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Slow Going on Controversial Road Funding Policy

April 25, 2011 By Conrad deFiebre, Transportation Fellow

In one of the slowest-moving public policy initiatives in Minnesota memory, the state Department of Transportation will begin pilot testing a mileage-based user fee for driving in July, four years after the Legislature authorized the $5 million study. What's more, MnDOT assures us that this controversial option for financing roads and bridges won't take effect statewide until at least "10 or 20 years from now."

Former Gov. Tim Pawlenty promoted the study as an alternative to raising fuel taxes, the historical workhorse of highway funding. He and Lt. Gov./Transportation Commissioner Carol Molnau repeatedly told us that fuel taxes were losing their efficacy to plug-in, hybrid and other high-mileage vehicles—not to mention inflation, which they didn't. Therefore, different ways to raise money to build and maintain roads had to be found.

That's true, as far as it goes. But somehow Pawlenty and Molnau twisted this fact into an argument that fuel taxes should never, ever be increased to keep up with the rising costs of driving infrastructure—as had been done for decades in Minnesota and even on the federal level by Ronald Reagan. In effect, the mileage fee prospect was a stalling tactic, an effort to run out the clock on proposals to increase the fuel tax.

Now we know that this four-corners offense could last into the 2030s. Even that timeline could be optimistic, given the issues of cost, technology and civil liberties that surround tracking and taxing drivers' mileage instead of the gallons of hydrocarbons they burn.

It took 2008's historic override of Pawlenty's third transportation bill veto to raise Minnesota's gas tax slowly from its 1988 level of 20 cents a gallon to 28.5 cents by July 2012—still less than the current national average, and still well short of putting a dent in MnDOT's projected $50 billion funding shortfall for state highways over the next 20 years.

By itself, mileage tolling won't address that problem, either. The same tax aversion that's done far more to rein in fuel-based revenues than gas-sipping vehicles will figure prominently in any future debates over mileage fee rates—putting us pretty much back where we started.

But the study will go on, with completion scheduled for the end of next year. An urban-rural mix of 500 drivers from Hennepin and Wright counties will be recruited for the research over three six-month periods. Each will get a $350 stipend and a dumbed-down smartphone that will record their travel via GPS, handle monthly mileage billing, and transmit real-time traffic and safety messages. The phones will be disabled from calling, texting and web browsing.

Cory Johnson, MnDOT's project manager, said "scoping and planning" consumed the four years since the study was authorized. The result, he said, is a research design that improves upon similar efforts in Oregon and other states by using commercially available technology and messaging functions.

Battelle Memorial Institute, a $4.9 billion-a-year nonprofit research group with headquarters in Columbus, Ohio, won a $4.1 million contract to conduct most of the study. SAIC, a multinational defense contractor with headquarters in San Diego, Calif., will evaluate the results and produce a final technology report for $1 million. The University of Minnesota's Humphrey School of Public Affairs got a $395,000 contract to conduct a parallel policy study, including surveys and hearings to gauge Minnesotans' concerns about mileage tolling.

The project was able to exceed its $5 million appropriation from highway funds by tapping about $500,000 in technology money for the traffic and safety messaging component, Johnson said.

Mileage tolling may eventually replace fuel taxes, but many hurdles will remain after the study is done. One is cost. Humphrey School Prof. Zhirong Zhao told the Star Tribune that collecting road revenue via mileage fees is four times more expensive than by fuel taxes, although improved technology could bring it down to just three times as much. Mileage tolling also could open more possibilities for tax evasion than user fees extracted at the pump.

And, perhaps most significantly, reasonable fears persist over an electronic Big Brother on the dashboard monitoring the driver's every movement. MnDOT is assuring prospective test volunteers that their privacy will be protected. But among the allures of mileage tolling is GPS tracking that would waive fees for driving out of state and also impose higher rates for travel on congested routes, which is actually a promising strategy for priced traffic management.

In the MnDOT test, drivers will pay 1 cent a mile for ordinary travel, but 3 cents a mile in congested conditions—the equivalent of a 60-cents-per gallon fuel tax on a car getting 20 miles per gallon. Because the testers also must pay the state-federal tax of 46.4 cents a gallon at the pump, they will be "pre-imbursed" for the mileage charges, Johnson said.

I can already hear the howls of protest. Witness the opposition to a current federal proposal to require electric monitors in over-the-road trucks. The devices would record when a truck's engine is running as a way to enforce safety limits on truckers' daily driving hours, which now depend on an honor system of paper log books. Big trucking companies like the idea as an aid to fleet management, but the 150,000-member Owner-Operator Independent Drivers Association doesn't.

"I can't think of anything good that would come from this," independent trucker Terry Button told National Public Radio. "When I'm away from home, my rig is my home. Does somebody come in your front door and decide, 'I want to plug into your computer and see where you've been today'?"

Implementation is a long way off and there will be a lot of debates in the meantime. For now, we’re taking a positive step toward examining ways to more adequately pay for our roads.

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