How- ever, there is no clear indication of which approach will suc- ceed in the long term. As a result, it is likely that transportation agencies will implement existing and innovative approaches in combination to maximize funding and achieve mobility and connectivity objectives in the near and medium term. In order to provide a better understanding of the potential implemen- tation costs, it is essential to analyze and compare collection, administrative, and compliance costs for existing and alter- native revenue-generation systems. 1.1 Research Objectives The objectives of this research are to (1) examine, com- pare, and present the administrative, collection, and compli- ance costs of usage-based revenue-generation systems, such as motor fuel taxes, tolls, and VMT fees; and (2) examine the potential feasibility of alternative revenue-generation systems that have been implemented on a pilot basis or are in the con- ceptual stage. In addressing these research objectives, this report presents a cost analysis relating to the administrative, collection, and enforcement costs for the following revenue systems used to finance road infrastructure: (1) motor fuel taxes, (2) tolling, (3) VMT fees, (4) cordon/congestion pricing, and (5) parking fees. It also provides a comparative analysis of these revenue collection systems and examines several technologies that show promise for enabling revenue-generation systems. Finally, this report also lays out the methodologies and data structure C H A P T E R 1 Introduction
for analyzing the costs of alternative revenue systems for transportation. 1.2 Report Audience The research results presented in this report provide infor- mation needed not only to promote a better understanding of the costs associated with each of the revenue-generation systems, but also to assist public- and private-sector decision makers and stakeholders in formulating policies. The pri- mary potential users of the research results, therefore, are the FHWA, state departments of transportation (DOTs), state departments of taxation/revenue, metropolitan planning organizations (MPOs), toll authorities, academia, energy providers, and consultants. 1.3 Report Structure This report is divided into six chapters, including this intro- duction. The remainder of this report is structured as follows: â¢ Chapter 2 presents an overview of the existing motor fuel tax system and a number of alternative revenue-generation systems. â¢ Chapter 3 examines several technologies that have the poten- tial to advance alternative revenue-generation systems for transportation. The selected technologies are the Intelli- Drive system, satellite-based and cellular-based fleet man- agement systems (FMSs), commercial vehicle information systems and networks (CVISN), and electric cars/smart charging software. â¢ Chapter 4 presents a cost accounting framework established for this study and then presents administration cost esti- mates for the five transportation revenue-generation sys- tems examined in this report. â¢ Chapter 5 defines unit measurements for the purpose of comparison within and among revenue-generation systems and uses them to examine costs between revenue systems. This chapter also presents the results of sensitivity analyses conducted on each revenue-generation system examined in this report. â¢ Chapter 6 presents study conclusions. In addition to the main body of the report, appendices pre- sent an overview of the Oregon VMT pay-at-the-pump system, a survey used to collect motor fuel tax-related administrative cost data, parameter data and detailed cost estimates, and a list of acronyms. 6