By Joseph Palmersheim
As vehicles get more fuel efficient, a yet-to-be answered question remains: how will this impact funding for Minnesota roads?
MnDOT staff will participate in an upcoming “Rethinking Transportation Finance Roundtable: Transition to Distance-Based Fees” event from 3:30–5 p.m. Monday, June 14. This event, the third in a series by the Humphrey School’s State and Local Policy Program, focuses on familiarizing state transportation and policy leaders with distance-based user fees and user-based transportation funding alternatives.
MnDOT Commissioner Margaret Anderson Kelliher will provide opening remarks, and MnDOT road pricing program director, will moderate a roundtable discussion on Minnesota’s Distance-Based Fee demonstration project and Minnesota legislative perspectives on a future transition to a new system of road usage charges.
So what is a DBF? Buckeye describes it as a fee levied on drivers for each mile of travel on public roads. In essence, the DBF is intended to recover some of the revenue that is not being collected from the motor fuel tax due to increasingly fuel efficient vehicles.
Minnesota, like most states, relies heavily on the gas tax to build and maintain roads and bridges. While the gas tax continues to be a significant source of highway revenue, today’s vehicles are using less gas and are increasingly reliant on other energy sources like electricity. In effect, the public is driving more but paying less for gasoline and, consequently, less in gas taxes to sustain sufficient levels of highway funding. This trend is expected to continue and eventually accelerate.
One of the big issues with DBF deployments is the cost of collection, Buckeye said. In both Oregon and Utah, the only two states with DBFs, the cost of operating their road user charge system exceeds the revenue collected. The presumption is that would change with economies of scale, but it is not clear how much.
Minnesota’s DBF demonstration is an attempt to show how embedded telematics might be used to enhance the efficiency of fee collection. The project collected data between April 2020 and March 2021 from two car-share companies in Minneapolis and St. Paul, along with data from a simulation using an automated vehicle supplied by VSI Labs in St. Louis Park. Final analysis and final report preparation is underway.
Embedded telematics, the hardware capable of collecting and transmitting data, is built into the vehicles used in the test. It cannot be removed, altered or corrupted by the user (at least in theory, Buckeye noted). That was a significant component of the demonstration, because almost all other demonstrations used “add-on” technology, which is vulnerable to manipulation, and therefore fraud or fee avoidance.
“We focused on the car-sharing business because their embedded telematics most closely represented what we believe will be available in the future on all new vehicles,” Buckeye said. “Importantly, we also believe use of the embedded telematics for data collection will enhance efficiency of operations while meeting data security and privacy demands. The car-share telematics system enables a user to reserve a car via a smartphone app, and then open the vehicle when the user chooses. Beyond that, the reporting of mileage is sent back via cellular communications to the central server in order to appropriately charge the user. This makes it very convenient for the user, and the government never sees the personal trip data because it is aggregated for reporting.”
The DBF demonstration in Minnesota is an attempt to show how the “user-pays” principle, used in the motor fuel tax, might be deployed fairly on the new generation of vehicles that use less motor fuels, Buckeye said.
“A mileage- or distance-based fee is one potential way to close the highway funding gap and ensure everyone is paying their fair share,” Buckeye explained. “This is an enormously challenging problem that states are facing. The federal government has provided financial incentives through the FAST Act for states to study and demonstrate alternatives to the gas tax. This DBF Roundtable is an attempt to bring together experts to discuss the pros and cons of various approaches and ideas.”
Learn more about Distance-Based Fees
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