Roads: The New Utility

Washington’s gas tax was finally raised again last year by lawmakers as part of a 16-year, $16 billion transportation funding package for roads, transit and more. It was rightly hailed as an important first step toward meeting the state’s surface transportation funding needs. However, the rough cost of doing that was pegged at $50.3 billion for 10 years in a 2012 report from then-Governor Christine Gregoire’s Connecting Washington task force.

The upshot: there’s still a big lift ahead on funding for smoothly-functioning, well-maintained transportation infrastructure in Washington state, with roads, highways and bridges an undeniably crucial part of the mix.

Raising The Ante On Mobility

Transportation infrastructure is needed to get statewide freight to global ports in Seattle and Tacoma; to get contractors to job sites; supplies and goods to customers; and particularly in Greater Seattle, to unsnarl the nation’s sixth worst traffic. The cost of the time lost in Seattle traffic has continued to exceed $3 billion annually for more than a decade.

The mobility ante is even higher in Central Puget Sound thanks to projected population growth there from the current 3.8 million to 5 million by 2040, and an affordable housing crisis that may lengthen commutes and worsen congestion by pushing more and more growing young families to buy homes in the region’s farthest reaches.

A New Recipe For Transportation Funding

At the same time, the state needs a new recipe for transportation funding. Legislators and business leaders understand the 2015 gas tax hike in Washington is probably the last hurrah for that approach.

State officials have continued to accent that the gas tax is not indexed to inflation, and transportation construction costs have risen sharply. Washington’s projected gas tax revenues for 2007 to 2023 turned out to be inflated by $5 billion compared to what actual intake up to 2011 was suggesting, according to the 2012 Gregoire administration report. This shortfall risk has been an ongoing concern.

Other factors contribute to the gas tax’s wobbly future. U.S. Energy Information Administration data show gas consumption has decreased since 2007, albeit modestly. According to the U.S. Environmental Protection Agency, adjusted fuel economy is up since 2003, sharply, although it fell from 1985 to 2003 and is currently at about 24 mpg on average (pp. ES5, ES8). Also constricting gas tax revenue growth, a growing number of Millennial workforce members are eschewing car ownership in lieu of on-demand rides via smartphone apps such as Uber and Lyft.

Vehicles nonetheless continue to pound the pavement and transportation maintenance needs replenish and grow, even as newly-funded projects launch.

So since 2013, with legislative authorization and funding, the Washington State Transportation Commission (WSTC) has been exploring how miles traveled could become the basis for a new formula. What they’ve landed on is called a Road User Charge (RUC), and is based on miles driven.

Could Be A Tougher Sell In Eastern Washington, But…

For many Seattle region system users, the strategy’s baked-in incentives for ride-sharing and telecommuting likely cast a green hue, easing their acceptance. Mention paying taxes by the mile in eastern Washington, and be prepared for a little road rage. But if you sit down at the kitchen table and run the numbers, that reaction changes as the possible advantage compared to the gas tax becomes evident, according to Janet Ray of AAA Washington.

Ray was a member of a Washington state advisory committee authorized by the legislature in 2012 to begin studying the feasibility of an RUC. She is Assistant Vice-President of Corporate Affairs for AAA Washington, grew up in eastern Washington, and is familiar with the challenges of long distances and low mileage vehicles.

Fairer Deal For Rural Drivers?

Under the current system, which taxes motorists based on how many gallons of fuel they use, there is no explicit tax per mile. Indirectly though, through the existing per-gallon gas tax, there is arguably a mileage tax already. The problem, says Ray, is that it favors drivers of higher-mileage cars at the expense of those who own the low mileage workhorse vehicles common in rural areas. The former pay less at the pump in taxes, but exert wear and tear on road surfaces about as much as the latter.

“The RUC would even out the cost paid per mile for everyone, no matter the amount of fuel used by a vehicle. The RUC could be a fairer way to charge for the use of the roadways, since it treats all vehicles evenly,” said Ray.

Pilot Project Design Underway

The State of Washington has committed $2.3 million to the work of the RUC Steering Committee from the initial study through the end of the biennium in 2017. An additional $1.3 million worth of in-kind time has been spent by staff and the 25 volunteer members of the committee, according to Reema Griffith, Executive Director of the Washington State Transportation Commission (WSTC). “Every year, we’ve gone back to the Legislature to report results and keep the committee’s work on track,” said Griffith.

Joe Tortorelli, WSTC Vice-Chair and RUC committee chair, said the next step will be to complete the design for a pilot project to test the options summarized in the 2016 report. The pilot is currently being designed in cooperation with the U.S. Department of Transportation, in pursuit of a $6 million federal grant to fund the project. Congress allocated $95 million over five years for this type of demonstration project under the Fixing America’s Surface Transportation (FAST) Act in December 2015.

“It will be totally voluntary, including choice of monitoring option,” said Tortorelli. “We’ll be recruiting 2000 volunteers in 2017 representing a variety of types of vehicles in urban, rural and suburban settings across the state.”

State Rep. Marcus Ricelli (D-3) told Lens, “RUC is closer to a user fee than a broad tax, but we need to figure out the rural-urban balance. As a representative from a border community, I am also aware of the in-state out-of-state issues,” Ricelli added.

That refers to questions around charging Washingtonians only for miles driven within Washington; and what government, if any, would charge out-of-state drivers for using Washington roads, especially if they are weekday commuters. Ricelli’s district includes Spokane, where daily trips of workers and others to and from close-by Idaho are common.

Ricelli agreed privacy concerns often raised in connection with an RUC are a real issue. However, he suggested some may be over-thinking this given the privacy compromises which people already accept to carry a cell phone.

Shift Wouldn’t Be Sudden

If the big shift occurs, it won’t be sudden. After the pilot, implementation of the RUC may still be at least eight to nine years away. One reason, according to Sen. Curtis King (R-14) is that the gas tax has been used as collateral for bonds sold for specific new road infrastructure. King is chair of the Senate Transportation Committee.

Griffith agreed. “We’re carrying a huge debt load that has to be paid off,” said Griffith. One scenario for implementation would keep the gas tax in place to meet the state’s bonding obligation while offering an RUC alternative.

In this faster timeline, the gas tax would continue to be rolled into the price of fuel at the pump, but RUC drivers would reconcile their tax due under the RUC to taxes already paid at the pump and receive either a rebate or a bill.

Drivers of electric vehicles, for instance, would receive a bill since they bought no gas. Drivers of older, low fuel mileage vehicles would receive a rebate on gas taxes paid that exceeded what was due under the RUC. The biggest challenge is a public wary of adding a new tax before the old tax can be phased out. One advantage of the combination scenario is that it easily captures gas taxes from out of state drivers.

Four Options For Calculating RUC Payments

The 2015 report from the Steering Committee laid out four options for measuring and assessing taxes by the mile.

  • A “time permit” is a flat fee for unlimited mileage collected annually at licensing, and would protect against charges for travel out-of-state, off-road, or on private roads. It would provide maximum privacy, but the annual fee payment would be a cash flow barrier for some drivers.
  • An odometer-based charge would be self-reported at annual licensing and applied at a flat rate. Like the time permit, annual lump-sum payment could be a problem for some drivers.
  • Automated tracking would tabulate total miles traveled using GPS technology installed in the car, to distinguish between in-state and out-of-state miles. The “smartest” devices can tell if a vehicle is on a private or public road and limit charges to public roads, but they raise privacy concerns. The periodic billing in lieu of an annual fee could be easier economically on some drivers.
  • Another option is a smart phone app, which in effect would be similar to automated tracking but could be tricky. What if the phone is turned off, the battery is dead, or the phone is left at home?

Another member of the RUC Steering Committee is Frank Riordan of Becker Trucking. He told Lens that the RUC is trying to be a true user tax, but monitoring and collecting the revenues would be much more difficult than fuel-based taxes. “The expense and details to resolve in setting up a new program from scratch are tremendous,” said Riordan.

Questions also arise about how states might coordinate, if several each have their own RUC programs in the future. So 10 western and inland states are coordinating on RUC planning.

Pre-Conditions For Eventual Consensus

The RUC concept will certainly ruffle feathers, and for once, the hiring of government communications consultants will be sorely justified if it continues to advance in Washington. Yet despite the controversies which the policy’s progress would provoke, the idea is met with considerable equanimity and interest on both sides of the aisle in Olympia, where knowledge of transportation funding challenges runs deep.

There is quiet political muscle gathering strength behind the RUC in some corporate suites of the state, as well. The RUC approach was recently accented by major employers and ex-Governor Gregoire, who together launched Challenge Seattle initiative earlier this year. It’s transportation agenda acknowledges the need to consider a “utility-based” funding approach based on system usage.

In order to make progress on its assigned tasks, the state’s RUC Steering Committee set aside a number of policy issues in the “parking lot.” One of these is how to assure that road usage taxes are spent on road projects. Another is whether an increase in taxes collected, versus current gas tax revenues, is part of setting the RUC rate. That could be needed to really make a dent in the statewide maintenance backlog, including bridge upgrades and paving projects.

At the recent Washington Policy Center Solutions Summit in Kennewick, King suggested the Legislature may have to consider the possibility of a motor vehicle excise tax as an interim measure to fund the maintenance backlog, based on the fair market value of vehicles and protected by the 18th Amendment of the state constitution to ensure they’re spent where they’re raised: roadways.

However, it’s not all about revenue. Rep. King emphasized the need to continue to work diligently at regulatory reform to control project costs.

Additional reporting and writing by Sue Lani Madsen.


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