The National Academies

NCHRP 20-24(069) [Final]

Implementable Strategies for Shifting to Direct Usage-Based Charges for Transportation Funding
[ NCHRP 20-24 (Administration of Highway and Transportation Agencies) ]

  Project Data
Funds: $305,285
Research Agency: ICF International, with RAND Corporation
Principal Investigator: Paul Sorenson
Effective Date: 2/6/2009
Completion Date: 11/30/2010
Comments: The project is administered under the NCHRP 20-24A task-order system.

Road-user charges based on vehicle-miles traveled (VMT) are considered by a number of groups to be a potentially viable alternative to motor-vehicle fuel taxes as a primary source of revenue to fund the nation’s highway system.  The concept has been the subject of notable research (for example, studies conducted by the State of Oregon and the University of Iowa) and its implications for public policy considered by a number of groups such as the TRB Committee for the Study of the Long-Term Viability of Fuel Taxes for Transportation Finance and the AASHTO Board of Directors.  (Reports of these two groups’ thinking on the subject are available; click on the highlighted names.)
While such studies have found the concept to be promising, they also have highlighted challenges. New communications and information technology must be installed to enable VMT charges to be implemented fully and public acceptance has yet to be proven.  Even with public support, years may be required for the new technology to be deployed throughout the vehicle fleet and highway network. 
Recent declines in fuel-tax revenues and the expiration of the SAFETEA-LU legislation in September 2009 are prominent among motivations for policy makers to consider changes in how we pay for highway construction and maintenance. Those who envision that VMT charges may be adopted as a long-term means for generating revenues seek interim mechanisms which can be quick to implement, acceptable to the public, and effective as a transition step toward fully-developed VMT charges that account for miles traveled, roads used, time-of-day, vehicle weight and emissions, and other factors influencing the cost of service. 
AASHTO is working to ensure that the various issues surrounding VMT charges are fully explored. However, there is considerable interest among policy makers in ways that a move toward VMT fees might be very quickly implemented both to raise revenues in the near term and to facilitate a transition to sustainable alternatives to fuel taxes as a primary revenue source. Senator Barbara Boxer (D-CA) has suggested, for example, that a VMT fee that is collected annually (or semi-annually, quarterly, or bi-annually) along with existing vehicle registration or inspection fees could provide an immediate means for revenue collection. For such a fee to be successfully implemented, attention must be given to ensuring its ease and reasonable costs of administration, low burden on road users, public and political acceptance of the concept, variations in legal and political situations among states, and availability of enabling technology.
The objectives of the first phase of this research were to (1) identify and evaluate possibly viable alternative mechanisms for assessing and collecting VMT fees that can be developed and implemented within the near term, 2010 through 2015; (2) propose a practical strategy—for example, considering political and institutional as well as economic and financial issues to be resolved—for implementing a mechanism that will have a high likelihood of sustainable success nationwide; (3) describe the immediate actions necessary to achieve implementation, and (4) identify a longer-term strategy for making a smooth and effective transition from the proposed immediately-implementable mechanism to a robust and sustainable system of VMT-based user fees and an approach to monitoring progress.  While analysis and forecasting of VMT trends were beyond the scope of this project, the research was conducted with consideration for the likely short- and longer-term viability of VMT fees as a significant source of revenue for financing the nation’s highway system for the foreseeable future.
The research entailed a review the literature on VMT fee concepts and similar revenue-collection methods and survey current state statutes and practices for assessing and collecting fuel taxes and vehicle-registration and inspection fees. The analysis included an evaluation of distance-related apportioned payment and registration systems for interstate trucks currently administered under the International Registration Plan and the International Fuel Tax Agreement, respectively. The researchers also examined state oversight and administration of the federal Heavy Vehicle Use Tax payments.  Methods for measuring or estimating VMT of individual vehicles were considered that may be used as a basis for VMT fees, along with legislation that may be required to enable state motor-vehicle administrations (MVAs) to administer VMT fee collection. Administrative costs, political and public acceptability, and other institutional concerns likely to influence the viability of VMT fee concepts, were assessed relative to existing revenue-generation systems. 
Based on these assessments, the researchers identified a range of alternative VMT fee mechanisms that could be implemented immediately in selected locations and fully deployed nationally before the end of the year 2015.  From this range of alternatives, several were selected for more detailed description and evaluation.  Particular attention was given to administrative and enforcement costs, institutional considerations, and implementation strategies.  The contractor's first-phase research report has been released as NCHRP Web-Only Document 143: Implementable Strategies for Shifting to Direct Usage-Based Charges for Transportation Funding.  The document may be viewed and downloaded by clicking here
A second phase of research extends the previous work toward enabling one or more demonstration projects to be developed.   The research team identified a set of promising VMT fee concepts suitable for testing through trial implementation and described the scope of a trial implementation and the criteria for judging which concepts are more promising. The team is described a method to evaluate options and select the most promising concept for testing through trial implementation.   Estimated funding levels and actions necessary to carry out a trial implementation of the most VMT fee concept or other promising concepts have also been considered.   A one-day workshop with panel members and other transportation finance experts was held in May 2010 to review and refine this information and consider how one or more trial implementations could be described and funded in federal surface transportation legislation.  The report from the second phase has been released as NCHRP Web-Only Document 161: System Trials to Demonstrate Mileage-Based Road Use Charges.  The document may be viewed and downloaded by clicking here

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