Current and Future Trends of Mobility Pricing

Forty percent of America’s roadway system is currently classified as being in poor or mediocre condition. According to infrastructurereportcard.org, the infrastructure backlog stands at $768 billion, with $560 billion required for roadway and bridge repairs.

However, the federal gas tax, which is not indexed to inflation, was last raised to 18.4 cents in October 1993. If indexed, it would have reached 35.51 cents in 2022, keeping it in better alignment with related road program costs. This has caused significant shortfalls and maintenance challenges, with $205 billion transferred since 2008 to maintain solvency. Many consumers are unaware of the various gas taxes they pay. Taxes significantly impact the final price at the pump.

Compounding this funding crisis, higher fuel efficiency internal combustion engine (ICE) vehicles and rapidly rising electric vehicle (EV) populations, are creating a decline in overall fuel tax revenues, forcing road owners to rethink future road funding solutions. Challenges to developing a standardized approach of exchanging and settling road charges for interstate travel have become critical for the Federal Highway Administration (FHWA). It was a topic of discussion at the July Conference of Minority Transportation Officials (COMTO) 2023 National Meeting and Training Conference. There, I hosted a roundtable discussion about the issue with two leaders in the tolling industry: Marcelle Jones, Principal and Sr. Transportation Policy and Strategy Advisor with Stantec, and Lucinda Broussard, Director of Transportation System Operations for the San Diego Association of Governments.

Policymakers have recently incentivized purchasing fuel-efficient, electric and hybrid vehicles through tax incentives. Unfortunately, by 2030, a $22.5 billion gap in sales tax revenue is projected with the purchase of these vehicles. The system needs adapting, and nearly every state is exploring new approaches for collecting, exchanging and settling fees for roadway usage. However, with no established national standards, state road pricing systems are diverse, each exhibiting distinct operational practices and rules.

Industry wide mobility pricing, in the form of road user charging (RUC), has gained momentum with 38 state departments of transportation exploring its implementation to supplement or offset gas tax deficiencies. Establishing a national RUC program requires careful consideration of critical elements, including methods of assessment such as self-reporting, radio-frequency identification readers, odometer readings, global positioning systems, onboard units, smartphone apps and telematics. Policymakers must also address setting fees, data collection, data ownership, data accuracy, data security, data accessibility, collection and payment frequency, costs, interstate travel, usage of funds, exemptions or discounts and equity. Equity is of utmost importance and must be addressed, including the fairness of road user charging, especially concerning rural and lower-income households that drive lower MPG vehicles. According to research conducted by Broussard, lower-income individuals spend 26% of their income toward transportation fees. Consequently, the adoption of new RUC models is increasingly viewed as essential.

Though policy decisions are often influenced by competing priorities and obligations, as our leaders strategize the way forward, they must consider alternative transportation modes. Public input gathered across the state of Washington revealed that 50% of respondents prioritize preserving infrastructure; 22% seek investment in public transportation; 15% advocate for the construction of new infrastructure; 6% favor promoting alternative fuel vehicles and 5% support encouraging active transportation modes.

Creative solutions and collaborative efforts are indispensable to ensure the sustainability and improvement of our transportation infrastructure amidst the challenges we face today.