RUC
INSIGHTS

How Road User Charging Can Advance Long-Term Transportation Funding

Transportation leaders can effectively incorporate RUC through transparency, appropriate policies and proactive planning

By Mike Warren and Kary Witt | HNTB

As the revenue generated from America’s state and federal fuel taxes declines, transportation agencies are seeking alternative sources to fund infrastructure projects. An increase in electric vehicle adoption, the increased fuel efficiency of gas-powered vehicles, inflation and the growing needs of an aging highway system have combined to increase the urgency to identify and evaluate new funding sources.

Road user charging (RUC)—drivers paying for transportation based on the number of miles they travel rather than on the number of gallons of gas they buy—offers a potential solution. Sometimes called vehicle miles traveled, mileage-based user fees or pay-per-mile, this approach could provide sustainable funding for capital construction, maintenance, safety improvements and long-term rehabilitation. According to a recent HNTB America THINKS survey, over sixty percent of those polled supported this approach, indicating they believe the fairest way to fund road maintenance and improvements should be based on the number of miles driven or the type of vehicle they drive.

Seventeen states have completed RUC pilots, and several others have feasibility studies underway. These RUC pilots have provided valuable information that can be used to address misperceptions about implementation and enhance understanding of RUC’s potential benefits.  Four states have evolved beyond pilots and launched legislatively authorized RUC programs, with several more being considered in the coming years.

Understanding RUC

As states explore RUC, a better understanding of the role privacy, fairness and administrative costs each play is needed prior to adoption. This understanding can be effectively addressed through transparency, policies and proactive planning.

1. Privacy

In a RUC program, it is essential for user data to remain private and be completely safeguarded.

At the beginning of RUC pilot programs, participants want to know what data is being collected; how their data will be used and who will have access to it.   They also want assurances that their data will be safeguarded and not used for other purposes.

Through policy, states can establish how much or how little mileage information is collected. They can also decide how RUC fees are assessed using that data. The technology companies managing RUC programs, called account managers, can offer choices in how participants report their mileage ranging from no-tech (odometer reading or photo upload) all the way to using in-vehicle telematics systems to report the number of miles driven. These technologies can even report if any of these miles should be exempt (i.e. traveling out of state or on private lands). These account managers and their RUC systems are also held to the same National Institute of Standards and Technology standards the financial services industry follows. This includes safeguards that prevent sharing personally identifiable information collected on participating drivers.

Complete transparency is needed so motorists feel comfortable with how their information is being handled. States can craft participant agreements that clarify what information will be collected and who can access it. For instance, Oklahoma built trust with participants by addressing privacy concerns in its frequently asked questions, telling participants what mileage data would be collected, who would have access to it and what it would be used for. They also assured participants that all collected data would be destroyed at the end of the pilot.

2. Fairness

RUC can be deployed fairly to ensure impacts do not fall disproportionately on some communities and rural households, while making sure that all motorists pay their fair share for use of the same road. Pricing studies designed with fairness goals in mind can guide policymakers on how to ensure that these communities pay no more, or even less than they do under the current gas tax model.

RUC studies present an opportunity for states to establish policies that are fair to all drivers. To identify an appropriate fee structure for its pilot program, California for example, used data from a household travel survey as a basis for exploring discounted per-mile rates based on geography and income.

States considering RUC can define what fairness looks like for the populations they serve and tailor their policies accordingly. Legislators, departments of finance and revenue, academia and other stakeholders can be included in discussions of fair options and feasibilities and help evaluate the potential impacts of the policy decisions being considered.

3. Financial and Administrative Planning

Long-term financial and administrative planning is essential to ensure a sustainable RUC program. While there are upfront costs when establishing a program, as the volume of RUC participants increases, per-motorist and fixed administrative costs can decrease. States can reduce capital and operational costs by bundling RUC administration with other revenue mechanisms such as tolling authorities, transit or even utility services, where staff, technology and account management mechanisms are already in place to support usage-based transactions. These organizations often have payment processes in place, which can help ease the path to adoption.

States also can consider partnering with retail outlets to offer value-added conveniences for drivers—for example, allowing people to pay their RUC invoices when they pay their monthly mobile phone bills. Easing the process for the end-user can help foster and retain support in engaging with these programs.

Legislative champions, state revenue agencies and departments of motor vehicles are essential partners in the administrative success of RUC projects. Legislative champions advocate for the necessary policy changes and funding allocations, ensuring that RUC initiatives receive the legislative support they need to move forward. Revenue agencies play a pivotal role in transitioning from traditional fuel taxes to RUC systems, managing the financial aspects, conducting financial audits and ensuring a smooth shift in revenue collection methods. Departments of motor vehicles are crucial for integrating RUC systems with existing vehicle registration and licensing processes, providing a seamless experience for users. Together, these partners facilitate the implementation, operation and public acceptance of RUC projects, ultimately contributing to their long-term success and sustainability.

Moving forward

RUC presents a promising alternative to sustainably fund transportation infrastructure. By addressing privacy concerns, ensuring the implementation of a fair system, and planning for financial and administrative efficiency, agencies can create a transparent system that meets the evolving needs of modern transportation. While no one model will solve long-term funding issues on its own, it is vital to collaborate with the public to identify funding mechanisms that ensure efficient, well-maintained transportation systems. RUC can be a key component of the solution.

ABOUT THE AUTHORS

Mike Warren
National Practice Consultant
HNTB Corporation

Mike Warren is a national practice consultant at HNTB. He brings over 24 years of experience in RUC, emerging mobility, connected and automated vehicles, smart infrastructure and innovative funding. Before joining HNTB, Warren was instrumental in advancing road user charging initiatives across the United States, including the initial Oregon RUC Pilot Project, which led to the OReGO program, and pilot projects for California, Colorado, Minnesota, Wyoming and the RUC America multistate coalition.

Contact him at [email protected].

 

Kary Witt, PE
National Toll and Road Use Charge Practice Leader
HNTB Corporation

Kary Witt is a National Toll and Road Use Charging Practice Leader for HNTB. Backed by more than 30 years of diverse industry experience, Witt’s expertise includes helping clients across the country with financing, planning, operating, building and maintaining toll programs and facilities. Witt was the project manager for Oklahoma’s Fair Miles Oklahoma Pay-Per-Mile Pilot, a unique and highly successful pilot that explored how RUC could serve as a gas-tax replacement, and how it impacts rural and tribal communities.

Contact him at [email protected].