Alternative Methods for Funding Local Transportation: VMT tax
Bridge Construction on NE Side (image credit: Curt Ailes)
A recent front page story in the New York Times highlighted a pilot program in The Netherlands whereby personal automobiles were outfitted with a meter not unlike what you would find in a taxi cab. The meter was linked via GPS and tracked how many miles and what route were travelled and tabulated a charge based on these factors. The meter contained a readout, also much like a taxi cab meter, that displayed the charge that the driver would see in an end of the month bill. The service would operate much like cell phone service where you get charged for what you used.
The idea seems a novel one in that the meters represent government intrusion into private automobiles. On its face this seems socialistic but at the heart, the premise has validity; that being an honest charge to automobile owners for the amount of time they spend behind the wheel using public roadways. At issue is the notion that the ever growing fuel efficiency of automobiles being sold is driving down revenues being generated by federal and state gasoline taxes; taxes which are used to fund the upkeep and construction of new roadways, and public transportation, projects all across the nation. This gap will continue to grow as vehicles become more fuel efficient over the years driven by buyer demand as well as federal policy. Just this last week, a major announcement came from Washington stating that by 2025, the average passenger vehicle would be required to attain 50mpg.
A VMT tax would not only create a new method of financing public transportation infrastructure, but it would also calm the debate between roadway and public transit lobbyists who complain today that public transit funds are generated solely from gasoline taxes; a notion that is untrue and proven by an annual infusion of billions from the general operating fund to pay for transportation funding shortfalls; the overarching point being that our existing gasoline taxes cannot keep up with demand for roadways and transit.
Locally, could a VMT tax be implemented to help pay for transportation infrastructure? Indianapolis while not home to chronic traffic congestion observed in places like Los Angeles, San Francisco or New York IS home to a higher than average commute distances. I wrote about this late last year after a report was released comparing the major metro areas of the US and how far people were driving on average; Indianapolis averages 21 miles one way for workers commuting via personal automobile.
Construction on Virgina Ave in Fountain Square (image credit: Curt Ailes)
Given that the CBD of Indianapolis is the state’s largest concentration of employment, and that Marion County taxpayers are the ones on the hook to pay for road repairs while suburban workers flow in and out of the city every day without paying for public roadway upkeep, a VMT could represent a leveling of the playing field in finding ways to pay for roadway upkeep and construction. Indeed, the recently released long term transportation plan by the Indianapolis MPO cited a lack of sufficient funding to maintain our existing amount of roadways over the 25 year planning horizon let alone finance new roadway construction. Even given these constraints, new roadway & widening of existing roadways is planned with the result likely to be a lower quality of driving experience. This also creates additional user costs with wear and tear on vehicles suspensions and bodies that must be maintained to keep vehicles in good state of repair and gas mileage as high as possible.
For you normal readers, you must be wondering by now why I have not mentioned anything about how this could fund public transit improvements that have been brewing locally. The Indyconnect plan as it stands calls for a non-automobile based tax of some sort in the form of either a sales tax, income tax or other creative form of non-automobile based funding to construct passenger rail and improve the current bus service. To this end, a tax implemented solely for transit could stand on its own while funding collected from a VMT would be used to cover the roadway funding needs in a responsible and representative manner of the actual amount of usage occurring in the metro area. The same report I referenced above, even in the face of insufficient funding for existing roadways, recognizes the need for some of the existing funds being collected go towards mass transit funding and sets aside 10% of the 25 year plans budget to go towards capital expenditures for IndyGo, devoid of a dedicated tax for transit occurring in the next general session.
Could a VMT be implemented in Indianapolis? In my opinion this is a stretch given the overly conservative nature of residents of the region. Furthermore, something of this nature is likely to have to make its way through the state legislature; a body which has proven to be very conservative in nature highlighted by this past session’s attack on the state Public Mass Transit Fund (PMTF). Additionally, considering the rules for who would actually be on the hook for participating could be dicey. However, I believe that the conversation has some merit and is worthy of exploring as a means of funding local roadway needs. The way that Federal policy is headed, there is likely to be a LARGE drop off in government transportation dollars in coming years with the House GOP pushing a bill that would reduce Federal funding by 30% over current and already underfunded levels. There are many other factors that would have to be considered and how they would affect current travel patterns and funding for other subsidized programs but at the core, figuring out how to fairly pay for roadway construction demand is a conversation that needs to happen.
One last parting shot and I will open the floor for debate. In the NY Times article I referenced above, a participant of the program in The Netherlands commented that having the meter in his car and seeing the charge tick away like in a cab, caused him to immediately question his choice of transportation and he admitted that public transit would receive much more consideration for him in the future. I thought that was particularly interesting in that it transcends a notion that all transit advocates struggle to get over; that notion being how do you convince people to choose to use public transit. In this case, watching your money tick away at an agreed upon, and fair, rate to pay for your actual usage on the road. How fitting that a potential method for FAIRLY funding roadway upkeep and construction could cause someone to consider using public transit.
As always, I now open the floor to debate by the readers.