What’s most important, what can we live with
- June 8, 2021
- Posted by: Joe Milazzo II
- Category: Blog
In light of this week’s legislative committee on highway funding, and in true “let’s get moving” fashion, I decided to accelerate our weekly Thursday’ Thoughts at 3 blog to Tuesday.
Yesterday I had the opportunity to represent the regional business community at the NC TEN Commission at the General Assembly. Kudos to NC Senator Vickie Sawyer for organizing the entire event.
I participated in the “Registration/User Fees Working Group”, where I spoke of both the potential and the limitations of an “access user fee”. We also discussed other potential options including a hybrid fee and an increased electric vehicle fee — which are simply targeted access fees — along with a possible vehicle miles traveled (VMT) fee, which would be a travel-based revenue measure, similar to the motor fuels tax we have today. We also discussed retaining the motor fuels tax for an indefinite period of time.
Each of the partners in my working group were thoughtful, passionate, knowledgeable, and caring about the future of the state. There was no consensus that emerged, other than giving consumers a choice among options would make any solution or package of solutions more palatable.
We are honest brokers at your neighborhood RTA, so I included several of the reasons not to do an access fee — or at least its inherent limitations — in an example one pager I distributed to the group (available here).
To be clear, when it comes to policy choices, there is rarely a “correct” answer — it comes down to what you want, what your top goals are, and what you can live with.
When it comes to modernizing transportation, RTA’s overall objective is that we want sufficient, predictable, and steadily growing revenue for NCDOT to ensure successful statewide transportation investments over time.
This predictability and stability will reduce risk — and this will require program or revenue resilience due to foreseen or unforeseen disruptions. Those could be changes in vehicle mix, propulsion technology, overall travel, economy/pandemic, etc.
Of course, we want a program that is fair and acceptable. Because it’s the right thing to do — and because the program won’t be implemented if it’s not acceptable.
One way an access fee conveys acceptability and fairness is the fact that all vehicles would pay the same access fee, regardless of vehicle type, fuel type, or how far they drive. And that that number is known and predicable for the consumer.
Another way an access fee with a standard price conveys fairness is that it costs NCDOT money to make the network available, regardless of how much you drive, or whether or not you drive at all in a given month. This consistent monthly pricing is analogous to a mobile phone plan.
Several of my work group colleagues had issues with the access fee concept, which were reasonable — a primary one being that the access fee would not vary by mileage, and that not being dependent on travel seemed unfair to them — i.e., those who drive more, should pay more.
Are they “right”? Are we “right”? There is no “right.”
It is clear that varying by mileage makes intuitive sense, and is generally analogous to what happens with fuel taxes today. So there is a clear familiarity with that framework, and you can avoid paying more fees if you are able to drive less.
However, it is also clear that varying by mileage means that consumers will typically receive varying bills from month to month — which may be challenging from a personal budgeting standpoint, particularly as people will be paying their VMT fees in arrears. As well, those who do have to travel longer distances for work, health care, etc. will absolutely pay more — even if they never travel in congestion, and thus even if they never give rise to additional costs to NCDOT in terms of pavement width (lanes) or thickness.
In addition, varying mileage and the resultant varying fees would make it harder for NCDOT to predict their revenue — and that revenue will absolutely fall the next time we have a pandemic or other economic downturn. That is where the simplicity and predictability of an access fee obviously shines, and this is a primary reason we have and continue to support it — we want consistent, effective delivery of multimodal projects in our region and state.
One way to help with the acceptability of an access fee could be to provide a rebate for very low mileage vehicles (e.g., those that are driven less than 20% of the average, or around 3,000 miles per year). This may assist with both the financial transition and the change in conceptual framework to an access fee.
Going back to the beginning of the post — while any change in revenue model will likely be challenging at some level, if you give consumers a choice, you may reduce some resistance. My understanding is that Oregon’s pilot revenue program does this.
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RTA will continue to elevate a vehicle registration-based access user fee approach to modernize state highway funding, and we will support any framework to modernize funding that is fair, acceptable, effective, and resilient.
As a practical matter — and in light of the title of this blog — this means we will continue to support the access fee, and we will support any modification of an access fee-based program necessary for support, acceptability, and passage — as long as it accomplishes our goal of sufficient, steady and resilient revenue for transportation. The core policy question will be whether the administrative cost and foregone revenue of providing multiple choices beyond a simple, broad-based access fee approach can be made low enough that the overall goal of sufficient, steady revenue can be achieved.
Let’s get moving,
Joe Milazzo II, PE
Executive Director, Regional Transportation Alliance
RTA is the voice of the regional business community on transportation in the Research Triangle area.
RTA represents more than 100 leading businesses and 25 member chambers of commerce in central and eastern North Carolina.