Tuesday 25 April 2017

Connecticut learning the hard way

Connecticut could almost be a case study in what not to do when investigating whether and how to transition from fuel taxes to road user charging. I wrote about it in August last year, and it shows just what goes wrong when a half-hearted effort is undertaken in developing and communicating even the investigation of road charging as a policy option.  As such, it has simply got worse.

What's happened? Well Connecticut has announced (reported in the CT Mirror) that it is not participating in a pilot with three other states as part of the I-95 Corridor Coalition. Connecticut should be a lesson to other states in the US, and other jurisdictions more globally about what not to do.

The proposal  

Under Section 6020 of the FAST Act, US states are able to access Federal funds to undertake road pricing pilots (more here). The I-95 Corridor Coalition is an association of state DOTs for all of the states through which Interstate 95 passes through (as the primary north-south Interstate Highway along the eastern seaboard of the United States). Four states in the I-95 Corridor Coalition applied for funding to undertake a pilot – Connecticut, Delaware, New Hampshire and Pennsylvania.

The pilot was primarily intended to look at charging by distance across multiple states and received US$1.49 million in Federal funding (which needed to be matched by the states). 

However, although the Governor was interested in studying options to replace the gas tax, the political and media narrative around charging by distance was an absolute disaster.

The most recent statement from the I-95 Coalition about its proposal is below:

Phase II of the Coalition’s research was conducted as a case study involving the three neighboring states of Maryland, Delaware, and Pennsylvania. A concept of operations for a long range vision was developed that describes the functions that would need to be accomplished by a multi-state MBUF system that encompasses all miles traveled by all vehicles by state and jurisdiction as well as tolls and congestion-based charges. The research also explored issues that would have to be considered in the transition from the current fuel tax based revenue collection to implementation of this potential future concept of operations, including staging of the transition, the functionality of early stage systems; participation in early stage systems, including vehicle types and the potential for opt-in alternatives; collection and payment enforcement methods, both within individual states and across state lines; strategies for operating under a dual fuel tax/MBUF system during transition, and procedures for properly allocating revenues based on where miles were actually driven. The research also produced a further analysis of cost, examining it from the perspective of the estimated costs associated with the collection of MBUFs compared to the current costs for collecting not only fuel taxes, but also tolls and registration fees.
Note no mention of Connecticut, and there is a fairly simple reason for that – there was little engagement with politicians, the media and the public of the value in participating in this pilot in Connecticut. Indeed, the media coverage is scathing, not just because of the failure to communicate, but because in the absence of clear objectives and a clear message, people make things up.

Although the focus of opposition was on spending US$300,000 of state taxpayers’ money on the pilot, when no politician was willing to state that distance based charges might be implemented, that focus rapidly expanded to a dismissal of the pilot on the grounds that it isn’t even worth studying.   That level of ultracrepidarianism occurs because ignorance fills a vacuum of information, and in this case it is fed by a parochialism that is blind to the experience of others.

The arguments against studying road user charging are exacerbated by the absence of politicians (or even journalists) that are willing or able to challenge the negativity.

Patch reported that State Representative David Rutigliano claimed it was about "Big Brother" knowing how far you travel and where you travel. Yet, if that were the goal, then there wouldn't be options to charge by distance without recording location. More importantly, there is no engagement about how to address privacy concerns, such as keeping the state away from user data by using competing private service providers.

There was a petition to stop the pilot which showed that opposition was based on the usual arguments about privacy and fear that it would be a new tax. 

Where were the arguments about the sustainability of fuel tax? Where were the arguments about the equity implications of the roads being paid for by people who can't afford electric or hybrid vehicles?

More fundamentally, the absence of the basic economic concept of user pays is disappointing.  Connecticut didn't have a champion for reform, able to make these arguments, even the basic point that the whole reason to investigate road user charging is to replace fuel tax.  This report from Fox indicates how both Democratic and Republican politicians saw it as a new tax.

I'd not be surprised if people oppose it if they think it is a new tax, or think that it is part of a conspiracy to spy on everyone.

Connecticut had no political champion with a clear message and simple clear responses to criticism, based on a mixture of policy goals and the experience of others. Oregon and California have had this, but Connecticut media has operated in a vacuum filled with ignorance and fear.

The messages should have been clear about:

- Declining yields from fuel tax will make it unsustainable and increasingly unfair;

- Charging by mile could replace fuel tax;

- Charging by mile is feasible, is done elsewhere, but the state needs to understand a lot more about it and how people would react to it, before considering it further;

- Any money from such charges would be dedicated to road maintenance and upgrades.

That hasn't happened, this clearly shows what not to do when a jurisdiction is considering even investigating how to reform the charging and funding of roads.

Connecticut has since debated the introduction of tolls on major interstates, but that raises opposition as well, given they would be additional charges for all users and has other challenges. It can only be an interim measure, as it can only address major corridors, not the lack of revenue on all roads.

A common debate in the US about road charging is between those who support it because of the unsustainability of fuel taxation, compared to those who think existing spending on roads is wasteful and inefficient, so the focus should be on reforming how existing funding is spent.

Both are right. US states could learn a lot from each other and from foreign jurisdictions about lifecycle asset management, long term funding commitments for roads, competitive tendering of contracting and depoliticisation of road funding. However, that will only extract so much value from the current system without addressing more fundamental limitations on the sustainability and fairness of fuel tax. Just as inflation adjusting fuel tax will buy time, it is likely to only be enough time to investigate, pilot and start a transition away from fuel tax.

UPDATE: The Ridgefield Press reports on how Senator Toni Boucher is hailing the withdrawal from the pilot.  This article has a poor representation of the technology options:

Possible mechanisms for tracking the number of miles included a chip in the car or an app on the GPS, which has raised concerns about the possible invasion of personal privacy.
Miles aren't tracked, they are recorded.  Neither a "chip in the car" nor an "app on the GPS" (whatever that means) make any sense.  
Boucher's comments are not unreasonable though:

“The Department of Transportation did pursue this mainly on their own without letting the legislature know about it,” Sen. Boucher said. “Since we were not in session, it was a big shock to us. As one of the co-chairs of the transportation committee, I was very much interested in what this was all about. When looking into the mileage tax study, it did not appeal to us at all.”

She opposes it as being "another tax" and thinks the state shouldn't find new sources of revenue. That's a fair position to take, as discussion about charging by distance is generally about replacing existing taxes.   This just reinforces the importance of getting the policy and communications right.