State Road User Charge Toolkit

3/23/2021

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Introduction

Since the early 2000s, states have been at the forefront of discussions to explore possible replacements for the motor fuel tax (MFT). States are heavily reliant on MFT revenue as a source for transportation funds. According to the National Association of State Budget Officers’ 2019 State Expenditure Report, “Motor fuel taxes represented the largest revenue source for transportation funds at 39.8%.”

Motor fuel tax receipts are projected to decline as vehicles become more fuel-efficient and the surge of new electric vehicles continues to spark interest among buyers. Given these two major pressures on the MFT, states have begun to actively study, explore and pilot road user charge (RUC) systems as the most likely long-term replacement for declining MFT revenue. Also known as Vehicle Miles Traveled (VMT) or Mileage-Based User Fees (MBUF), these efforts have been supported by the federal government via the Surface Transportation System Funding Alternatives (STSFA) grant program.

Twelve state and regional pilots have received federal grants to explore alternative funding mechanisms such as road usage charges. NCSL is collaborating with the Federal Highway Administration to provide legislatures, states and other transportation stakeholders with insight into what states have achieved so far. Fact sheets are being developed for each state and an in-person meeting will be convened later in the project to bring RUC stakeholders together.

Missouri state flag.Road User Charge Fact Sheet: Missouri

State: Missouri | Publication Date: Oct. 30, 2020.

History

 Missouri’s Department of Transportation (MoDOT) received three grant awards over three years totaling $4.8 million from the federal Surface Transportation System Funding Alternatives (STSFA) program. These grants enabled MoDOT to study an alternative revenue mechanism designed to address payment inequities in the state’s fuel tax structure. Specifically, MoDOT designed a proposed miles per gallon (mpg)-based registration fee to replace its current registration fee structure, along with a financial model assessing the potential impacts of such a transition, and a platform for a full-scale implementation strategy with Missouri’s Department of Revenue (MoDOR).

STSFA Awards

Federal Fiscal Year

Grant Amount

Description

2016

$250,000

 Study a new annual registration fee schedule based on estimated mpg and determine concept feasibility.

2017

$2,772,000

Conduct public outreach on concerns related to equity and data security issues.

2018

$1,782,000

Deploy innovative strategies such as annual vehicle registration fees varying by vehicle fuel economy along with other user-based charges.

Legislative Activity

In 2017, Missouri’s General Assembly adopted HCR 47, which established the “21st Century Missouri Transportation System Task Force.” This task force was a 23-member bipartisan panel consisting of participants from the private sector and legislative and executive branches.  A report was published in 2018 “with recommendations regarding the state transportation system and the funding of that system.” One recommendation called for legislative changes to approve a new annual registration fee structure based on a vehicle’s mpg instead of a vehicle’s taxable horsepower.

According to MoDOT, legislation is required to implement an mpg-based registration fee structure. The Missouri General Assembly has considered five pieces of legislation over three years that would have implemented the proposed revenue mechanism supported by MoDOT. However, none of these bills had been enacted as of October 2020.

In 2018, HB 2600 would have established a base vehicle registration fee totaling $29 for all vehicles with an Environmental Protection Agency (EPA) fuel economy under 30 mpg. Vehicles achieving an EPA fuel economy of at least 30 mpg would have paid an incremental fee per mpg, an amount set by administrative rule. This bill was referred to the House Transportation Committee but did not advance beyond that point.

In 2019, HB 500 and SB 201 would have replaced the current registration fee structure with one based on the combined city and highway mpg rating using the fuel economy label by the EPA or a rating obtained using vehicle identification numbers. The House Transportation Committee held a hearing in Feb. 2019 but did not advance the proposal beyond that point. The Senate Transportation, Infrastructure and Public Safety (TIPS) Committee voted its bill out of committee in Feb. 2019, but it was not subsequently considered by the full Senate. The new base annual registration fee would have been $24 and, for each additional mile per gallon over 29 mpg and up to 60 mpg, the fee would have increased by $6. Plug-in hybrid and electric vehicles would have been subject to an mpg-based annual registration fee totaling up to $204.

In 2020, HB 2301 and SB 906 also would have replaced the horsepower-based registration fee structure with one using mpg ratings and set annual fees based on such ratings.  The House version was referred to the Transportation Committee but did not receive a hearing. The Senate TIPS Committee held a hearing in March 2020 on its version, but the proposal was not advanced beyond that point.  Vehicles with an mpg of 19 or less would have paid $25, 20 mpg to 29 mpg would have paid $32, 30 mpg to 39 mpg would have paid $39, 40 mpg to 49 mpg would have paid $46, 50 mpg to 59 mpg would have paid $53 and 60 mpg or more would have paid $75. Additionally, plug-in hybrid and electric vehicles would have been subject to fees of $112.50 and $125, respectively.

Project Details

Missouri’s registration fee is currently based on a vehicle’s taxable horsepower, a calculation determined by a vehicle’s cylinder dimensions. MoDOT studied the feasibility of transitioning its registration fee structure from taxable horsepower to a vehicle’s combined mpg rating. An operational framework was developed to implement the amended structure. The proposed revenue mechanism is not meant to replace current fuel taxes and is also not a per-mile charge based on road usage. Additionally, a technical memorandum was produced to identify each passenger vehicle with the appropriate EPA fuel economy rating. The project found that “by charging vehicle licensing fees, the state would be able to maintain the Highway Trust Fund revenue stream while simultaneously addressing the existing payment inequity between high and low-efficiency vehicles. Specifically, low-efficiency vehicles would be charged a smaller registration fee than high-efficiency vehicles, as lower efficiency vehicles carry a larger motor fuel tax burden.”

Project Status

MoDOT completed pre-deployment activities on Aug. 15, 2018. These activities involved testing the feasibility of transitioning to a fee schedule based on the combined mpg rating of vehicles and coordinating with MoDOR to develop a full-scale implementation strategy to replace the existing registration fee structure. Since then, MoDOT has worked with the General Assembly regarding alternative funding mechanisms for transportation infrastructure. This has included an outreach campaign to lawmakers about the need for alternative funding, as well as new technologies. A State Innovation Forum was also organized in which stakeholders presented their ideas on possible solutions to transportation funding problems.

MoDOT’s phase two STSFA award provided $2.7 million to investigate attributable revenues in rural and urban areas. Furthermore, MoDOT received a third STSFA award of nearly $1.8 million in federal fiscal year 2018 to design and implement mpg-based registration fees. According to MoDOT, two studies were conducted. One study sought to understand highway use on a per-year, per-mile and per-driver basis to determine highway impacts and the fees paid by non-gasoline and non-diesel vehicles. This study concluded in September 2019 and its results will support a policy that benchmarks mpg-based registration fees according to highway use and the amount of fees presently paid into the highway system.

The other study explored fees paid by rural and urban drivers under a potential mpg-based registration fee structure while addressing commuting patterns and vehicle types. This study concluded in June 2019, with results indicating that rural drivers are effectively subsidizing urban drivers. MoDOT notes its primary project goals from the studies were twofold. First, MoDOT seeks to “generate revenues consistent with technological trends in the motor vehicle market,” and second, MoDOT is committed to “ensure privacy and security for drivers while using current adaptable technologies to collect and administer the fee.” 

Additional Resources

Washington state flag.Road User Charge Fact Sheet: Washington

State: Washington | Publication Date: Dec. 15, 2020

History

The Washington State Transportation Commission (WSTC), in partnership with the Washington State Department of Transportation (WSDOT), has received three grant awards totaling approximately $14 million over three years under the federal Surface Transportation System Funding Alternatives (STSFA) program. The WSTC is a seven-member body of citizens appointed by the governor for six-year terms and has been the convener of discussions on-road usage charge (RUC) activities. One of WSTC’s roles is to conduct studies and projects for the Washington Legislature.

State allocated funds enabled Washington to conduct early studies of a RUC program beginning in 2012 following the passage of state legislation. In 2015, WSTC was awarded federal grants from the FHWA Value Pricing Pilot Program to further explore RUC. In 2016, the WSTC received funding under the STSFA program to design and develop a RUC prototype system. In 2017, WSTC received a second STSFA grant to complete an operational 12-month RUC pilot, collect data, evaluate the performance of the pilot system and prepare a final report and recommendations for a future RUC system.

STSFA Awards 

Fiscal Year

Grant Amount

Description

2016

$3,847,000

Test and evaluate an RUC system as a replacement to the gas tax; conduct the first international interoperability test of a RUC system between the U.S. and Canada; conduct the first test of interoperability between two states (Washington and Oregon) where actual RUC payments from drivers were collected, transacted, and reconciled between the two states using the first-ever “HUB” clearinghouse approach; explore opportunities to leverage the capabilities of third-party enterprises to reduce mileage reporting costs; developed and tested an owner-controlled smartphone app to accurately report out-of-state mileage and control when GPS was turned on or off.

2017

$4,600,000

Carry out and evaluate a 12-month pilot that tests five concepts of mileage reporting to collect feedback from users regarding methods for assessing user fees, and to collaborate with other states to test and develop organizational and operational capabilities for implementing a RUC program.

2019

$5,525,000

Explore six tasks designed to probe and address implementation challenges discovered during the recently completed RUC Assessment and Pilot Project. Research topics will include an assessment of equity impacts and mitigation options; modeling the impacts of future mobility models including increased ride-share, telework, etc., and assessing new mileage collection methods.

Legislative Activity

In 2012, Washington’s Legislature enacted HB 2190, which made a biennial $775,000 appropriation to study the feasibility of transitioning from the gas tax to a RUC system. The law directed WSTC to convene a steering committee to provide direction and guidance on road user assessments and transitioning to an RUC system. The RUC steering committee included members from the trucking industry, environmental groups, localities, public transportation, technology industry and the motoring public.

The legislature made a biennial $450,000 appropriation in 2014, SB 6001 (enacted), to develop a work plan and concept of operations. The same budget also directed WSTC to conduct a detailed financial analysis and to seek federal funding for a statewide pilot project. The analysis covered moving away from the gas tax, while introducing a RUC on a portion of vehicles and using the gas tax in the interim as a pre-payment mechanism to reduce collection costs and evasion. It also addressed setting RUC rates fairly for out-of-state drivers. 

In 2018, SB 6106 (enacted) required periodic reporting on the RUC pilot to the RUC steering committee. HB 1160 of 2019 (enacted) required a final report on the RUC pilot by January 2020. The law also directed WSTC to continue researching the impacts of RUC on low-income households, vulnerable populations and displaced communities. WSTC was further directed to seek federal funds, update recommended RUC operational concepts and business cases and develop a detailed plan for phasing in RUC.

Project Details

In July 2018, WSTC initiated a pilot project to test an operational RUC program using a flat per-mile rate, derived from taking the state’s average vehicle mpg of 20.5 and dividing it by the state gas tax of 49.4 cents per gallon. Specifically, the RUC pilot offered five mileage reporting options, with each option using electronic invoicing for drivers: 

Automated distance charge, which is calculated using one of these methods:

  • A mileage permit, which is a permit issued when a driver pays a flat fee upfront for a block of miles such as 1,000, 5,000 or 10,000. Drivers report odometer readings electronically via photo or in-person every three months and purchase additional permits as needed.
  • Vehicle odometer readings, a post-pay approach where drivers drove for three months and then submitted odometer readings electronically via photo or in-person with support from a vehicle licensing office. 
  • Automated distance charge, which is calculated using one of these methods:
    • A plug-in telematics device with GPS.
    • A plug-in telematics device without GPS. 
    • A smartphone app to record and report mileage, which allowed users to decide whether to enable location-based services. 

STSFA grants funded the final design, recruitment and implementation of the 12-month RUC pilot, as well as surveying pilot participants, conducting focus groups around the state and evaluation planning. The grants also funded a smartphone innovation challenge that used a crowdsourcing approach at the University of Washington to build a beta smartphone app designed for the RUC pilot. The RUC pilot tested a theoretical 2.4 cents per mile charge for light-duty, non-commercial vehicles such as gasoline-fueled, hybrid and electric vehicles. More than 5,000 drivers volunteered for the RUC pilot, with 2,000 vehicles ultimately selected to participate. Participants represented diverse geographic and demographic groups across the state. There were no financial transactions for the RUC pilot and participants received mock invoices throughout its duration. The pilot ended in January 2019.

Project Status

Washington completed all of the activities funded by STSFA Phase I grants. These activities included a 12-month RUC pilot with 2,000 participants, as well as participant surveys, focus groups, agency interviews and case studies. A concept of operations was produced for the pilot. This explored RUC operational concepts including a mileage permit, self-reporting and automated distance charging, tested whether there was a business case and identified implementation issues such as privacy, data security and enforcement. This also involved RUC steering committee-facilitated discussions on policy, public acceptance and technical issues. After studying RUC over several years, the RUC steering committee and WSTC determined that a RUC system was feasible and could out-produce the gas tax long-term to fund transportation needs. 

The pilot prototyped a RUC system that closely modeled a full-scale system and the results informed next steps for an operational RUC system using a phased-in approach. One element was designing a system that could still collect gas taxes yet ensured drivers were not subject to both. Thus, drivers were credited for gas taxes paid at the pump, which then reduced the amount of RUC charges due. 

A second element was studying out-of-state driving patterns to develop a multi-state RUC revenue reconciliation system, referred to as “the HUB.” The HUB acted as a financial clearinghouse that successfully processed the miles submitted by participants from Washington, Oregon, Idaho and British Columbia. Since 90 drivers from Oregon and 30 from Washington agreed to pay real money for their miles driven, the HUB provided a testing ground to process actual financial transactions and remit RUC revenues to each state according to miles driven. Notably, the WA RUC HUB was the first field test of a multi-jurisdictional RUC transaction processing system in North America. 

A third element was to gather participant and public feedback. The top concerns raised were privacy, simplicity in reporting miles and other dimensions of equity, including vehicle weight, per-mile rates based on emissions and a driver’s ability to pay.   

The WSTC announced 16 recommendations in December 2019 detailing how Washington can manage the transition from a gas tax system to a RUC system. Recommendations were to allow drivers to try the RUC system, test new personal privacy protections, conduct additional research regarding RUC rates and driver, vehicle or infrastructure characteristics and reduce the cost of collection through public-private partnerships (P3s). Furthermore, WSTC’s final RUC report in January 2020 called on the legislature to consider its 16 recommendations and included support for “a gradual and deliberate transition to a RUC system.” The report recommended phasing in RUC over the next 10 to 25 years, which is when all outstanding bonds that pledged gas tax revenue will have been paid off or restructured. Other recommendations were to begin a RUC program where electric and hybrid vehicles would pay a RUC, including state-owned vehicles, dedicating RUC revenues to highway purposes as required by the 18th Amendment of Washington’s Constitution, enacting laws that protect personal privacy and working with other states to narrow RUC compliance gaps. 

The WSTC and their partner WSDOT recently received a $5.5 million STSFA grant to study issues discovered during the pilot that need to be resolved before a wide-scale RUC system can occur. The Forward Drive project reflects the next phase of RUC financial, policy,  operational and technology development. At the outset, the first four tasks of the Forward Drive project will be conducted concurrently in preparation for small-scale field tests.

  • The first task is financial modeling that considers advancements and future adoption of autonomous, connected, electric and shared vehicles as a growing component of roadway miles. 
  • The second task is to conduct an in-depth equity analysis, which will identify and measure potential disparate impacts of RUC to communities of color, low-income households, vulnerable populations and displaced communities. The project will also develop impact mitigation strategies. 
  • The third task will include updated mileage reporting methods such as identifying and testing new technologies, as well as enhanced in-person mileage reporting options. The in-person mileage reporting options may include entering into partnerships with a wider range of businesses to offer mileage verification services to the public. The P3 approach was first tested in the WA RUC Pilot Project, with promising results. 
  • The fourth task entails collaborating with other states to explore strategies to reduce the administrative costs of collecting RUC. 

Once the four primary tasks are completed, Forward Drive will develop a detailed plan to incorporate advancements into a test plan followed by smaller RUC prototype “subtests.”  These are small-scale tests of the new mileage reporting methods, equity policies, collecting RUC from ride-hailing vehicles such as Uber and Lyft and testing cost reduction techniques. Finally, it will include a detailed RUC roadmap on how Washington and other states can right-size a RUC policy and system. A specific deliverable will also offer a framework on how transportation policy and funding choices can be reexamined in light of increases in RUC revenue.  

Additional Resources

Washington state flag.Road User Charge Fact Sheet: Oregon

State: Oregon | Publication Date: Feb. 2, 2021

History

Oregon has been at the forefront of road user charge (RUC) developments in the United States since the turn of the 21st century. In 2001, the legislature enacted a law (HB 3946) to study alternative transportation funding sources other than fuel taxes. This statute created an advisory body, the Road User Fee Task Force (RUFTF), to lead the policy development of creating a new source of sustainable revenue to fund repair and maintenance of the roadways. The task force consists of members appointed by the governor, Senate president, House speaker and the chair of the Oregon Transportation Commission. The RUFTF oversaw the development of two RUC pilot projects conducted by the Oregon Department of Transportation (ODOT) in 2006 and 2012. In 2013, the legislature passed, and the governor signed, SB 810, directing ODOT to establish the nation’s first fully operational RUC program by 2015. The new RUC program, named OReGO, went live in July 2015. 

Federal Surface Transportation System Funding Alternatives Awards: As summarized in the table below, beginning in 2016 ODOT received three grant awards totaling $9.4 million over three years under the federal Surface Transportation System Funding Alternatives (STSFA) program. These grants expanded and refined ODOT’s existing RUC program known as OReGO by providing resources to continue researching and refining technical aspects of the program. STSFA funds have also helped ODOT develop a public awareness strategy based on participant feedback, expand technology options to report data and explore account management challenges such as compliance in a voluntary system. 

Federal Fiscal Year

Grant Amount

Description

2016

$2,100,000

Enhance OReGO by focusing on four established objectives including technology options, public awareness, compliance mechanisms and exploring interoperability to expand RUC nationwide.

2017

$2,315,000

Improve the scalability of OReGO and demonstrate its utility as a funding source for local jurisdictions, as well as flexible enough to accommodate varying tax rates and geographical boundaries.

2019

$5,000,000

Explore RUC in a connected vehicle ecosystem (CVE) and seek to deploy functional implementation.

Additionally, ODOT received four grants totaling approximately $5.3 million over four years to spearhead  RUC West's regional effort to strengthen understanding of RUC and share best practices. RUC West consists of 17 Western state transportation organizations with an interest in studying RUC and sharing information. RUC West will be highlighted in a future fact sheet.

Legislative Activity

The Oregon Legislature significantly modified OReGO in 2019 (HB 2881, enacted). Amendments to the program allowed ODOT to prepare for a future large-scale program by removing the limit on the number of vehicles allowed to participate in the program, increased the minimum fuel efficiency rating from 17 mpg to 20 mpg and replaced the static per-mile charge rate and indexed the rate to the fuel tax—with a formula equal to 5% of the state’s per-gallon license tax. The RUC rate is currently 1.8 cents per mile, according to ODOT. The law also ended the practice of refunds being issued to participants paying more in fuel taxes than what was owed in per-mile charges, allowing for a more sustainable program. Critically, owners of vehicles achieving 40 mpg or more and electric vehicles were exempted from paying supplemental registration fees if they choose to participate in OReGO. The goal of this policy change was to encourage more highly fuel-efficient vehicles to join the program. These annual supplemental fees, created in 2017 via HB 2017, are $33 for vehicles with fuel efficiency of more than 40 mpg and $110 for electric vehicles. In 2022, these surcharges increase to $35 and $115, respectively.

In 2020, the RUFTF considered many policy changes to modify and expand the state’s RUC operations. For example, one proposal would require all passenger vehicles beginning with model year 2027 and rated at least 30 mpg to pay for road usage on a per-mile basis. Another proposal would require ODOT to structure its RUC program to support future pricing mechanisms that collect charges based on time-of-day and distance traveled. 

The RUFTF presented a report before the Joint Transportation Committee in December 2020. The report recommended legislation (HB 2342, pending) that would mandate an RUC program beginning on July 1, 2026, for model year 2027 vehicles or newer that have a combined rating of 30 mpg or higher. The voluntary RUC program would be repealed by July 1, 2029. For the first three years of the mandatory RUC program, drivers could choose to opt-out by paying a $400 fee. Further, supplemental registration fees would not apply to RUC participants. Finally, an equity report would be due in 2022, a climate report in 2024 and a “medium-duty” report in 2026 to examine how 8,000 lbs. to 26,000 lbs. vehicles can be included in the RUC program. ODOT would also be required to submit biennial implementation reports to the RUFTF.

Project Details

OReGO reports approximately 700 current participants as of Dec. 7, 2020. To enroll, a driver must first choose a commercial account provider or the state account manager to manages payments. Three firms—Azuga, Emovis and ODOT—currently offer RUC mileage reporting and payment services.

>The overall goals of Oregon’s STSFA-funded work are to prepare for an expanded RUC program with a possible enrollment mandate for certain vehicles, as well as address the gap between fuel tax collections and transportation infrastructure needs.

ODOT’s RUC work consists of four main objectives:

  • Evaluating compliance mechanisms.  
  • Exploring interoperability. 
  • Expanding the market via technology options, streamlining account management, developing new mileage reporting options and sharing data with other public entities. 
  • Increasing public awareness.

Evaluating Compliance Mechanisms

The first completed objective was to evaluate RUC compliance amongst users and prospective users, including studying and developing enforcement and interoperability options. For enforcement of payments within a RUC system, research was conducted on new technologies such as embedded vehicle telematics and cell phone imagery as potential replacements to self-installed devices in vehicles. This is intended to help ensure compliance in a future mandatory RUC program. ODOT notes a “system that relies exclusively on devices installed in vehicles will create challenges for a mandatory tax program.” Thus, commercial account managers were contracted to offer technology options such as a smartphone application to record mileage and to improve the accuracy of mileage reporting, or to confirm mileage reported by other means. Account managers were also contracted to help enroll participants, administer the program and reconcile payments on behalf of RUC participants. 

Exploring Interoperability

The second objective was to explore interoperability with other states by holding a Multi-State RUC Forum in September 2017 and had both technical and business tracks. Issues on the technical track included technology options to report mileage, interoperability with other jurisdictions and connected and autonomous vehicles in a RUC system. The business track discussed differences between rural and urban drivers, privacy, rate-setting and working with other states regarding managing public funds and vehicle transfers. Other efforts regarding interoperability are ongoing and will be detailed in the fact sheet on RUC West.

Expanding RUC Market via Technology Options 

The third objective is continuing to explore expanded technology options and developing a system for manual RUC reporting. The technology currently used in a voluntary program cannot effectively deter payment evasion if participation becomes mandatory, according to ODOT’s 2017 report. Specific evasion issues include drivers removing devices from their vehicles or not paying altogether. Further, the report recommended using technology that cannot easily be removed or that deters tampering.

Delinquent or non-paying participants in a voluntary system are only removed from the program and their accounts do not accrue penalties and interest. ODOT recommended mileage reporting devices be coupled with a flat annual RUC amount. For example, when a RUC participant falls out of compliance or their vehicles are no longer compatible with the technology, they would be switched to a flat RUC amount instead of paying on a per-mile basis. This seeks to ensure effective compliance measures are in place before implementing a mandatory program. ODOT is also exploring RUC enrollment at the point of sale for new vehicles and expects to complete such a project by the end of 2023.

Increasing Public Awareness

Lastly, OReGO staff has conducted significant public outreach and will continue those efforts. ODOT has used a variety of venues and tools to gather feedback regarding public understanding and acceptance of transportation funding and RUC. Outreach activities involved public surveys, focus groups with RUC “dissenters,” a listening tour and surveying OReGO participants about their experience. Public surveys addressed awareness, acceptance and favorability towards RUC. Among survey respondents in general, “With just a little information and two-way conversation, people’s acceptance of road usage charging turned from negativity to acceptance.” Further, a focus group of residents found, “Most Oregonians do not understand how transportation infrastructure is currently funded.” Nearly half of residents also “thought there must be a better way to pay for roads,” and supported tolls or raising vehicle registration fees. The main concerns among the public were privacy-related, such as how data will be used, along with mileage reporting and uncertainty regarding implementation of a complex program.

OReGO participants reported (96%) they were “largely satisfied with their experience.” Moreover, OReGO participants supported RUC and thought it was fair, although they were concerned about rural drivers paying too much and out-of-state drivers not paying enough. In fact, respondents in both the OReGO participant survey and statewide public perception survey agreed the two greatest drawbacks to RUC were “penalizing rural drivers who drive longer distances and tracking out-of-state drivers that use Oregon roads.” OReGO participants also noted concern about penalizing fuel-efficient vehicles, while the public perception survey indicated, “RUC was just another way to tax people more.” OReGO participants were also less concerned about privacy issues compared to public survey respondents who did not participate in OReGO. The outreach findings overall were used to help address communication challenges and enhance public awareness. 

Other Activities

Additionally, ODOT partnered with the city of Portland and the Metro Regional Government on the design of three pilots studying the feasibility of adapting the state’s RUC system for localities. There are three local RUC area pricing pilots, with up to 100 volunteers participating in each six-month pilot. Volunteers within the Portland metro area were recruited for the local pilots between January and February 2021, and the pilots will continue through late summer 2021.

Each pilot will explore a specific local area RUC, all within the Portland metro area. The first pilot will focus on static and variable rates within geographically bounded areas and a local RUC will be added to the statewide RUC based on the time-of-day. The second pilot will explore layered options, including central business districts, and will overlap two geofenced areas and test varying RUC rates based on time-of-day. The final of the three pilots will evaluate ways to incentivize travel on certain corridors during peak hours and charging drivers different rates based on both trip distance and time-of-day. These pilots will enhance the state’s understanding of technology under various per-mile scenarios and the results will help answer if a local RUC option is feasible as part of a future mandatory program.

Lastly, ODOT will also use STSFA funds to deploy RUC in a CVE, which will support both RUC data collection and intelligent transportation system functions. This includes seeking to achieve functional implementation by validating data sharing between data collection, transaction processing and account management subsystems. 

Additional Resources

New Hampshire state flag.Road User Charge Fact Sheet: New Hampshire

State: New Hampshire | Publication Date: Feb.8, 2020

History

New Hampshire’s Department of Transportation (NHDOT) received one grant award of $250,000 under the federal Surface Transportation System Funding Alternatives (STSFA) program. NHDOT used the grant to study a proposed road usage fee (RUF) schedule based on the Environmental Protection Agency’s (EPA) combined city/highway fuel economy rating of a vehicle. RUFs would seek to address declining fuel tax revenues due to the increasing number of fuel-efficient vehicles by establishing a RUF in conjunction with the state’s vehicle registration system. The study also explored equity dimensions related to establishing RUFs, such as collecting travel data using location-based services, out-of-state, rural and urban drivers and relative burdens of fuel taxes and RUFs by income.

STSFA Awards
Federal Fiscal Year Grant Amount  Description
2018 $250,000 Explore a proposed RUF schedule that would be assessed in conjunction with vehicle registration fees.

Legislative Activity

Since 2016, five notable pieces of legislation have been considered by New Hampshire’s General Court to authorize RUFs based on a vehicle’s combined fuel economy rating. However, none of the bills were subsequently enacted. 

In 2016, HB 1602 (failed) would have assessed a RUF on vehicles with a fuel economy rating over 20 mpg and non-gasoline vehicles. RUF assessments ranged from $29.97 up to $149.85. The maximum assessment of $149.85 applied to vehicles rated over 50 mpg, as well as non-gasoline vehicles. Legislation in 2017, HB 621 (failed), would have collected RUFs upon registering a vehicle rated at 22.5 mpg or more. RUF assessments ranged from $7.70 up to $77.08 for vehicles rated 51 mpg or more. For non-gasoline vehicles, the assessment would have been $123.33.

Two bills in 2018 and 2019, HB 1763 (failed) and HB 478 (failed), would have directed state DOT to create a RUF schedule for vehicles rated over 20 mpg. The maximum RUF was set at $111. In 2020, HB 1649 (failed) stipulated mpg increment ranges of $10 for vehicles rated 20 mpg or less up to $100 for vehicles rated over 50 mpg. Additionally, non-gasoline vehicles would have been assessed $125.

Project Details

Phase one of NHDOT’s STSFA grant examined RUF revenue projections, along with key factors including equity, public outreach and policy design options. Phase one’s results will be used to inform phase two’s potential development, which could involve an interim testing step, a small-scale implementation or a full statewide implementation.

NHDOT has completed its phase one activities. In February 2020, NHDOT issued a final report which concluded: “the imposition of a RUF program would increase statewide revenues while making revenue flows more consistent.” NHDOT activities addressed revenue estimates of a potential new RUF compared to existing motor fuel tax revenue while exploring uncertainties that could impact such projections. Equity dimensions were explored concerning urban versus rural drivers, income groups and residents versus visitors. Public opinion polls and focus groups were also conducted. Finally, the report outlined four options to establish RUFs including the advantages and disadvantages of each option. 

Proposed annual RUFs that were studied ranged from $10 for vehicles with an EPA fuel economy rated 20 mpg or less up to $125 for non-gasoline vehicles including electric cars. Fee increases were based on a vehicle’s fuel-efficiency and the study assessed higher fees in increments of 10 mpg. Vehicles rated between 21 mpg and 30 mpg would pay $25 annually, increasing to $50 for vehicles between 31 mpg and 40 mpg and to $75 for vehicles between 41 mpg and 50 mpg. Vehicles over 50 mpg would be subject to a $100 assessment. All light-duty vehicles with a vehicle weight rating under 8,500 lbs. would be subject to RUFs when a vehicle’s annual registration is processed. RUFs would be expected to generate $27.1 million in the first year, increasing to $42.7 million annually by 2030. 

Phase one’s final report in February 2020 concluded that “the imposition of a RUF program would increase statewide revenues while making revenue flows more consistent.” 

Additionally, recommendations discussed public outreach on RUFs in general and why it is needed noting, “Gas tax revenue appears likely to decline over the next decade… in the range of 10% to 25% from 2020 levels” or approximately $30 million cumulatively by 2030. Statewide focus groups were held in October 2019 to understand residents’ perceptions of transportation funding and their reaction to the proposed RUF funding structure. While survey results indicated 41% of participants supported increasing state investments in transportation, nearly half opposed doing so by establishing RUFs or increasing fuel taxes in particular. 

Equity implications addressed annual miles driven by different drivers, vehicle age, urban and rural geography and income. One notable issue focused on how different populations would be affected by fuel taxes and RUFs, with the report highlighting revenue contributions by owners of non-gasoline vehicles and highly fuel-efficient vehicles that drove less than 10,000 miles annually would be “substantially lower than drivers of less efficient vehicles.”  The report mentions this because RUFs are collected at a fixed rate regardless of the total number of miles driven. 

A notable point in the final report also found that discussing RUFs with the legislature and focus groups was important. NHDOT notes it found RUFs would be a relatively minor cost compared to total annual fuel costs paid by all income groups. Further, owners of fuel-efficient and electric vehicles would still save significantly on annual fuel costs, even after fuel taxes and RUFs were included. “On a per-vehicle basis, the incidence of gas tax shows little variation, ranging from $90 annually for the lowest income group to just over $100 for the highest groups; and the RUF would average $21-24 per year for all groups.”

In terms of geographical equity, the study examined drivers in four geographic classifications taken from the National Household Travel Survey that apply to New Hampshire -   Second City, Suburban, Small Town and Rural. The report found RUFs “would constitute a higher relative proportion of transportation costs for the state’s urban and suburban drivers than it would for its residents of rural areas and small towns. With regards to driving habits of New Hampshire residents versus visitors, the report discussed the fact out-of-state drivers would not be paying into a RUF system. 

Phase one’s final report detailed recommendations and potential next steps. For example, passing legislation to list the EPA’s combined fuel economy rating on new vehicle titles, as well as clarifying registration processes for vehicles without an mpg rating. A notable technical element also addressed the role of local clerks, who register vehicles on the state’s behalf, in determining mpg ratings. Potential options to ease implementation issues at the local level included manually matching mpg ratings to a vehicle and relying on approximate, rather than exact, ratings upon registering a vehicle. Other options discussed creating a database with vehicle identification numbers (VIN) and using automated processes to transfer mpg ratings by VIN to local clerks.

Additional Resources

Minnesota state flag.Road User Charge Fact Sheet: Minnesota

State: Minnesota | Publication Date: March 22, 2021

History

The Minnesota Department of Transportation (MnDOT) has received two grant awards totaling approximately $1.3 million over two years under the federal Surface Transportation System Funding Alternatives (STSFA) program. The first STSFA grant enabled MnDOT to study and design a road user charge (RUC) program known as Distance-based User Fees (DBUF) on Mobility-as-a-Service (MaaS) providers, such as HOURCAR and Zipcar. The second STSFA grant allowed MnDOT to begin a DBUF demonstration program. According to MnDOT, “DBUF aims to charge vehicles appropriately and proportionately for use of the roads.”

The aim of this project is to demonstrate that on-board embedded telematics in shared-mobility fleets and automated vehicles can be used to efficiently and effectively collect distance based fees. DBUFs are considered an alternative to the state fuel tax for those vehicles not paying their fair share for use of the road. In the case of electric vehicles, a DBUF may also replace the registration surcharge with an appropriate per-mile fee. Minnesota envisions retaining the state fuel tax and migrating to DBUFs as more vehicles become factory equipped with embedded telematics. MnDOT is also working with Minnesota’s Department of Revenue (MnDOR) on DBUF collection and account reconciliation processes. 

STSFA Awards
Federal Fiscal Year Grant Amount  Description
2016 $300,000 Explore MaaS as a revenue collection mechanism for DBUF. Verify DBUF-related data can be accurately and securely transferred.
2018 $999,600 Deploy a DBUF demonstration to assess its feasibility, as well as gather public opinion, educate residents and policymakers and identify organizational and administrative gaps.

Legislative Activity

Minnesota’s Legislature has considered two pieces of legislation related to DBUFs since 2019.HF 1146/SF 1122 (failed) would have directed MnDOT to establish a mileage-based user fee (MBUF) program. The bill outlined objectives such as identifying steps to implement an MBUF system, analyze options related to MBUF and test and evaluate data management and fee collection systems.

Legislation introduced in 2021, HF 523, would require owners of an all-electric vehicle to pay a road usage charge (RUC) beginning July 2022. The RUC would be calculated based on the miles driven, multiplied by the excise tax rate for gasoline, divided by the vehicle’s fuel economy. The bill also includes a proposed implementation fee surcharge that would be determined annually or on a less frequent basis. The bill would require the state to enter into an agreement with one or more account providers to perform RUC management. The account provider(s) would be required to share certain data regarding an enrolled vehicle owner.

RUC revenue derived from the implementation surcharge would be deposited in the vehicle services operating account for payments to account providers and for administrative costs incurred. The remaining revenue would be deposited in the highway user tax distribution fund.  
By Nov. 15 annually, the commissioner of public safety would have to submit an annual report to the chairs, ranking minority members and staff of the legislative committees with jurisdiction over transportation policy and finance concerning the RUC. 

Project Details

The FY 2016 STSFA grant was used to develop a pre-deployment DBUF planning study and proof of concept. According to the Federal Highway Administration’s biennial STSFA report, MnDOT’s Phase I activities included:

  • Recruiting MaaS providers.
  • Modeling pricing strategies and exploring multi-modal pricing options. 
  • Engaging in stakeholder outreach and developing and executing legislative strategies. 
  • Gauging public interest and acceptance of a distance-based fee approach. 
  • Researching DBUF collection methods. 
  • Developing a design for Phase II’s deployment.

Phase I’s primary goal was to design an affordable DBUF program. MaaS providers were chosen because the vehicles already have onboard technologies. Over two weeks, 56 vehicles traveled 23,000 miles. A concept of operations was completed during Phase I and a limited proof-of-concept was studied to put in place a data sharing mechanism. 

The results from Phase I validated MnDOT’s ability to download and store mileage data in a secure data repository across MaaS providers, automated vehicles and MnDOT and MnDOR. By testing a MaaS model, MnDOT anticipates better data security and system reliability than with personally owned vehicles not involved in commercial transportation services because MaaS relies on a private third-party repository and a mileage tracking technology already embedded in the vehicles.

Phase I activities have been completed, with MnDOT stating, “The DBUF model is viable, cost-effective and scalable for a larger implementation.” A DBUF equating to 2.7 cents per mile was calculated based on the results of Phase I and will be used during Phase II’s demonstration. Phase II will address the following activities:

  • A 12-month demonstration, which is slated to wrap-up on March 31, 2021.
  • Two roundtables with transportation leaders and policymakers on the national landscape for transportation financing. Preliminary results from the DBUF demonstration will be discussed. 
  • Test connected and automated vehicles (C/AV).
  • Develop the business case and revenue model for potential DBUF deployment.
  • Develop a rate-setting framework to consider how charges should be levied fairly.

MnDOT notes that certain MaaS companies, such as ride-hailing providers Lyft and Uber, could not participate in Phase II because their telematics platform was on personal devices not actually embedded in the vehicle itself. Thus, for Phase II’s demonstration, MnDOT determined that only HOURCAR and Zipcar met their criteria. These car-sharing services typically have embedded telematics in-vehicle and more accurately reflect the equipment that Original Equipment Manufacturers (OEMs) are now installing in the majority of manufactured vehicles. Thus, they represent a model for wider and more efficient deployment of DBUFs. MnDOT is also optimistic they can potentially include OEMs in future demonstrations.

MnDOR will receive electronic reports and invoices detailing the net DBUF less state and federal fuel taxes. MnDOR will audit provider data to ensure it is valid and accounts will be assessed and reconciled as needed. No real monies will be collected, and any charges will be simulated.

MnDOT has also established a Technical Advisory Committee (TAC) to advise the DBUF project team, provide guidance on policy and technical matters and participate in discussions with the public and policymakers. The TAC will consider issues such as social and geographic equity, rate-setting options (including variable rates based on time of day or location), stakeholder outreach and data privacy concerns.

Seven demonstration goals were outlined for Phase II, including equity, public acceptance, privacy, ease of payment and collection, transparency, evasion and scalability. The demonstration will also examine the nexus between C/AVs, electric vehicles and MaaS ownership models to “promote a more sustainable transportation funding mechanism.” To help meet project goals, Phase II activities will include educating the public and policymakers about declining transportation revenues, establishing appropriate pricing structures, data and financial systems security and minimizing collection and enforcement costs.

Additional Resources