Friday, 18 September 2020

So will Wyoming really implement road user charging for all vehicles?

Quietly, Wyoming has been investigating whether road user charging could replace its fuel tax.  On Monday 21st September, the Transportation, Highways & Military Affairs of the State Legislature will be discussing a draft Bill (PDF) to implement a "road usage charge" for the state.

The Bill proposes that all Wyoming registered vehicles be subject to RUC, with six categories of vehicles and per mile rates as follows :

  • Motorcycles (US$0.013);
  • Private cars (US$0.0215);
  • Pickup trucks and vans (US$0.0287);
  • Buses and rigid trucks (US$0.065);
  • Single trailer trucks (US$0.1032); and
  • Seven of more multi-axle trailer trucks (US$0.1435).
It includes provision to charge vehicles from other states by any means available to Wyoming residents, but also mileage permits (prepaid distance) or time permits.  It also proposes that any (state) fuel taxes paid be credited to any RUC account.

The draft Bill requires that there be at least one manual method of distance measurement and one means to prepay for "unlimited" distance in a given time period.

On the face of it, this is revolutionary, if it received political approval it would make Wyoming the first jurisdiction not only in the United States, but globally, to mandate RUC for all vehicles registered on its territory.  

Wyoming has been investigating RUC for several months, so this is a very bold step, and it raises a lot of issues, not least being the time and effort required to set up systems for the vehicles of the entire state to switch to RUC, AND require vehicles from neighbouring states to pay RUC (noting that three Interstate Highways pass through the state and it has borders with six states, Montana, South Dakota, Nebraska, Colorado, Utah and Idaho). Although Wyoming's population is less than 600,000 and the motor vehicle fleet is less than 300,000, it is still an ambitious and courageous endeavour, and one that shouldn't be taken lightly, because there are two big lessons from the implementation of road user charging/road pricing:
  1. Get the public to accept the case for road user charging. Without public acceptability, the policy is dead.
  2. If you fail with your first attempt, you can't try a second time for at least ten years, because the public, stakeholders (and the media) will remember why it failed the first time.
Wyoming needs to bring the public on board, on grounds of fairness and necessity AND it needs to progress a programme that will not only be acceptable to the public, but will work in terms of minimising administrative costs to government, minimising compliance costs to users and be readly enforcement.

Earlier work indicated that there is a funding gap of US$135 million per annum to maintain the network at its current standard (which is already not ideal), so it is designed to address that,

So to implement this, there will need to be accounts for all owners of vehicles in Wyoming, and then permits (or accounts) for all out of state vehicles transiting Wyoming.  That may be done with a mix of private account managers and the state, and for some vehicles it will mean in vehicle equipment, but for others it will mean recording odometer images (and for heavy vehicles it may mean hubodometers).

Now the proposal appears to have been, in part, informed by Wyoming's advisors, engineering consultancy WSP, and the draft bill raises a whole series of questions, so I thought I'd quickly give a few thoughts:
  • Six categories of vehicles is curious. It's curious to include motorcycles (which no other RUC system anywhere has included - no, Singapore's ERP is NOT a RUC system), that I can't imagine the transaction costs involved in including them (let alone enforcing RUC against out of state motorcycles).  There are so few categories for heavy vehicles it is extraordinary, as this provides next to no opportunity to vary rates by mass (as categories) or configuration (to reward more road-friendly configurations).  Other full network heavy vehicle RUC systems (Oregon, New Zealand and Switzerland) have much wider categories by mass and configuration, that this over-simplification will mean the heaviest vehicles will subsidise lighter ones, and there are no incentives to have additional axles and tyres to reduce road wear.  Category 3 is odd indeed, either make it similar to passenger cars or make them light trucks. 
  • There are variations between commercial account managers and state provision. The state can be the RUC provider and can subcontract retail outlets to open accounts on its behalf. This is exactly what happens with prepaid distance permits in New Zealand, which can be bought at some gas stations, post offices and some other outlets.
  • Rate adjustments according to inflation are all very well, but in both Oregon and New Zealand, this is not the main source of information about rate setting.  Both jurisdictions (and in fact European ones) use cost-allocation models to help inform what rates should apply to different types of vehicles based on what vehicles generate costs on the road network (informed by spending). It's a sophisticated process, but it minimises cross-subsidies between groups of road users.
  • Having a process to credit fuel taxes paid means having a system parallel with the RUC system, which can be tricky especially for private automobile users. If payment isn't automated, there needs to be a verifiable system to identify gas tax collections and credit it to the RUC account. There are a lot of ways of doing this, but they need to take into account those who pay cash for fuel, and those who have their own fleet filling stations.
  • Minimise exemptions, they can cost a lot of money and provide opportunities for fraud, but ensure you make vehicles that spend very little distance on public roads, such as some farm equipment, exempt (not tractors that can drive many miles on public roads or farm trucks). Consider that if a type of vehicle typically spends only a few miles on public roads a year (e.g. by going from one part of a farm to another) then there is no point collecting revenue on a per mile basis from them.
I thoroughly encourage Wyoming to be ambitious, but bring the public with you and make sure you do it right first time.  There are plenty of jurisdictions that have tried to implement road pricing/road user charging programs and failed (see Edinburgh and Manchester in the UK, Copenhagen, Finland, the Netherlands, Vancouver congestion pricing), you don't want to be the first in the USA to fail because you sought to do too much too soon.  The UK tried moving to RUC for all vehicles around 15 years ago, but it resulted in a massive public backlash that killed the idea off completely, and is only NOW being gently explored. Meanwhile, UK fuel tax revenue has not been able to be inflation adjusted since 2010.

What should be done instead?

Start with a smaller group.  Electric vehicles, plug-in electric vehicles and hybrids are a small group, but raise enough issues to start off with, and they are part of the core problem.  Sure, Utah and Oregon have kind of followed this, but you can do this within 18 months with the right direction and experience applied.

Another group would be heavy vehicles, which have their own complications, but would generate more in state transit revenue and once done, it is easier to roll out to light vehicles.

Don't rush, do it right.