As usual a good collection of responses. I find myself in 100% agreement with Pat Jones that the real issue is educating the users of transportation that there is no free lunch--we either pay for the transportation infrastructure we use or we will face deteiorating surface, aviation and maritime infrastructure as well as congestion, inefficient use of fossil fuels and unnecessary environmental degradation.

Sure, we can wait for local and state-by-state leadership but that is going to happen anyway. My guess is that in 2013 budgetary pressures will open a window of opportunity for federal leadership, especially on issues where there are practical alternatives to the general fund (as there clearly are with transportation). So let's not let our elected representatives off the hook ("[t]o regulate commerce with foreign nations, and among the several states, and with the Indian tribes") and insist on their leadership and support them.

We have the opportunity to raise the necessary transportation funding, replace the gas tax AND better utilize market-based signals and incentives in the ways our infrastructure is used. VMT, tolling and/or the current gas tax are all better than general taxation and the variety of politicized "bank-shot" funding sources that have been floated.

Thanks to Pat for getting folks together for a timely conference. Let's get on with it.

Steve Van Beek

A VMT fee, or some similar system or systems of user-based charges, is likely to emerge over time, as a principal source of funding for the nation's highway and road system. As two national commissions and a range of organizatins, including the Bipartisan Policy Center (BPC), have noted, motor fuels taxes are not sustainable sources of revenue for transportation. Indeed, a decline in transportation's dependence on petroleum is in the national interest and will, in any event, be the result of market- and regulatory-driven improvements in energy efficiency.

However, this transition will not happen soon, and we are likely to remain largely dependent upon gasoline and diesel taxes at both the federal and state levels for some time. Moreover, the political, financial, and technological hurdles to the introduction of a federal VMT charge seem substantial. Thus, as other respondents to this question have noted, change is likely to come from the bottom up, that is, VMT charges and more extensive use of tolling and other user charges almost certainly will be first introduced at the state and local levels. In our federal system of government, where states are the laboratories of democracy, this is probably preferable. User charges can be ever more widely tried at the state and local level; indeed, states are likely to have to turn to such revenue sources, as federal funding for transportation improvements continues to decline and to become ever more uncertain.

However, the federal government should not be passive in this movement. For now, as the proposed amendment to MAP-21 by Senators Carper, Kirk and Warner sought to accomplish, current federal pilot programs for tolling and user charges should be extended, and the caps on participation should be removed. All federal barriers to tolling and user charges should be removed, and implementation of such user-based revenue programs at the state and local levels should be incentivized by the federal government through a system of rewards or bonuses to those states and metropolitan regions that introduce them.

These fees will graduallly, but steadily, be implemented, but this will not occur quickly, nor all at once, and probably not widely at the federal level. The technology is there, and, with education and greater use of demonstration or pilot programs, public support can be achieved, but the adoption of VMT fees will occur slowly, state-by-state, region-by-region.

I love reading the responses to Fawn’s questions about the potential for a vehicle-miles traveled fee and have some thoughts of my own. More on that in a moment.

In the meantime, I want to let everyone know that we will probe the depths of Fawn’s questions in great detail at the Mileage Based User Fee Symposium and Transportation Finance Summit that IBTTA and several partners are hosting in Jersey City, NJ, April 29-May 1, 2012. Both Dick Mudge and Joshua Schank (respondents below) will be on the program and you can interrogate them further at the summit. You can learn more about the summit and register here.

Gabriel suggests that people are willing to pay more for a superior service and holds up the iPhone as an example. He implies that a VMT supported road should offer superior service. Agreed.

Joshua cites many potential obstacles to the successful emergence of VMT fees, but I think he’s being a bit pessimistic. He also suggests that we should allow technological innovation to happen from the ground up. “Once people accept the concept within states, perhaps the federal government will have a shot.” I agree with that observation.

Dick suggests that a VMT system should “focus on a single goal: generating funds for transportation. The more such a system begins to look like social engineering, the more it will generate opposition.” I heartily agree.

Now for my thought. I love the fact that we are talking about the potential of VMT fees. Why? Because there is a culture and expectation in America today in which NOT having to pay for the services we want, especially with respect to surface transportation, is considered the normal state of affairs. Until that changes, nothing else will.

So join us in Jersey City to learn more about what a VMT charging system might look like and the benefits it will bring.

It is hard to imagine a national VMT-based fee happening soon. But then the gasoline tax started at the state level, with the federal government following more than a decade later. IF mileage-based fees are to happen, we need a few success stories. To date there have been a series of pilot projects that show the technology works. We need to move beyond this. Some guidelines:

· Focus on a single goal: generating funds for transportation. It is easy to imagine a VMT-fee based system that can do a range of wonderful things from congestion management to encouraging use of different classes of vehicles or roadways. The more such a system begins to look like social engineering, the more it will generate opposition.

· Emphasize cost controls. While the fuel tax costs only about one percent to collect, other transportation user fees are much more expensive – registration fees can take more than 20 percent of revenues to collect (I-95 Corridor study) and traditional tolling is not a lot better (open road tolling can drop to ten percent or less, however). To be practical both financially and politically, I think a VMT fee system needs to cost less than ten percent of revenues – less than five percent would be wonderful.

· Develop scalable deployments rather than more pilot projects. Technology tests are not the issue now.

· Target specific types of vehicles in specific locations. Oregon and its plans for electric vehicles is a prime example. Heavy trucks in a specific state or corridor offer another opportunity particularly if the fee replaced existing truck taxes and was partly dedicated to truck related investments

In sum, let 1,000 flowers bloom – or at least 50. This does not guarantee eventual implementation of course but without a series of real deployments, nothing will happen. I can also imagine that as soon as VMT fees start to appear likely, our political leaders may decide to take a serious look at simply raising the motor fuel tax.

As state-level gas taxes run out of steam due to increasing vehicle gas mileage and alternative fuels, they will need to be replaced in order to maintain and expand our transportation infrastructure in the future. We should welcome and encourage such replacement, because more accurate user-fees at the state level will allow states to better manage demand and weigh investment priorities.

But at the federal level, a VMT fee faces several obstacles that together seem insurmountable.

First, we have not yet articulated a clear enough need for a federal program to convince the public to pay any fee at all. We have an existing mechanism in place - the federal gas tax - that would work just fine for the near future if we had the political will to increase it. But instead of support for an increase, we see more evidence of support in Congress for devolving the program to the states.

Second, the perception of a privacy issue is unlikely to be overcome in this country, where people are inherently suspicious of the federal government. All the technological fixes in the world are unlikely to convince people that it is ok for the federal government to charge them by the mile for driving.

Third, there are large administrative costs associated with a VMT-style fee. Some reports have indicated that this cost is so high that a VMT fee would have to be substantially higher than the existing gas tax on a per-mile basis in order to bring in the same amount of revenue.

Finally, VMT fees will perpetuate and exacerbate the donor-donee fights we currently experience with the gas tax. When we know exactly where all the funds are coming from, those paying are likely to demand 100% back on every dollar. In which case, why have a federal program at all?

The VMT-fee concept at the federal level is so toxic that we cannot even get anyone to agree to spend federal money to study it. Secretary LaHood got in trouble with the White House for even saying we should "look at" the issue.

These things could change, but in the meantime, let's focus our collective energy at the federal level on making the case for the federal program using existing funding mechanisms, and giving states the tools they need to make such transitions at the state level. Once people accept the concept within states, perhaps the federal government will have a shot. We are not backward technologically, but technological innovation in government usually occurs from the bottom-up.

Fawn uses the terms “Driving Tax” and “VMT Fee” without distinguishing between them. Replacing the federal fuel tax by a “Driving Tax”, with all the revenues going to Washington, for allocation by the federal government, seems to make as much sense as sending all the revenues from telephone calls to the cash-strapped Feds. Is it really a good idea?

But replacing the fuel tax by a mileage–based fee is surely a good idea. Electronically-collected fees are familiar to the millions who use devices such as “E-ZPass”. The fees can be sent directly to those who provide the facilities being used — whether public or private entities — eliminating entirely the need for federal financing.

The federal government got into financing modern roads by means of a fuel tax mainly to finance the Interstate Highway System. But now that that system is virtually complete, federal involvement in highway financing no longer seems necessary.

Fawn asks: “Should vehicles be taxed differently based on their footprint or when they are used (i.e., peak v. non-peak hours)?” Why not? Does she pay the same for all restaurant meals? As road conditions differ from place to place and from time to time, should not the fees? The federal fuel tax was considered the most suitable way to pay for roads when it was introduced, but times have changed since 1956.

Fawn goes on to ask: “How can such a major change be made into a pill the American public can swallow?” One answer is that the American public can “swallow” that “pill” in the same way that it “swallowed” the more expensive iPhone: By being offered a superior product. One way to achieve the change is to allow road users to switch to mileage-based road-use fees in a voluntary manner: Giving them the option of paying such a fee instead of the current fuel tax.

Let interested states invite private manufacturers to devise alternative methods of charging for road use, methods that offer benefits, such as “Pay-As-You-Drive” insurance premiums, guidance to convenient parking, and information about traffic congestion. University of Texas Professor Kara Kockelman has written a lot about this. This approach would enable some of the seemingly difficult problems — such as privacy — to be solved in the US, as it has been reportedly solved in Europe.

The federal government employs plenty of bright people, and may hit on the best modern way to charge for road use. But is it not more likely that competition in different states, introducing different methods, would enable the best solutions to emerge, as happened with telecommunications? Is this not another reason for turning back road financing to the states, and allowing our over-worked federal congress-people to focus on matters more suitable for them, such as producing federal budgets?