2011 NY Vehicle Miles of Travel Final Report by GBNRTC

A Practical Approach to Truck VMT Fees Including Some Financial Implications and Possible Impacts on Traffic Congestion

Final Report

Delcan Corporation, Calmar Telematics, and Greater Buffalo Niagara Regional Transportation Council with support from

Capital District Transportation Committee Binghamton Metropolitan Transportation Study

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Table of Contents Acronyms .......................................................................................................................................... iii EXECUTIVE SUMMARY ...................................................................................................................... 1 Background .................................................................................................................................. 2 Project Goals ................................................................................................................................ 3 Findings .......................................................................................................................................... 4 Methodology ................................................................................................................................ 6 Next Steps ..................................................................................................................................... 8 INTRODUCTION................................................................................................................................. 9 BACKGROUND ............................................................................................................................. 9 Freight Trends .............................................................................................................................. 12 Background on VMT Fees ........................................................................................................ 13 Implementation Stumbling Blocks .......................................................................................... 14 Truck Based VMT Fees Advantages ....................................................................................... 16 METHODOLOGY ............................................................................................................................. 19 Sources of Data ......................................................................................................................... 20 Creation of VMT Fee Database .............................................................................................. 22 Description of Methodology to Determine Truck VMT ........................................................ 23 Development of Revenue Baselines ...................................................................................... 27 Development of Alternative Fee Structures .......................................................................... 29 Test Rate Structure Models with Detailed Data from Trucking Partners ........................... 32 GBNRTC Congestion Pricing Case Study............................................................................... 32 CONCLUSIONS ............................................................................................................................... 40 Equipment Requirements ......................................................................................................... 42 Privacy ..................................................................................................................................... 43 Location or Time Based Variation ....................................................................................... 44 Cost to Administer VMT Fee System ....................................................................................... 46 Outreach ................................................................................................................................. 46 Introductory Fleet Meetings ................................................................................................. 47 Advisory Board Meeting ....................................................................................................... 48

A PRACTICAL APPROACH TO TRUCK VMT FEES

NEXT STEPS ....................................................................................................................................... 49 APPENDIX ........................................................................................................................................ 50 Equipment Matrix Definitions ................................................................................................... 51 Study Team and Roles .............................................................................................................. 57 New York State Vehicle Miles Traveled as Estimated for VMT Fee Calculations ............ 58 Advisory Board Members ......................................................................................................... 60 New York Truck VMT Advisory Board Meeting ...................................................................... 61 Background ............................................................................................................................ 61 Devices Used/Equipment Matrix ......................................................................................... 62 VMT Fee Rates Proposed and Reactions........................................................................... 62 Discussion Questions .............................................................................................................. 63 GPS Data Point Processing....................................................................................................... 67 Carrier Data Snapped to Map Dataset Characteristics .................................................... 69 Detailed GBNRTC Pricing Case Study .................................................................................... 71

A PRACTICAL APPROACH TO TRUCK VMT FEES

Acronyms AADT –Annual Average Daily Traffic AASHTO – American Association of State Highway and Transportation Officials ALIS – Accident Location Information System BMTS – Binghamton Metropolitan Transportation Study (regional transportation planning agency and MPO for bi-state Binghamton area straddling the NY/PA border) CAFE – Corporate Average Fuel Economy CDTC – Capital District Transportation Committee (MPO for Albany-Schenectady-Troy metropolitan area) DOT – Department of Transportation EPA – Environmental Protection Agency FHWA – Federal Highway Administration GBNRTC - Greater Buffalo Niagara Regional Transportation Council (MPO for Greater Buffalo Region) GHG – Greenhouse Gases GPS – Global Positioning Satellite GVW – Gross Vehicle Weight HTF – Highway Trust Fund HUT – Highway Use Tax IFTA – International Fuel Tax Association ISTEA – Intermodal Surface Transportation Efficiency Act LOS – Level of Service MPO – Metropolitan Planning Organization NCHRP – National Cooperative Highway Research Program NY MTA – New York Motor Truck Association NYCDOT – New York City Department of Transportation NYSDMV – New York State Department of Motor Vehicles NYSDOT – New York State Department of Transportation NYSERDA – New York State Energy Research and Development Authority NYSTA – New York State Thruway Authority TTI – Texas Transportation Institute

iii

A PRACTICAL APPROACH TO TRUCK VMT FEES

EXECUTIVE SUMMARY A truck-based VMT fee could replace existing truck highway user fees and offer a robust, long-term source of user-fee based revenues for highway investment. Data from the VMT system would make it possible to focus a portion of any net new funds on investments that would improve truck mobility. A truck-based VMT fee system has advantages over auto-based VMT fee proposals due to a proven low-cost technology and reduced concerns over privacy. Any truck VMT-fee system should focus on several principles: simplicity, cost control (by using existing technologies) and an emphasis on the economic importance of an efficient trucking industry. A truck-based VMT fee system offers the potential to generate additional revenues, whether by reducing under payments (currently more than $200 million a year for the state of New York and $1-3 billion nationally) or by increasing truck-based revenues. VMT fee systems that rely on location-based technology also generate data that will improve truck-related planning. This study examined the feasibility of using existing GPS-based technology to implement a truck VMT system that could replace existing truck fees and taxes in New York State. Using data from several New York-based truck fleets, a VMT fee system was designed around the technology already installed in the trucks. These systems were sufficient to determine routes with enough accuracy to assess fees. Several sets of fee structures were tested â&#x20AC;&#x201C; flat rates by type of truck, variable rates by type of road, and variable rates by time of day. Finally the fees were applied to recent historical data from the participating carriers. The carriers were interviewed to get their reactions to the system and the fee structures proposed in order to help assess the actions needed to generate broader acceptance among the motor carrier industry. A preliminary assessment of the costs to implement a truck-based VMT fee system showed that collection costs would be higher than for motor fuel taxes (about one percent of collections), but significantly less than the costs to collect other transportation fees including registration fees and tolls, and less than the costs for the German truck toll system. A limited case study showed that varying rates by time of day (lower rates for off-peak periods) was unlikely to have a significant impact on congestion.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

The project also analyzed indirect support for other broad national goals, including reduced energy consumption; reduced transportation costs in general (encourage use of higher level roads); improved safety (again, through use of higher level roads); reduced traffic congestion; help reduce GHG and other emissions; and support livability objectives. The scale of these other benefits depends on the specific nature of the fees that are charged. Most impacts on the motor carrier industry are likely to be very small since shippers and receivers largely determine when and where truckers drive in order to make on-time deliveries and these forces are likely to outweigh modest shifts in operating costs. Some advocates of mileage-based fees have called for complex systems that are likely to contradict the goal of a simple system that does not create economic hardships for the motor carrier industry. Truck-based VMT fees also offer other important benefits to the trucking industry and to the public sector. Near real-time data on truck travel would help to identify when and where truck bottlenecks exist and to help measure their severity. This information could help target the investment of any additional funds that the VMT fee might generate. This is an important argument for equity and efficiency â&#x20AC;&#x201C; spending should match the needs of those who provide the funding. Data about trip origins and destinations and routes could support improved planning by the public sector.

Background Federal and state finance mechanisms no longer provide sufficient funds to meet the demands for surface transportation investment. The reasons for this problem are both political and economic. For example, the federal tax on motor fuels has not been increased since 1993, despite inflation and continual growth in demand for highway construction and maintenance. Most state motor fuel taxes have also lagged well behind inflation and demand.1 Even aside from political issues, the future does not look encouraging, with new car fuel economy standards mandated to increase to 35.5 miles per gallon by 2016 (the socalled CAFE standards). Growth in electric and hybrid vehicles are expected to blossom in response to worries about higher oil prices and concerns over greenhouse gas emissions. The Obama Administration has also discussed a 62 mile per gallon standard for new cars by 2025. EPA is about to propose the first fuel economy standards for new trucks.

New York state has a two part tax on diesel: one part was last increased in 1972 and the second part varies each quarter based on inflation (the most recent change reduced the rate). 1

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

These pressures have increased interest in non-fuel sources of revenues for highway travel. Mileage-based fees – also called VMT fees – have become a popular topic among financial experts – and even some politicians. The National Surface Transportation Infrastructure Financing Commission reviewed the full range of financial options and recommended VMT fees as the most promising.2 NCHRP has completed two reviews of VMT fees3, Oregon DOT has completed a test of technology4 and the University of Iowa is completing a two-year test deployment that includes technology and individual attitudes5. In the US, automobiles have been the primary focus of VMT fees. In these studies individual privacy, equipment costs, operational costs and time-to-implement have been raised as major concerns. In contrast, a truck-based VMT fee avoids some of these problems since privacy is less of an issue and because a significant fraction of large trucks already have fleet management systems that include the basic technology needed to support a mileage tax – GPS for location and some form of wireless communication. The costs to operate and audit the system remain a concern given the low costs to collect motor fuel taxes. Several European nations have implemented mileage-based fees for trucks (Germany, Switzerland, and the Czech Republic with similar systems being examined elsewhere in Europe). These European systems differ significantly from the approach described in this report. Their operating costs are high (though still lower than for most toll systems and US registration fees), they do not rely on off-the-shelf technology, and they often have secondary objectives (Germany, for example, was concerned about controlling unsafe and polluting vehicles from Eastern Europe).

Project Goals This project seeks to examine whether or not a truck-based VMT fee offers a practical long-term base for transportation finance. The first goal was to show that existing technology, already widely in use by the motor carrier industry, could be used as the

2 National Surface Transportation Infrastructure Financing Commission, “Paying Our Way: A New Framework for Transportation Finance,” (February, 2009). http://financecommission.dot.gov/Documents/NSTIF_Commission_Final_Report_Advance%20Co py_Feb09.pdf 3 RAND Corporation, “Implementable Strategies for Shifting to Direct Usage-Based Charges for Transportation Funding,” National Academy of Sciences, (June, 2009), and “System Trials to Demonstrate Mileage-Base Road User Charges,” (October, 2010). 4 Whitty, J.M., Oregon’s Mileage Fee Concept and Road User Fee Pilot Program: Final Report. Oregon Department of Transportation, (November, 2007). 5 National Evaluation of a Mileage-Based Road User Charge study underway in Iowa, University of Iowa's Public Policy Center, http://www.roaduserstudy.org/Default.aspx

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

basis of a VMT fee system. The second goal was to show that a VMT fee system could be used to replace existing truck fees and taxes, thereby reducing administrative costs for both the private and public sector. The final goal was to engage the trucking and public sector communities in the design of the system to further understanding and to gain support for the concept. An important part of the NY Truck VMT Fee Study was its focus on working closely with individual motor carriers. Several New York-based trucking firms provided data and advice to this study. This critical private-sector contribution provided practical feedback regarding the realities associated with the professional operation of truck fleets and the reactions these taxpayers have to a new way to finance highways. This support allowed the team to use detailed truck operating data to test alternative fee structures, rather than relying on assumptions and averages. The participating commercial vehicle operators stated that their goals included a desire to simplify the current tax system that is a concatenation of registrations, fuel taxes, mileage fees, tolls and interstate fees. The commercial carriers expressed support for consolidating the tax structure down to a single mileage based system similar to the IFTA system in which interstate truckers are required to participate.

Findings The first finding set the stage for the rest of the project - existing GPS based technology worked to collect the data and determine the routes driven by the trucks with sufficient detail to support several fee structures. Important issues still need to be dealt with prior to a full implementation including security/tamperability of the equipment to protect the data, auditing procedures, consistency of GIS road mapping nationwide, and how best to equip fleets that do not presently have the equipment. Second, VMT fees would work as a replacement for existing fee and tax structures imposed on motor carriers. Several alternative fee structures were developed that collected the same total dollar amount as expected from the current fees and taxes. The current system, however, results in significant under payments to the state of New York. There are two possible sources of this under payment. First, the State’s mileage based fee collects less than half of the funds expected, generating a loss of more than $150 million a year. This finding is consistent with previous studies.6 Much of this tax is self reported and it is difficult to audit motor carriers located outside the state of New York.

American Transportation Research Institute (ATRI), “New York State Ton-Mile Tax AnalysisEstimation of Untaxed Commercial Vehicle Miles Traveled,” 2008. http://www.atri-online.org/research/results/economicanalysis/nytmtanalysisv9.pdf 6

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Second, diesel payments appear to be low. This is harder to estimate, but if we assume that tractor trailers average 6.25 miles per gallon7, the under payment totals about $90 million per year. This finding was not expected. There are two possible causes: •

First, under reporting by interstate truckers. Interstate truckers are required to report mileage each quarter to IFTA (International Fuel Tax Association). IFTA balances payments among the states based on miles driven in each state. Motor carriers, however, have an incentive to under report mileage in a high tax states (such as New York) and to over report miles in nearby relatively low tax states (such as New Jersey and Pennsylvania). These data are self reported and it is not easy to audit the large number of independent drivers and small firms.

•

Second, there are a number of ways to avoid diesel fees. Some involve using untaxed fuels such as home heating fuel or aviation fuel and some involve illegal acts. Estimates of these losses vary between $1 and $3 billion a year nationwide.8

The significant level of revenue losses raises the option of setting VMT fees to equalize the current truck fees instead of merely matching current state revenues. This would increase funds for the state of New York by about $250 million dollars a year with no increase in tax rates. Motor carriers who were already paying the correct amount of fees would see no change in their tax payments. Firms or individuals who avoided certain NY State truck taxes would see an increase. Alternatively the VMT fee could be set at a lower rate, but one that would still increase revenues for the state. This would reduce user fees for those truckers who were already making correct payments. VMT fees could be applied to meet other goals. For example, a fee that varied by type of road with a higher fee placed on local roads would encourage trucks to use higher level roads that tend to be engineered to handle the weight of trucks. Rates that vary by time of day (lower during uncongested times) were found to have a small impact on overall congestion by themselves. Interestingly, the truckers preferred the base case – a flat fee for all roads for all times of day. They stressed the appeal of simplicity, despite the fact that each of the fleets in the study would have paid less under the more complicated fee structures.

Use of a lower miles per gallon number would increase the estimated loss. The fuel economy estimate is based on a study by Calmar Telematics using actual fuel use data by motor carriers in New York State. 8 NCHRP Report 623: Identifying and Quantifying Rates of State Motor Fuel Tax Evasion. http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_rpt_623.pdf 7

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

The proposed VMT fee system uses low cost readily available technology, it provides more accurate data for assessing fees than any of the current systems, it would avoid the IFTA issue of funds not properly credited to each state, and it is relatively easy to report and audit. From a public sector perspective it will enhance the data collected, reduce inaccuracies and underreporting, and should streamline business practices. All the participating truckers were interested in the concept and could see value as long as the new system was kept simple (preference for a single flat fee over fees that vary by class of roadway). They were also open to a system that generated additional funds but only as long as some or all of these additional funds were dedicated to highway investments. They also supported a VMT-fee based system for automobiles as one way to offset the shifts in equity caused by the rapid increases in fuel economy. Several of these firms have indicated a willingness to participate in a possible second phase on a voluntary basis. Members of our public sector advisory panel were interested in the concept and supportive of further work. They see value in terms of possible additional funds for transportation but also were supportive of fees that would vary by type of roadway in order to encourage some traffic to avoid local roads in favor of higher level roads. There was also general support for off-peak discounts as one way to encourage trucks to shift the time of travel (rather than higher rates during peak hours), although most recognized that the absolute impact on congestion would be minor and may not even be noticeable in some cases. Another strong benefit from the system from the public sector’s perspective is the availability of highly detailed current data about truck movements for freight planning and analysis

Methodology The study analyzed truck travel in NY state, with detail by class of truck and class of roadway; analyzed current truck fees paid to the state of New York; and then examined detailed travel by three motor carriers in the state. The project also relied on interviews with managers from half a dozen NY-based motor carriers and interviews with public sector officials with knowledge of the topic. The study built on several assumptions: •

Design a system that was revenue-neutral

April 2011

–

All existing NY state truck taxes are assumed to be replaced by the truckVMT fee

–

No increase in the overall payments by the trucking industry (although individual firms might pay less or more)

A PRACTICAL APPROACH TO TRUCK VMT FEES

– •

•

No decrease in the revenues generated by the state of New York from truck fees

Minimize costs, for both private and public sector –

Rely on existing fleet management systems already in use by motor carriers

–

Identify cost-effective options for fleets that currently do not have an onboard management system

–

Seek to reduce the accounting costs and related administrative costs for motor carriers and the public sector

Keep the set of proposed fees as simple as possible –

Continue the current fee structure used by the NY Thruway – a de facto truck VMT fee system.

For simplicity, the project focused on tractor trailers, although data were collected for large single-unit trucks. Tractor trailers generate the most user fees under the current system, are most likely to be equipped with fleet management systems, and are important economically. The study examined three fee structures. •

•

Flat fee per mile – a single rate for all roads -

10.6 cents per mile for non NY Thruway roads

5.1 cents per mile for the NY Thruway – in order to recover diesel fees and registration fees.9 This would be in addition to the current Thruway fees.

Fees that vary by class of roadway – with the goal to encourage trucks to use higher level roads as much as possible. These roads are safer and because they are more likely to have been built to handle larger, heavier vehicles, the longterm maintenance costs for NYSDOT should be lower as well. -

9 cents per mile for Interstates and other divided highways

13 cents per mile for major arterials

17 cents per mile for other arterials and local roads.

Fees that offer an incentive to avoid peak-hour travel times. This reduced fees by 50 percent for travel between (8PM to 5 AM) for upstate cities (no specific analysis was prepared for the NY metropolitan area).

The NY Thruway waives payment of the NY state ton-mile tax.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Next Steps Additional work is required before any effort to implement a truck-based VMT fee system. This project identified two possible next steps: •

Operate a voluntary system that would make it possible to develop required software, test auditing, procedures and develop a “real-world” measure of the costs to operate such a system. In sum, this effort would seek to establish procedures which may be attractive to both the public and the private sectors and encourage a near-term transition to a VMT-based highway finance system. In this system, motor carriers would operate under two tax systems — current law and a mileage based system. Each month a payment would be made based on the miles driven — a motor carrier would receive funds if the mileage fee cost less than the current system and would make a payment if the mileage-based fee cost more than the current mix of New York truck taxes. In effect, each firm would operate as if the VMT fee were the actual set of user fees.

•

Examine the practicality of using the IFTA data to support a nationwide VMT fee system. Motor carriers already report these data so no additional costs would be imposed on motor carriers — and once fully implemented there would be tangible accounting savings since all current federal truck fees would be dropped (diesel fees, heavy vehicle use tax, excise taxes on tire sales and new truck sales). There would be additional auditing costs to ensure full reporting.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

INTRODUCTION Considerable interest exists in finding a new source of funds to cover highway maintenance and investment. There is also interest in techniques that might also encourage more efficient use of our highway assets. VMT or mileage-based fees are often mentioned as an approach that could meet both these goals. There are significant technical and political problems with this approach, however, and to date most work has focused on pilot projects designed to test alternative technologies for automobiles. No effort in the US has examined the practicality of truck-based mileage fees. This project takes a first look at the practical issues related to truck-based VMT fees, using the state of New York as a test case. Funding for this project comes from FHWA’s Value Pricing program under a competitive process. The Greater Buffalo Niagara Regional Transportation Council (the MPO in the Buffalo metropolitan region) sponsored the work, with support from the MPOs in Albany NY and Binghamton NY. Hal Morse was the lead from the GBNRTC. The technical work was completed by Delcan Corporation (Richard Mudge, Rosalyn Wilson, and Sumala Tirumalachetty) and Calmar Telematics (Ross Sheckler, Lee Maynus, Ralph Viviano and Adam Kovar). An appendix provides more detail on these entities.

BACKGROUND Federal and state finance mechanisms no longer provide a sufficient and sustainable source of funds for the nation’s surface transportation needs. AASHTO estimates that funding covers only one third of the $200 billion required to maintain and upgrade the nation’s highway system. The Highway Trust Fund (HTF) has been close to insolvent three times since the end of FY 2008. Twice Congress has Our growing economy and appropriated funds from the general tax pool to prevent population has placed sharp cutbacks as the fund approaches a zero cash increasing demands on an aging transportation balance, and in 2010 more than $19 billion was moved system. Total vehicle miles from general funds to insure that the fund would not run traveled (VMT) increased dry until early 2013. The next figure shows that funds for by more than 48 percent transit will drop by 36 percent in 2012 and highway funds while highway spending per VMT has actually will drop by almost 70 percent in 2013. The new “stable” declined by 7 percent in level of highway funding will be at least $8 billion a year the last 25 years, and less than the current level of about $43 billion.10 nearly 50 percent since the beginning of the federal HTF in the late 1950s.

Speech by Jim Tymon, now with the majority staff for the House Transportation and Infrastructure Committee, at Road Gang luncheon, November 18, 2010.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Current revenues are stagnant as the average fuel economy of passenger cars has begun to improve and the federal CAFE standards mandate an average fuel economy of 35.5 miles per gallon for new passenger vehicles by 2016.11 The Obama Administration has discussed a 62 miles per gallon target for the 2025 time frame. At the same time, the historical rate of growth in VMT for cars has slowed from 5 to 6 percent per year to 2 percent per year or less (and of course actual declines during the current recession). Together these changes represent a structural change in surface transportation finance.

Estimation of Reduced Program Spending Beyond 2011 Highways

Transit

50 45

43.0

42.6

42.5

36.7

36.3

($ billions)

35 30 25 20 15

10.9

13.2

11.3

7.2

7.5

7.7

8.0

5 0 2010

2011

2012

2013

2014

2015

Ending balance for FY 2008 includes $8.017 billion transferred from the General Fund in September 2008. Ending balance for FY 2009 includes $7 billion transferred from the General Fund in August 2009. Current balance for FY 2010 includes $19.373 transferred from General Fund to reimburse for lost interest since 1998 in March 2010. Source: American Association of state highway and Transportation Officials

In addition, current revenues fall well short of demand. Current policy regarding gas mileage requirements and policies designed to encourage electric vehicles will continue to exacerbate the shortfall. Federal policy favors fuel efficient autos, those

11 Federal

Register /Vol. 75, No. 88 / Friday, May 7, 2010 /Rules and Regulations, May 10, 2010, Environmental Protection Agency and National Highway Traffic Safety Administration, p. 25330. The CAFE standards apply to passenger cars and light trucks – categories which span the range of vehicles from sedans to crossovers to pickup trucks to vans – manufactured in model years 2012 through 2016.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

using hybrid fuels, and cleaner burning fuel – all of these objectives reduce the number of gallons of gasoline sold, along with the total tax revenue. Growth in high-efficiency light vehicles will also continue to shift the relative financial burden toward trucks since improvements in truck fuel economy are slower and the level of truck VMT continues to grow. Indeed, “The current federal surface trucks have been paying a growing share of transportation funding structure that Highway Trust Fund revenues in recent years, relies primarily on taxes imposed on contributing about 37 percent of the total versus petroleum-derived vehicle fuels is not sustainable in the long term and 33 percent in 1997.12 Advances in technology, is likely to erode more quickly than individual interest in the environment, and the previously thought…A federal Administration’s commitment to address global funding system based on more direct climate change and reduce energy imports may forms of “user pay” charges, in the form of a charge for each mile driven accelerate the funding gap and further increase (commonly referred to as a vehicle the share of total highway costs paid by the miles traveled or VMT fee system), has emerged as the consensus trucking industry. choice for the future…the Commission believes it is critical to move forward with a VMT fee system.”

Political support for higher fuel taxes (or increasing other user fees) to offset these structural changes is rare. The federal tax on Final Report of the National Surface motor fuel (18 cents per gallon for gasoline and Transportation Infrastructure 24 cents per gallon for diesel fuel) was last raised Financing Commission in 1993. Furthermore because it is not adjusted Feb 2009 for inflation, the federal gas tax has experienced a cumulative loss in purchasing power of 33 percent since 1993. A series of recent blue ribbon commissions have studied this problem and concluded that the present reliance on fuel taxes will not generate the revenue needed in the long term. The two Congressional commissions, the bi-partisan, congressionally-appointed National Surface Transportation Infrastructure Financing Commission13 and the National Surface Transportation Policy and Revenue Study Commission14 both call for a transition to VMT or mileage based fees.

FHWA analysis of ISTEA. http://www.fhwa.dot.gov/policy/hcas/addendum.htm National Surface Transportation Infrastructure Financing Commission released its final report “Paying Our Way: A New Framework for Transportation Finance” in February 2009. 14National Surface Transportation Policy and Revenue Study Commission released its final report “Transportation for Tomorrow: Report of the National Surface Transportation Policy and Revenue Study Commission” in January 2008. 12 13

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Over the last five to seven years, there have been a growing number of pilot projects on mileage based fees. The work by the Oregon DOT is best known15. This work focused on alternative ways to measure automobile VMT and then to collect fees. The University of Iowa is completing a two-year test in a range of urban and rural environments, with an emphasis on driver reactions to the technology and a pricing system. The National Academy of Sciences has sponsored a report that examined near-term opportunities to implement mileage based fees. To date the US experience has focused on automobile-based systems, with very little mention of truck-based VMT fees. Europe, however, has moved ahead with truckbased systems in several countries. The German system has been in operation for a decade and other efforts are underway in Switzerland, Slovakia etc. These are relatively expensive systems (although still less costly than most toll roads) and they often have motivations other than the generation of revenues. The German system, for example, has strong financial incentives to discourage older and more polluting trucks based in Eastern Europe and represents the first commitment of highway fees to highway spending in Germany.

Freight Trends The AASHTO Freight Bottom Line Report forecasts that the US economy will grow at 2.9 percent per year for the next 30 years, population will increase from 300 million to 380 million (more than 80 percent residing in urban areas), and the demand for freight transportation will double.16 As has been noted by FHWA, by 2020, 90 percent of urban Interstates will be at or exceeding capacity. According to the Freight Analysis Framework (FAF) released by the USDOT in November 2010, freight tonnage is expected to grow 1.6 percent per year, reaching 27.1 billion tons by 2040 ⎯ a 61 percent increase in tonnage between 2010 and 2040.17 The trucking industry can expect its share of total tonnage to increase gradually from 68 percent in 2009 to 70.7 percent by 2021.18 This increase in freight demand and truck travel will result in more trucks on the nation’s interstate highways, from an average of 10,500 trucks per day per mile now to an average of 22,700 trucks per day per mile in 20 years. Some of the most heavily used highway segments are already experiencing more than 50,000 trucks per day per mile.

James Whitty and John Svadlenak (Oregon DOT), “Discerning the Pathway to Implementation of a National Mileage-Based Charging System,” Transportation Research Board, October 2009. 16 American Association of State Highway and Transportation Officials (AASHTO), “Freight Bottom Line Report,” found at http://freight.transportation.org/doc/FreightRailReport.pdf. 17 Federal Highway Administration, “DOT Releases New Freight Transportation Data,” November 2010. 18American Trucking Association, “US Freight Transportation Forecast to 2021,” 2010. 15

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Significant increases in capacity are necessary to handle the increase of truck traffic, and that will only be possible with adequate funding. This rapid growth makes freight demand a key force in future infrastructure investments. Highway congestion and bottlenecks are the most prevalent problem facing truck freight movements and will continue to grow as our economy recovers and expands. The most recent TTI Urban Mobility report shows that the overall cost of congestion, in terms of wasted fuel and lost productivity, reached $115 billion in 2009, an increase of more than 80 percent since 2000.19 Congestion results in higher fuel usage, greater emissions, and higher costs as well as significant losses in economic productivity. While traffic congestion is a widespread problem that affects individuals, businesses, and visitors alike, the nation is also entering the early stages of a freight transportation capacity crisis.20 The last several decades have witnessed steady growth in the demand for freight transportation in the United States, driven by economic expansion and global trade. But highway capacity has not kept pace with demand. This imbalance creates congestion, upward pressure on freight transportation prices, and less reliable trip times as freight carriers struggle to meet delivery windows. The recent severe recession may have given the network four or five years of breathing room to work on solutions to freight network congestion and highway financing. New York State’s specific issues mirror national trends – revenue shortfall, congestion, bottlenecks, and border crossing issues. If anything, New York’s revenue shortfall is worse than the national average. The I-90/I-290 interchange east of Buffalo was the worst freight bottleneck in the nation in 2008, with nearly 1.7 million hours of annual truck delay. Trucks account for almost one fourth of traffic. The Buffalo-Niagara region also represents a key link for traffic between the US and Canada with the Peace Bridge and the Queenston-Lewiston Bridge ranking among the busiest border crossings.

Background on VMT Fees While many transportation policy experts believe that VMT fees offer considerable potential as a reliable source of funds for highway programs, VMT fees also generate concerns regarding technology, privacy, and an array of institutional issues. To date

19Schrank,

David, and Tim Lomax, Texas Transportation Institute, “2010 Urban Mobility Report”. Cambridge Systematics and Battelle Memorial Institute, “An Initial Assessment of Freight Bottlenecks on Highways Executive Summary,” for the Federal Highway Administration, October 2005. http://www.fhwa.dot.gov/policy/otps/bottlenecks/execsum.htm 20

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

the major studies or trials undertaken in the U.S. have involved passenger vehicles. Implementation for the entire driving public has numerous problems to overcome including worries about the potential for governmental oversight of private individuals. VMT fees for trucks avoids many of the barriers related to passenger cars, however, some practical problems do exist. Based on lessons learned from the earlier VMT fee trials and some recent studies, Oregon DOT has prepared a scorecard for an attractive VMT fee system. Based on this scorecard, a truck based VMT fee system passes every test but one â&#x20AC;&#x201C; the ability to cover all motorists. It can replace existing fees (not just motor fuel taxes), GPS systems make it possible to reflect different fees across state lines, it has low capital cost (indeed, many truckers have already invested in fleet management systems that can process mileage based fees) and the systems are reliable and tested in the field. Some of the options (congestion pricing and variable rate structures) are possible for trucks, but may not be attractive given the interest in a simple system and given the limited flexibility that most trucks have regarding when and where they must deliver their goods.

Implementation Stumbling Blocks Truck-based VMT fee data collection will take advantage of readily available technology already in use by the trucking industry. Using data collected from telemetry boxes installed on each truck, it is possible to calculate the vehicle miles traveled by roadway and time of day. This technology offers a highly reliable method of collecting the required data for mileage-based fees and auditing systems can be coordinated with these systems.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

A significant portion of the long-haul fleet already has telemetry boxes installed because the information is useful for operations management and monitoring driver behavior to reduce costs and improve efficiency. The market is already filled with competitors for both the boxes and the data services, so it is not necessary to design a new box and costs for a basic system are low ⎯ $200 or so for installation. To ensure that data are being collected in sufficient detail minimum specifications will need to be established. We anticipate that truckers will have their choice of approved devices. More in depth discussion of alternatives for the boxes can be found later in this report. The cost to deploy the telemetry system could be a problem for smaller trucking companies and independent owner operators. Due to their size they may not reap as many of the management benefits of collecting the data to improve their operations. It may be necessary to offer some financial inducements to encourage installation of the boxes or to make them affordable for these truckers.2122 For larger companies the benefits derived from automating the fee collection process, as well as the usefulness of the data for other management and operations tasks, should make them a net win for the carrier. One of the carriers providing advice to this study reports that GPS-based fleet management systems have a payback of less than 12 months. Changes will also need to be made at state agencies to reflect the discontinuance of old fees systems and start up of VMT fee systems. It is estimated that the VMT fee system will represent a higher percent of collection cost than the current motor fuel tax system (estimated at one percent for the state of New York and less at the national level), but could cost less than costs for registration fees (18 percent for New York state) or weightdistance taxes. One study estimates that collection costs could be $40 or so per vehicle23 – a high percentage for automobiles which drive limited miles but a modest percentage for large trucks which drive many more miles and pay higher per mile fees.24

21 In addition to soft loans or tax credits, one option might be to have a two tier system, with slightly lower rates for systems based on GPS and higher rates for systems based only on reported mileage. This would provide a direct financial incentive to switch to in-truck fleet management systems. 22 Alternatively, a simple odometer based system that is audited during the annual safety inspection could serve the purposes for trucks that have not adopted a telematics solution. Such a system would require carriers to estimate miles by state and thus raises issues related to auditing. 23 I-95 Corridor study, Executive Board Briefing, “Multi-State VMT-Based Charge Initiative Member Advisory Committee,” (September 22, 2010). 24 For example, with a national VMT fee of two cents per mile for autos (the RAND study for NCHRP suggested that one cent per mile would break even) $40 per year in collection costs

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

A nationwide VMT system would be difficult to deploy in a short period of time because of political, legal and operational issues. Since the system would affect interstate commerce, there are a variety of laws that may need to be modified. Individual states may also need to modify their charters or laws to permit the collection of VMT fees. The political issues vary across a wide spectrum of interested parties and action is unlikely without an operational test. Privacy has been a strong concern among some individuals with the tests that involve private passenger vehicles, but should not be such a concern for the trucking community since the driver is a paid employee and carriers already need to know the location of their trucks. Independent owner-operators represent close to 40 percent of the industry and could raise privacy concerns since many of them have the same worries about having the movements tracked by GPS equipment. For some of that industry segment, the issue is moot since many are under contract to other carriers who use them to augment their fleet. Those carriers often require owner operators who work for them to install telemetry equipment. Interest in VMT fees among transportation policy groups continues to grow. Political support is mixed â&#x17D;Ż although Congressman Blumenauer (Oregon) has introduced legislation that would fund a series of pilot projects. The I-95 Corridor Coalition has a study underway to examine administrative and cost issues related to VMT fees. Preliminary conclusions show that collection costs will be quite high as a percentage of revenues, in large part since each automobile generates a modest amount of revenues. This study did not consider trucks.

Truck Based VMT Fees Advantages Truck based VMT fees offer many advantages. Roughly half of large trucks already have installed required equipment, meaning no added cost to the public â&#x20AC;&#x201C; or to these motor carriers. The cost for boxes is not steep and the return on investment period is relatively short. The cost is low to equip additional trucks and could be facilitated by some modest programs at the federal level for smaller carriers and owner operators. The annual operating costs are low as well. Privacy is less of an issue since fleet owners have the right to know the location of their trucks and employees. It is not even necessary for the company to divulge their routes to file their fees. While the underlying data will be subject to audit, proprietary commercial information can still be protected.

would equal 20 percent of revenues for cars that traveled 10,000 miles per year but less than four percent for trucks at the 10.6 cents per mile estimated for New York state.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Another important benefit of VMT fee collection through automated means is the wealth of data that will be available about the travel patterns of commercial trucks. With the data collected it will be easy to identify bottlenecks and other problems that need to be addressed to improve the movement of freight. Revenue collected under the VMT fees system can be directed to specific investments that benefit freight movements and enhance the efficiency of the overall system.25 The VMT fee system evaluated in this project will discourage fraud and under-reporting. During the course of this project the research team identified unreported revenue for the state of New York of more than $200 million a year. Estimated Revenue Loss ($ Millions) Estimated Underpayment Ton Mile Tax Revenue

170

Diesel Tax Revenue

There are two sources of this under payment. First, the state’s mileage based fee collects less than half of the funds expected. This finding is consistent with previous studies,26 although we find a slightly larger under payment. Much of this tax is self reported and it is difficult to audit motor carriers located outside of New York. Second, diesel payments appear to be low. This is harder to estimate but if we assume that tractor trailers average 6.25 miles per gallon27 the under payment is about $90 million dollars per year. This finding was not expected. There are two possible causes for this problem: 1. Under reporting by interstate truckers. Interstate truckers are required to report mileage each quarter to IFTA (International Fuel Tax Association). IFTA then balances payments among the states based on miles driven, rather than based on dollars paid when diesel fuel was purchased. There is an incentive, however, for motor carriers to under report mileage in a high tax states (such as New York) and to over report miles in nearby relatively low tax states (such as New Jersey

This ability to tie the generation of the revenue to a specific road that is being used was viewed favorably by the fleet owners who participated in this study. 26 American Transportation Research Institute (ATRI), “New York State Ton-Mile Tax AnalysisEstimation of Untaxed Commercial Vehicle Miles Traveled”, 2008. http://www.atri-online.org/research/results/economicanalysis/nytmtanalysisv9.pdf 27 Use of a lower miles per gallon number would increase the estimated loss. 25

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

and Pennsylvania). These data are self reported and it is not easy to audit the large number of independent drivers and small firms. 2. There are a number of ways to avoid diesel fees. Some involve using untaxed fuels such as home heating fuel or aviation fuel and some involve illegal acts. Estimates of these losses vary between $1 and $3 billion a year.28 The significant level of revenue losses raises the option of setting VMT fees to equalize the current truck fees. This would increase funds for the state of New York by about $250 million dollars a year with no increase in tax rates. Motor carriers who were already paying the correct amount of fees would see no change in their tax payments. Firms or individuals who were under paying would see an increase. Another option would agree to “split the difference” and decrease the official rate for trucks, but keep it above the effective current rate. In this case, the state would receive more revenues than today while those motor carriers who had been paying the appropriate amount would now pay less. A third option, or course, would be to recognize the need for additional investment in the region’s roadway network and raise overall fee levels – but with the requirement that additional funds focus on investments that improve the efficient movement of freight.

NCHRP Report 623: “Identifying and Quantifying Rates of State Motor Fuel Tax Evasion,” October 2009. http://onlinepubs.trb.org/onlinepubs/nchrp/nchrp_rpt_623.pdf 28

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

METHODOLOGY The scope of the VMT Fee project for the state of New workable VMT fee system using existing technology and data captured for currently operating trucking companies. Three trucking companies provided detailed data that were used to measure the potential impact of the various fee schemes that were tested. In addition a total of a half dozen carriers participated in a series of focus groups that provided “off the record” comments and suggestions during the study. The VMT fee system was designed to be revenue neutral ⎯ that is on average the same level of revenue will be generated as is collected today and the carriers as a whole will not pay more than they currently pay. A true revenue-neutral system turned out to be impossible since actual payments were considerably less than called for by the state’s tax rates. Obviously every individual carrier may not end up in a revenue neutral position depending on the fee scheme implemented. The study included the entire state without any special emphasis being placed on the New York City region. New York City has a separate set of issues unique to that highly urbanized area which was not characteristic of the State as a whole.

York focused on the design of a The Fleets Fleets participating in the VMT study that provided in-depth data to the project team were: Fleet A - A common and contract carrier based in New York State with approximately 185 tractor trailers fully equipped with a GPS system. Fleet A is registered as an interstate carrier hauling general commodities operating throughout the United States. There are no straight trucks in the fleet. Fleet B - A New York based private retail fleet with approximately 47 tractor trailers equipped with a GPS system. Fleet B is registered as an interstate carrier with regional activity in the northeast. This fleet also includes approximately 230 straight trucks, but most are not GPS equipped. Fleet C – A fuel hauler located in New York State with approximately 40 tractor trailers equipped with a GPS system. Fleet C also operates internationally. The fleet does not include straight trucks. Other Fleets - In addition other

Data were collected to estimate total VMT on New carriers participated in a series of York roadways by type of road using existing focus groups that provided nonattributable comments and methods employed by New York State Department suggestions during the study. of Transportation (NYSDOT). Data were compiled to estimate the revenue currently collected for the state fuel taxes, registration fees and the ton-mile tax. These revenue streams were used to determine the revenue that needed to be generated by a VMT fee system to maintain revenue neutrality. Using these data several alternative VMT fee schemes were developed:

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

• • •

A flat fee for travel on all roadways A series of fees based on the type of roadway traveled A discount fee structure to encourage off-peak travel.

GPS data were collected for a one month period for all the equipped trucks in the sample motor carriers and geo-referenced (“snapped”) to roadways to provide a complete picture of the trips for each truck in the sample. Each of the participating fleets periodically record information specific to individual vehicles within their fleet, which at least includes a time stamp and location information (usually in a latitude/longitude format). Most of the fleets also include basic information such as current speed, GPS heading and odometer reading. Other metrics are available as well. These data permit the determination of an accurate mileage reading. The process for doing so requires several steps: • • • •

Collect the information from the fleet Perform geo-referencing (or snapping) the telemetry points to specific links within the map set29 Develop most likely route between consecutive snaps Compute mileage based on the reference map and time breakdowns.

A more detailed description of the process is included in the Appendix. To protect the commercial interest of the participating firms, the data were aggregated and provided in several different breakouts: • •

By type of road traveled By time of day traveled.

Using the various fee alternatives the actual data for each carrier were used to calculate the VMT fees that would be paid. Those results were compared to the actual payments made by the carrier for the sample month. The results were discussed with the carriers and their opinions of the various rate structures were collected and evaluated. The results and policy implications were presented to the Public Advisory Board for comment and recommendations.

Sources of Data The NYSDOT provided traffic count data collected for more than a year from stations spread all across the state (See map below). Data included volume counts at all count

For this study we used the New York State Division of Motor Vehicles Accident Location Information System (ALIS) map set. 29

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

New York State Count Stations

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

stations and classified counts (by thirteen vehicle classes) at fewer locations. They also provided guidance and seasonal factors needed to estimate total annual VMT for the state. In addition, NYSDOT provided the Accident Location and Information System (ALIS) base map that was used to analyze the fleet data and our baseline of truck VMT data. The New York State Thruway Authority (NYSTA) provided both VMT data and revenue data for the sample year. The New York State Tax and Finance Department provided details on the number of trucks registered for ton-mile tax and their weight. Tax Data Collected from the The motor carrier partners provided a month’s Participating Fleets for April 2009 worth of GPS points for all of their trucks equipped • Diesel Fuel Taxes - Quarter 1 with telematic equipment. In addition they - Gallons Purchased provided actual tax payments for each of the - Federal Excise Tax various taxes for the sample period. - NYS Excise Tax Much of the other information needed to estimate missing data or for comparisons was developed by the consultant team. Calmar snapped the GPS data to the ALIS map after making necessary enhancements to the file. This provided the basic database for analysis. Calmar also provided aggregated data from all of the trucks in their database for use in measuring impacts of the various rate structures.

- NYS Gross Receipts Tax - County Sales Tax - Federal Oil Spill Recovery - NYS Sales Tax • NYS MT-903 Highway Use Tax (HUT) - Total Miles - Taxable Miles - Tax Paid • NYS 2290 Heavy Vehicle Highway Use Tax - Paid one year in advance every July - $550.00 per truck over 75,000 lbs. • MTA Tax form CT-3M/4M

The Greater Buffalo Niagara Regional Transportation Council (GBNRTC) provided data about truck travel by route and congestion conditions in order to provide a solid understanding of the congestion conditions on New York roads. The Capital District Transportation Committee and Syracuse MPO also provided congestion data and descriptions.

Creation of VMT Fee Database Delcan and Calmar created a new database for this project by extracting the data required for the participating carriers. Calmar worked with the fleets and their data service providers to capture the data with the level of granularity (GPS reports every one to three minutes) required for the analyses. Through an iterative process using and refining the data, Delcan and Calmar defined the data fields and populated the new database. Several other databases were

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

created to combine data from other sources with the data extracted from the motor carriers to perform analysis. Two main datasets were created. The Summary Dataset contains records showing how many miles were traveled on which classifications of roads, during which time ranges, for individual vehicles over the entirety of a date range. The GPS data points representing each truck trip were â&#x20AC;&#x153;snappedâ&#x20AC;? to the roadways they traveled on to map a truck route. The second or Snapped Points Dataset contains records of each vehicle's locations along its trip and the roads to which they were snapped.

Sample Truck Route Data from the Database

Description of Methodology to Determine Truck VMT To determine a set of revenue neutral mileage fees for trucks required a baseline estimate of truck miles traveled by class of truck and by type of road. Neither NYSDOT nor FHWA estimate VMT with such a breakdown. Four road classes were identified (based) on the classification provided by ALIS:

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

• • • •

The tolled sections of the NY Thruway – with truck mileage rates already set by the Authority Other primary highways with limited access – class A1 (other than the tolled Thruway sections) Primary highways without limited access – class A2 Secondary and other highways and local roads – class A3 and lower.

The vehicle classification adopted by NYSDOT (13 class classification system defined by FHWA) was used to identify truck categories. Detailed data on vehicle classification counts was obtained from NYSDOT. Coverage for AADT is more complete than for vehicle classifications. Not surprisingly, data are best for expressways (A1 category) with AADT estimates for almost all of the 1,967 highway (center-line) miles and quite good for major arterials (A2 category) covering more than 90 percent of the 5,119 miles. In some cases these observations cover only certain times of year, requiring us to generate estimates for the full year. Fewer than 50 percent of expressway and major arterial roadway links have no vehicle classification data despite good AADT reports. Data for the NY City metropolitan area are poor, requiring more aggressive assumptions. We also needed estimates for the missing roadway links and for locations that do not report vehicle classifications. The estimation process to generate total VMT involved several steps: •

Adjust for seasonality - Even where data for vehicle class were collected, in most cases these data cover relatively short periods of time (most less than a month). Truck traffic as well as overall traffic volume exhibits seasonal variation. Seasonality factors (for urban and rural regions) have been calculated using the overall data base. These factors were then used to adjust estimates for times of year when NYUSDOT did not provide direct observations for truck classifications. .

•

Adjust for missing data - This is a two-part process:

April 2011

Use data from other segments of the same highway - When observations are available for other segments of the same highway, these are averaged and then used as estimates for missing segments. For example, vehicle classifications for segments along the I-87 Northway are used to fill in for missing sections along I-87. Direct observations and data from the same highway account for five sixths of the data for expressways and more than 90 percent of that for major arterials.

Use data from the same class of roadway - This was used for one sixth of the expressways and 7 percent of major arterials. For A3 Class roads the data for the same class of roadway was adjusted for the region as well. Regions include each of the major metropolitan areas (New York, Buffalo, 24

A PRACTICAL APPROACH TO TRUCK VMT FEES

Albany, Syracuse and Rochester) and rural regions of the state (using the NYSDOT districts) and other regions defined by NYSDOT. NYC region has volume and classification counts on fewer roads, and average values were adjusted to obtain more reasonable estimates. For roads under the jurisdiction of the Thruway, volume and vehicle classification counts from several stations were obtained from the Thruway Authority. Thruway Authority uses different metrics for maintaining volume and vehicle classification data (categories based on length) compared to NYSDOT. With reasonable assumptions, Thruway data were processed to obtain annual VMT for straight trucks and tractor-trailers. Average AADT values from Thruway ramps are used for estimating VMT on ramps across the state and truck percentages from A1 class roads are used to determine VMT by vehicle class. For local roads, per mile VMT estimates reported by FHWA are used. The table below shows an estimate of statewide VMT for trucks on the three most important road categories in the state of New York and the Thruway. A detailed table of estimated vehicle miles traveled for New York State (for 13 classes of vehicles) can be found in the Appendix. Annual VMT in New York State is estimated at 137 million miles, which is very close to the 136 million miles estimates by FHWA.30 Truck VMT Estimated for New York State in 2009

Total

Hwy VMT (million miles)

Straight Trucks

Trucks with trailers

Trucks with multi-trailers

F06 - F07

F08 - F10

F11 - F 13

10,139

4,147

5,865

126

8,566

3,794

4,646

126

Thruway tolled VMT

1,573

353

1,219

A1 + Ramps

3,805

1,348

2,391

977

597

367

3,784

1,849

1,888

Non-Thruway VMT (million miles)

A2 A3 + Others

A1 – Primary highways with limited access A2 – Primary highways without limited access A3 and Others – secondary highways

FHWA Highway Statistics reports annual VMT in New York State as 136 million miles.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES Sample Telematic Data Overlayed on Highway Map by Type of Road

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Development of Revenue Baselines To develop the baseline revenue to measure impacts against and to assure revenue neutrality information on revenues from existing truck related user fees in NY was collected and then compared with estimates of expected revenues. This analysis was done for each class of truck. The expected level of revenues was then used as a base to estimate per mile fees under different scenarios. Not counting tolls for use of the NY Thruway, NY State has three truck user fees: vehicle registration fees, diesel taxes, and the Highway Use Tax, or ton-mile taxes. The tax on diesel fuel has three components: •

Motor fuel excise tax (Article 12-A), levied at 8 cents/gallon. Revenue in 2008 were $71.0 million but decreased by 5.7 percent in 2009 due to reduced truck traffic.

•

Petroleum business tax (PBT) collected at 14.7 cents/gallon (Article 13-A) which is required to be adjusted annually by law. Revenue in 2009 (from all fuels) – $1.1 billion, decreased by 4.2 percent in 2009. Since diesel portion of petroleum fuel tax is not reported separately, diesel PBT taxes are calculated based on reported sales of taxable diesel (934 million gallons).

•

IFTA (International Fuel Tax Agreement) – accounts for travel made on state highways using fuel bought outside state. Revenue in 2009 – $33.7 million, decreased by 3.5 percent in 2009.

•

Receipts from diesel taxes paid by tractor trailers in 2009 was based on an estimated average fuel economy of 6.25 miles per gallon for tractor-trailers (F08F10) and higher rates for smaller trucks. This level of fuel economy is consistent with data collected by Calmar Telematics from tractor trailers in motor carriers that provide them with GPS data. Revenues were estimated at $242 million.

Highway Use Tax (HUT or ton-mile tax charges trucks based on their fully loaded weight and miles traveled): •

Highway use tax has two components - a registration fee/renewal fee and a mileage tax. HUT is calculated based on the weight of the truck and miles traveled in the state. It is filed quarterly for trucks with gross vehicle weight (GVW) greater than18,000 lbs.

•

Trucks can use either gross weight method (using a flat rate for all travel based on the truck’s GVW rating) or unloaded weight method (using different rates for loaded miles and unloaded miles). The vast majority of trucks in New York use the gross vehicle weight method. This is much simpler than tracking actual

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

weights and miles driven. Our analysis assumed that all trucks use gross weight method to pay highway use tax. •

Based on statistics provided by tax and finance department for registered trucks for the highway use tax, the average (weighted) GVW rating of straight trucks (26-46,000 lbs) is 29,344 lbs and 80,000 lbs for tractor trailers (46- 90,000 lbs).

•

HUT rates are 1.40 cents/mile for 30000 lbs (straight trucks) and 5.46 cents/mile for 80000 lbs (tractor trailers). The average GVW of multi-trailers (> 90,000 lbs) is 99,430 lbs and the HUT rate is 8.46 cents/mile.

•

F05 class trucks were excluded from tax estimation, since the GVW of F05 class trucks is assumed to be less than 18,000 lbs.

•

VMT on Thruway tolled sections is excluded from highway use tax so the Thruway VMT was excluded from the estimated total tax. VMT by multi-trailers on the Thruway is not available, so it has been included in tractor-trailer miles.

•

Estimated HUT Revenue with all the above assumptions is $282 million. Actual reported revenue was $112 million, which represents an underpayment of 60 percent31.

•

Highway use tax also charges a $4 renewal fee and a $15 permit fee. In this study, we assumed all registered vehicles have renewed their licenses which gives estimated revenue of $1.98 million. Reported revenue from permits and fees was $2.35 million.

Registration Fees:

•

Commercial vehicles are registered at a rate proportional to their weight – for a standard tractor-trailer with GVW 80,000 lbs annual registration fees is $576.

•

In order to estimate per-mile registration fees paid by in-state truckers, we needed a breakdown of VMT for in-state versus out of state truckers. Since this is not available for the entire state, per mile registration rates were obtained from data available from the fleets included in the sample. Registration fees are allocated across all miles traveled in the state, including miles travelled on the Thruway.

•

The per-mile registration fee rates using sample fleet data for in-state miles are 1.43 cents/mile for tractor trailers and 1.57 cents/mile for straight trucks. These

Possible reasons for this under payment are discussed elsewhere.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

rates have a greater error percentage since they have been obtained using a limited sample of trucks. •

Expected revenue from registration fees payments for the entire state estimated using the above per-mile registration rates is $150.9 million. This is higher than reported receipts, since this calculation assumes that out of state trucks pay registration fees at the same rate as in-state. While the data show an under payment, the number of assumptions used to make this estimate raise questions about its accuracy.

Development of Alternative Fee Structures The next two tables show the truck-related revenues reported by the state of New York for 2009 and then our estimate of what would have been received if all trucks paid at the rates imposed by law. Overall, the difference is more than $300 million and more than $250 million for tractor trailers. This difference raises an interesting question about what is meant by the phrase “revenue neutral.” If based on actual receipts, there would be a tax reduction for the motor carriers who currently pay the correct amount. If based on estimated receipts, then there will be no net increase for truckers who pay the correct amount but those who have been able to avoid these fees would now pay the correct total. We have interpreted “revenue neutral” to mean keeping the current tax rates in law. Reported Revenues (Million $) in 2009 Program Ton Mile Tax Revenues1

112

Registration Fees2

105

Diesel Tax 3

242

Total

459

New York State Department of Taxation and Finance, Annual Statistical Report 2008-2009 2 FHWA Highway Statistics 2007 1, 3

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Estimated Revenues (Million $) in 2009 Trucks with trailers

Trucks with multitrailers

F06 - F07

F08 - F10

F11 - F 13

Single Trucks Total F05

Registration Revenue

151

Diesel Tax Revenues

336

213

Ton-mile Tax Revenues

282

254

Total

771

200

552

Using the estimated total revenues for the taxes collected in New York State (diesel taxes, registration fees and ton-mile tax) and the VMT estimates by type of road and vehicle type a series of alternative rate structures were devised. The total revenue collected from each alternative is the same in the aggregate, although it will differ for each carrier based on the specific VMT characteristics of their fleet. The first rate structure developed was a flat fee for travel on any road in the state other than the NY Thruway (which already imposes the equivalent of a mileage based fee for trucks. At the same time, a fee is needed for travel on the Thruway to collect the registration fees and diesel taxes. This results in a flat rate of 10.6 cents per mile for tractor trailers for non-Thruway travel and a VMT fee charge of 5.1 cents per mile in addition to the toll for Thruway travel. Currently trucks may avoid using the Thruway to avoid the toll. Under the VMT system there will be a charge for travel on all roads in New York State. A charge for travel on non-Thruway roads will reduce the per mile advantage of avoiding the Thruway. While we expect the overall impact to be modest, some trucks will likely shift some travel to the Thruway from state roads. From a public policy perspective, one could argue that encouraging trucks to use the Thruway is positive since it will enhance safety and reduce congestion by removing large trucks from roads heavily traveled by other vehicles and putting them on roads engineered to handle heavy truck traffic. To the degree that this happened, Thruway revenues will increase

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

and expected revenues for the State DOT will decrease.32 The Thruway authority is an independent agency and answers to bond holders. Variable Rates by Class of Road VMT Fees (cents per VMT) Rates for Revenue Neutral

Tractor Trailers

Flat rate with additional fee on Thruway Thruway Other roads

5.1 10.6

Another set of rates was calculated with variable rates depending on the class of roadway. The rates favored travel on primary highways with limited access to encourage trucks to use the roadways designed to handle truck traffic. Heavy trucks will cause less damage on roads designed for their use â&#x20AC;&#x201C; Interstates and expressways, for example. The highest rates were for travel on secondary roads. It is recognized that travel on secondary roads is necessary to make deliveries to local businesses and homes. There is also a distinction between lighter weight trucks and heavier trucks. The highest rate paid would be 17 cents per mile for tractor trailers on secondary roads, compared to 9 cents per mile on limited access highways. For straight trucks rates range from 3.5 cents per mile for primary limited access highways and 6.5 cents per mile for secondary roads. The final rate calculation was a discounted rate for travel during off-peak. For this study we chose to reward a switch from peak to off peak, rather than penalize peak time travel. Carriers must respond to the schedule demanded by the shippers and rarely have control over their travel times. Simulations of the impact of off-peak or value pricing show that an off-peak discount would not make a significant change in congestion levels on arterials in Buffalo. Based on data from the participating fleets nearly 4 percent of their total vehicle miles travelled are in urban areas during off-peak hours (8PM â&#x20AC;&#x201C; 5AM). This policy would require a small (0.2 cents per mile) increase in peak period rates in order to continue to meet the revenue-neutral objective.

The motor carriers who provided advice to this study all said that their policy called for the use of the Thruway, rather than using other roads to save on tolls. Thus, they expect to see no increase in Thruway use under this policy. We suspect that this is not correct for owner-operators and perhaps some smaller fleets. The magnitude of any shift will not be large, but a one percent increase in Thruway traffic by tractor trailers would generate an additional $3 million a year in toll revenue for the Thruway. 32

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Off Peak Pricing VMT Fees (cents per VMT)

Rates for Revenue Neutral

Tractor Trailers

Off peak discount pricing Off peak hours Peak hours

6.07 12.14

Test Rate Structure Models with Detailed Data from Trucking Partners In order to test the impact of the various rate structures on each of the three trucking firms we applied the VMT fee by type of road and time of day to the actual miles of the tractor trailers in their fleets. The resulting sum was compare to their actual tax payments for the same period. All three firms would pay less under the flat fee rate scheme. The implication of this is that other trucking firms (and presumably many of those that are under-reporting currently) would pay higher taxes. Using the variable fee structure all firms came out ahead, but one of the carriers came out far better because more of its travels were already on the highest category of road with the lowest cost.

GBNRTC Congestion Pricing Case Study The overall VMT study included a primary objective to develop a potential alternative method of user fee collection based on truck vehicle miles of travel. A secondary objective was to look at the possibility that the proposed VMT fee structure could be used to create incentives for trucks to travel at different times or on different routes to sufficiently change travel patterns to create positive outcomes. A study task was to determine if redistribution of some truck traffic from the peak travel periods could be sufficient to reduce congestion and improve levels of service in a test corridor. It was determined that a test in the Buffalo Niagara region was feasible based on the MPOâ&#x20AC;&#x2122;s well established regional travel model and robust traffic database available. While the region on an overall basis does not experience severe daily traffic congestion levels, there are corridors and time periods that exhibit congested conditions that would be able to be bounded and usable for a test scenario. National as well as local objectives were considered in preparing this test. Two primary areas of focus were determined to be appropriate for examination.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

These included: •

Peak Period Pricing: this overall study examined current truck fee schedules and payment methods and has produced recommendations for alternatives based on vehicle miles travelled. Time of day pricing options are also discussed, including incentives for trucks to travel through certain corridors or entire metropolitan areas at times outside of the peak periods. The study would then test the impact on levels of service if various percentages of truck traffic were removed in the peak periods. This would indicate ability to affect congestion levels for all traffic in those time periods.

•

Facility Utilization and Livability: a second area of focus in the test centered on the impact of truck traffic reduction and the possible shift of traffic to different facility types due to reduced congestion and subsequent travel times. It would be anticipated that reductions in truck volumes and congestion mitigation would free additional capacity on higher level facilities, resulting in remaining traffic attracted to those facilities. This would reduce traffic volumes on the lower tier facilities, which are typically less durable and more residentially focused. This would address concerns for both the need to encourage traffic onto facilities best designed and equipped to accommodate higher volumes and also the increasingly important “livability” concerns regarding traffic and neighborhood land use interface.

Freight congestion problems are most apparent at bottlenecks: specific locations that experience recurring congestion and traffic backups because traffic volumes exceed highway capacity and also due to issues associated with highway geometrics. This study was statewide in nature, with a strong emphasis on truck movements in the Buffalo-Niagara region in northwestern New York State. As previously referenced, studies by Cambridge Systematics and Battelle Memorial Institute showed that, based on 2004 data, the I-90/I-290 interchange east of Buffalo was the worst freight bottleneck in the nation, with nearly 1.7 million hours of annual truck delay. At a delay cost of $32.15 per hour, the conservative value used by the FHWA's Highway Economic Requirements System model for estimating national highway costs and benefits, the direct user cost of freight delays at this single bottleneck is about $55 million per year. While the I-90/I-290 interchange is an extreme example of a freight bottleneck, there are numerous occurrences in the Buffalo-Niagara region of inferior Levels of Service (LOS) on both the primary and secondary highway freight systems.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

This situation, coupled with availability of a regional travel model, makes the region a good candidate to test the feasibility and impacts of imposing a value-pricing program on truck trips Assumption: A reduction in truck during peak periods of travel. Subsequent to trips would have a positive impact development of assumptions and testing a peak on level of service (LOS) on major routes in the Buffalo-Niagara period reduction of truck trips in a portion of the Iregion. 190 corridor, the observed results appear to suggest improvements in highway levels of service, but only at significantly higher rates of truck trip reduction. The second objective was to test the impacts of similar assumptions off the freeway system. As observed in the test results, the more significant levels of peak period truck trip reduction resulted in decreased traffic volumes on lower tier facilities. The model showed that vehicles moved up to the freeway to take advantage of the higher speeds and reduced travel times. This also demonstrates the opportunity for pricing to address the issues of livability and asset management, if sufficient levels of truck trip reduction can be attained. Within this region, two corridors were targeted as potential locations to test value pricing strategies. These corridors are highlighted below. A major corridor for trucks and autos in the Buffalo-Niagara region is I-90 between Exit 50 (interchange between I-

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

90 and I-290) and I-190. Known as the free section of I-90, this corridor is heavily used by trucks (10 percent of average annual daily traffic) passing through the region (from east to west/ west to east) as well as between Canada and the east via I-190. Another corridor to observe the impacts and potential benefits of reducing truck trips at peak periods is the I-190 corridor between the I-190/I-90 interchange and the Peace Bridge which spans across the Niagara River to Fort Erie, Ontario, Canada. This particular corridor serves as a crucial trade link between the United States and Canada, where medium and heavy trucks make up between 8 and 10 percent of the average annual daily traffic (AADT) in both directions. Not only is this a significant trade corridor for the region, but it is also a major commuter corridor during the AM and PM peak periods, connecting first and second ring suburbs and the central business district of Buffalo. For this study, the I-190 corridor was selected.

The Travel Demand Model belonging to the Greater Buffalo Niagara Regional Transportation Council (GBNRTC) was developed to help GBNRTC staff improve their ability to obtain independent traffic forecasts, provide GBNRTC with additional tools to perform regional and corridor analyses, and perform air quality emissions analyses

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

required by environmental agencies. The GBNRTC Travel Demand Model is similar to most other integrated travel demand forecasting model systems in structure and purpose. In this study, the Travel Demand Model was used to simulate the various degrees of truck reduction on the network during peak periods of travel as a result of an imposed value pricing strategy. To reflect various degrees of pricing, truck trips would be reduced by predetermined factors provided by Calmar Telematics of 1, 2, 5, and 10 percent to be applied to the truck trip table at the AM and PM peak periods. These reduction factors represented assumptions of the various degrees of impact such a program could have on trucks during the peak periods. It was also assumed that greater reduction in trucks trips would have a positive impact on level of service (LOS) on major routes in the Buffalo-Niagara region. Levels of service as depicted during the AM peak period show some congestion on the inbound legs of I-190 towards the central business district for both I-190 North and I-190 South. Conversely, the outbound legs of I-190 North and South show heavy congestion during the PM peak periods. It was further assumed that an improvement in LOS on major facility types would render these roads more attractive to remaining trips in the network, favoring expressways over slower parallel roads and arterials during the AM and PM peak periods.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

In this test the level of service indicators remained unchanged at the lower levels of truck trip reduction, with the more significant and observable service level improvements occurring at truck trip reduction levels of as much as 50 percent in the peak period. The ability to achieve such a draconian shift would require more than a modest change in peak-period pricing. In particular, the truck VMT fee system described in this report does not have sufficient leverage to generate significant changes in truck use by time of day or location. The decrease in truck traffic as assumed and modeled on I-190 has, as expected, increased the attractiveness of the facility to remaining trips. As a result, some of the trips previously assigned to parallel routes to I-190 have been rerouted using I-190 for both the AM and PM peak periods. Shifting from parallel routes to the faster expressways is less prevalent on I-190 during the PM peak period. In the context of this project, the observed results from application of peak period reduction of truck trips in a portion of the I-190 corridor of the Buffalo-Niagara region appear to suggest the viability of pricing as a means to achieve the major stated objectives, but only at significantly higher peak period truck trip reduction rates. The initial objective was to examine the ability of pricing to affect congestion levels. In the test case, reductions in peak period truck trips resulted in incrementally improved volume to capacity ratios on the freeway system. In this test instance, the level of service indicators remained unchanged at the lower levels of truck trip reduction, with the more significant and observable service level improvements occurring at truck trip reduction levels of as much as 50 percent in the peak period. While the theory and modeling technique suggest that pricing can be an effective tool to achieve the stated objectives, it is unlikely that diversions of that magnitude are achievable at this location, with these circumstances, within the bounds of the proposed user fee system being proposed. Acceptable levels of objectives satisfaction at lower levels of peak period truck trip reduction might possibly be achieved in corridors or urban areas with overall higher levels of congestion and/or higher percentages of truck traffic. In progressing to the next phase of this initiative, an actual live test of the strategy, it is recommended some conditions be considered. An appropriate circumstance would include a more congested corridor or urban area, with a higher percentage of truck traffic and an established road network including freeways and parallel arterials to permit observation of traffic diversions.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

CONCLUSIONS Collecting the data to implement a VMT fees system is technically feasible and can be done cost effectively. The ideal solution is the use of GPS telemetry data generated by a box mounted on each truck. This has the advantages of protecting proprietary data, enhancing auditability, reducing calculation errors and providing data that can be used to make funding allocation decisions. It is also possible to participate in the system using a manual process such as that used by many truckers to report their IFTA data. Based on responses from the Advisory Board and other parties who have viewed the Phase 1 results, public agencies are very supportive of the VMT fee concept. New York State public officials were encouraged by the prospect of reducing fraud while improving the auditing capabilities. The use of VMT fees to meet other public goals relating to things such as emissions and livability was also highlighted by this group. VMT fee rates can be set using a variety of methods. The simplest would be a flat rate for travel on any road. This method has benefits because of its simplicity. Carriers would not have to worry about the classification of the Basic Principles for VMT Fee System roadways they travel on. Software to include • Simple variable rates by type of road to calculate the most • All things are not possible efficient and least cost route would quickly appear • Don’t disadvantage the on the market, but would represent an added trucking industry • Focus investment on roadways expense for companies not using routing software important to freight movement currently. Also this option allows for the greatest and carriers variability in reporting method. Trucking companies that do not use automated tracking systems or those that do not wish to invest in new technology could use their existing method of report data for IFTA to gather the data need to impose a VMT fee. Auditing would be less stringent than with an automated system but would need to be more aggressive than with current IFTA practices -- but could be accomplished using odometer readings and driver logs. Participating carriers said that although they fared better under the variable rate alternative, they would prefer a single rate. Another plus for using a VMT fee system to collect revenue is that it can reflect policy decisions and be used to meet other public or social goals. Setting fees that vary by type of road and favor roads designed to carry truck traffic should encourage trucks to minimize travel on lower level roads. This will reduce wear and tear on secondary roads and improve safety as well. While some members of the public sector has expressed a decided desire for congestion pricing, this study shows that such a pricing scheme would have little or no effect on how trucking firms operate. Of course, this might April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

change if the system affected all carriers and all shippers and there was an opportunity for both carriers and shippers to save money by changing schedules. The VMT fee can also be varied by type of truck. Based on our state estimates for VMT we calculated VMT fees for smaller straight trucks, but we were unable to compare our calculations to actual data for the sample carriers because those types of trucks, if they even had them in their fleets, have a low penetration rate for installation of telemetry boxes. We were unable to collect sufficient data from the sample carriers to test the rates. Although the rates were designed to arrive at a revenue neutral solution, true revenue neutrality is not possible. There will be limited impact for motor carriers that pay correct amounts currently, but carriers that have not been paying properly will see a disproportionate change in their tax situation. The study found significant under payment of ton mile taxes and sizable under payments of diesel taxes. The findings corroborate earlier studies looking at underpayments by the truck ton mile tax. The VMT fee system should improve revenue collection while also maintain rates at their current level. This would result in a net financial gain for the State and increased payments by certain truckers – probably mostly interstate trucking firms based outside the state. Collecting the data to implement a VMT fees system is technically feasible and can be done cost effectively. The ideal solution is the use of GPS telemetry data generated by a box mounted on each truck. This has the advantages of protecting proprietary data, enhancing auditability, reducing calculation errors and providing data that can be used to make funding allocation decisions. It is also possible to participate in the system using a manual process such as that used by many truckers to report their IFTA data. The Highway Trust Fund was established as a mechanism to provide dependable financing for Federal Government highway construction and is a critical source of funding for Department of Transportation (DOT) programs. Federal motor fuel excise tax receipts total $30 billion to $40 billion annually and account for more than 90 percent of Highway Trust Fund receipts. Motor fuel excise tax evasion is estimated to be from $1 billion annually to as much as 25 percent of total revenues.33 Nationwide, truck diesel taxes generate about $35 billion for federal and state transportation programs.

The estimate was obtained from the FHWA Office of Transportation Policy Studies web site, which qualifies the estimate by citing, “Numerous research projects have tried to determine losses resulting from motor fuel tax evasion. Estimates have been made by non-FHWA sources during Congressional testimony, through econometric and statistical analyses, as well as through revenue modeling, with results varying from about $1 billion annually to as much as 25 percent of total revenues. Reliable estimates of evasion are not available.” 33

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

The trucking partners who participated in Phase 1 are very open to providing advice regarding a possible truck VMT fee. Most were willing to continue on to later phases of the project. While they have not endorsed VMT fees they are willing to continue to test the idea and value having a say in the process. Their major advice concerned “Keep it Simple.” When considering the use of a VMT fee structure to mitigate congestions both carriers and public officials preferred the revenue positive approach of offering off-peak discounts instead of penalty rates during peak hours. More study is necessary to determine the price break necessary for shippers – and their carriers – to shift when they make deliveries or pickups. One of the carriers in our focus group estimates a 2 to 3 percent shift was possible in the near term – others were less optimistic. This will be an important facet of later phases of this study and will benefit from a longer study period. In the short run most carriers will not be able to make significant changes to their schedules because of customer requirements. In the long run, however, they could offer lower rates by passing along some of their savings from off-peak travel. The simulation runs for the Buffalo area were a good first step toward measuring the impact of the various fee alternatives. An important side effect of automating the data collection using GPS based telemetry systems is the amount of current data that will be available to decision makers who are allocating the funds collected. The motor carriers emphasized need to use new funds on the highway system, The new data stream will document where the points of failure are in the system and bolster the case for spending truck taxes on the infrastructure they use to improve freight mobility, The equipment necessary to implement a truck VMT fee system is already in existence and at a relatively low cost. There are a variety of options offering other outside benefits to the carriers. There is sufficient competition in both the market for telemetry box hardware the market for service providers to collect and process the data that the costs should remain low. It will be important to specify minimum standards and requirements for the system, rather than dictate the type of box. The technology options and estimated costs are included in the table below.

Equipment Requirements In the discussion of the mechanisms for collecting mileage based taxes it is important to recognize that interstate truck fleets already perform the tasks associated with most mileage taxes when they report to IFTA or to the several states that currently charge ton-mile taxes. In each case the miles driven in each state must be recorded and submitted to the tax department. A basic, national mileage tax system would require similar record keeping. The commercial vehicle operators currently handle this

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

reporting with a variety of technologies ranging from handwritten logs to automated telemetry based systems. The process of collecting the information that is necessary to calculate a mileage based tax can be quite simple or extremely complicated depending upon the degree of sophistication of the tax scheme and the taxpayer’s desire to maintain its privacy. A simple, flat mileage tax can be reported by reading the odometer of the truck. A complex mileage tax that incorporates variations for individual states, classes or roads, regions, and time of day requires a high resolution record of the trucks activity as well as up-to-date tax maps and significant computational power. Privacy One of the primary concerns expressed by the general public when discussing a mileage based tax is one of privacy with regard to travel activities. Citizens don’t want a record of where they drive to become part of the public record and commercial vehicle operators are wary of any record that may demonstrate that their drivers are operating in a less-than-safe manner. In order to maintain the vehicle operator’s privacy the tax must be calculated and audited without transferring specific vehicle location information to a public entity. Three options are considered; Simple odometer – A simple odometer reading will allow a commercial vehicle operator to report a flat tax. Such a process can be audited through a review of the engine database record but will not allow either the taxpayer or public sector to take advantage of any incentives for altering the time of day of travel or the class of roads that are used. No additional equipment is necessary to operate a tax system where the taxpayer is allowed to use an odometer reading to report taxes. Certified third party – The establishment of a trusted third party which has the capability of processing a vehicle’s GPS data and calculating the associated tax would allow for a high degree of variability in tax structures. The project team has been performing these calculations for the participating fleets in this first phase and is expecting to continue this process for the second phase. The third party approach allows for changes in tax maps on a day by day basis and has the data necessary to perform accurate analysis of the effects of proposed changes in tax policy. In order to operate a mileage based tax system that uses a third party for the calculation of taxes each vehicle would need to be equipped with a GPS telemetry system which directly transfers the vehicle location records to the third party either in real-time or on a store-and-forward basis.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Certified system â&#x20AC;&#x201C; If the risk of exposing exact travel history to the public sector is the primary concern for the vehicle owner the most secure approach to calculating a mileage based tax is to perform the calculation in real-time on a device mounted on the vehicle. The tax obligation and any other information that the vehicle owner desires can be downloaded in any manner that is convenient. The system that would be capable of real-time tax calculation would require computing capabilities similar to a current PC with memory sufficient to store a complete continental tax map (approximately 10 Gbytes) and a GPS record of sufficient length to satisfy tax audits (approximately 2 Gbytes). The system would also be required to accommodate tax map updates in a timely manner, presumably through a wired or high band-width wireless connection. Audits for a certified onboard system could be as simple as checking the certification of the tax software or perhaps recalculating past tax reports using a separate computer connected to the onboard computer via a network connection. Location or Time Based Variation A key consideration in the implementation of a mileage based tax schema that incorporate elements that allow variation by region, road, or time is the issue of granularity of the location data that is utilized and its effect on the final accuracy of the taxes collected. The current study has considered the possibility of a variation in mileage tax based upon the particular state that the truck is operating in as well as whether the truck is on an Interstate highway or some other road. If the tax is based on whether or not the truck is in the state of New York the average trip will be measured in hundreds of miles and it is probably adequate to record the GPS location on five minute cycles resulting in potential errors of a few percent. On the other hand, if there is a differentiation of tax rate based on the class or ownership of the road it is easy to find cases where a truck leaves an Interstate highway and is in a private facility after driving just half a mile on a county road. In this case a five minute location cycle will most frequently miss those miles driven on the lesser road, and if the private facility is a significant freight facility the smaller road will see hundreds or thousands of vehicle miles each day. The precise rate at which location data should be collected is a question to be answered once the granularity of the tax schema is selected. A detailed matrix of the options is presented below. Definitions can be found in the Appendix.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

NY VMT Equipment Matrix EQUIPMENT TOPIC ODOMETER

STORE AND FORWARD

BASIC REAL TIME REPORTING

ENHANCED REAL TIME REPORTING

CERTIFIED BOX

N/A

Under dash telemetry reporting box, GPS unit and separate WIFI or Bluetooth readers.

On or Under dash telemetry box (depends upon service provider), GPS unit, communications plan.

Under dash telemetry reporting box, GPS unit and separate WIFI or Bluetooth readers.

Up Front Capital Expense (per unit)

$200 plus cost to install WIFI/Bluetooth hot spot.

$200 - $500

$500 - $750

$1,000 - $2,000

Operating Cost (monthly, per unit)

$0 for equipment, but has personnel costs.

$15 - $30

$30 - $60

Fleet Participation Capability

Any fleet can participate. Basically changes current reporting paperwork with different paperwork.

Some fleets use store and forward technology that may be usable. Many other fleets have switched to near realtime reporting.

Works with most systems as long as the service provider has a direct data feed.

Works with most systems as long as the service provider has a direct data feed. Some fleets already have the equipment.

Fleet will have to obtain and install; will need to establish communications service if real time.

TELEMETRY ANDREPORTING EQUIPMENT

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Cost to Administer VMT Fee System The costs to implement and administer a VMT fee system is a sensitive subject. Within the trucking community this is particularly sensitive given the tight financial margins that characterize their business. There are also concerns regarding the costs to operate the German truck VMT fee system. While the costs of this system have come down over the years (from 16 percent to 11 percent with expectations of further efficiencies) they are still much higher than the motor fuel tax (one percent or less) – although less than the costs for most registration fees (18 percent in New York state). The German truck VMT fee system differs in important ways from the program considered here. We have focused on a system that relies on existing equipment and that recognizes the underlying economics of the motor carrier industry. The attached table shows the estimated costs to collect a range of highway related fees. While much is made of the efficiency of the motor fuel tax, most vehicle based fees actually cost quite a bit more to collect – 20 percent or more for most toll road systems and 18 percent for vehicle registration fees. More work is needed to define the costs of a truck-based VMT fee system such as the one proposed here, but we believe that the reliance on automated systems means the cost should be in the 2-5 percent range. Cost to Administer Various Fee Systems Program

Percent of Fees Collected

Motor Fuel New York National

1% 0.5-0.8%

Registration Fees (New York)

18 %

German truck VMT Fee System

11 %

Singapore congestion pricing System Toll Roads (manual) Toll Roads (open road) Proposed truck VMT System in New York Automobile VMT (I-95 corridor study)

8% 22 – 36 % 10% or less 2–5% 20 % -- or more

Outreach Outreach to public and private groups was an important part of this project. VMT fees of any type are controversial and it is important to conduct any such study in the open and in ways that will generate frank and useful comments. We chose to work with

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

individual trucking firms rather than through the official trade associations. Individual firms are often willing to speak frankly in private. Trade associations are often concerned about being misinterpreted and possibly creating confusion among their members. From the public sector we assembled an advisory panel that included senior transportation policy people from within the state of New York and from key national organizations—AASHTO and the I-95 Corridor for example. This group provided useful comments at key points during the study. Members are listed in the appendix. Introductory Fleet Meetings In early October 2009 the team began meeting with fleet owners or managers at their facilities to discuss the VMT project. Most fleets were very concerned about issues such as privacy and how their clients might view the fleet as a result of participating in the project. Summarized below are the initial impressions and positions of the three fleets that agreed to provide data for the project. Fleet X • • •

Transportation Manager represented the carrier for the duration of the project He expressed a desire to see the tax structure change but had doubts to the possibility of seeing any meaning full improvement His outlook was clearly”…let’s find out what’s out there…we really need to pursue every avenue to address the serious problems with the tax structure as it exists today.”

Fleet Y • • • •

•

Fleet owner represented the carrier throughout the project He was extremely skeptical about the whole tax structure currently in place He preferred a structure of fuel taxes and other taxes that was fair and equitable for all types of vehicle, rather than a new system He expressed that while he wasn’t confident that the tax structure was going to get better, he did feel that it was important to be ‘at the table’ on a project looking at alternatives The fleet owner expressed concern that if their participation in the program became widely known his clients might view the fleet negatively.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Fleet Z • • • • •

Owner and manager of this private fleet represented the carrier throughout the project. He is committed to continually looking at opportunities to reduce costs and improve efficiencies within his operation His conversation was rather far ranging and emphasized industry issues rather than any effect on his own fleet He felt that establishing a system that was fair for all truckers was paramount When questioned about the possibility of establishing a premium for driving through Albany at peak periods he stated that he would have to remove his fleet from the program under those conditions as it would put him at a competitive disadvantage.

Advisory Board Meeting An advisory board was selected to represent various stakeholders in the process. The board was used to evaluate the results of the Phase I efforts and to recommend future steps to be taken in the project. The full list of members and notes from the meeting can be found in the appendix.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

NEXT STEPS The next phase is a voluntary implementation - a â&#x20AC;&#x153;liveâ&#x20AC;? test with several truck fleets paying both the new VMT fee plus existing taxes. Payments would be made for those firms that owed less under the VMT fee tax. Operating the system with real economics would allow for the examination of the overall impact on Question: will motor carriers time and location of truck movements. The current enter into the voluntary trucking companies in our study have all expressed an implementation if they are interest in continuing with the study and participating in at risk to pay more? the voluntary implementation. Each of those fleets has been increasing the number of trucks equipped with telemetry equipment. We plan to expand the list of sample carriers to capture some other segments of the industry. We are also considering a Phase II A to evaluate and test the use of IFTA reporting procedures to support a regional (or national) odometer-based VMT fee system. This would eliminate the need for specialized equipment, thus holding down the cost. The downside would be a reduced ability to audit and higher audit expenses because of the manual nature of the process. Also this methodology will not produce data that can be used to justify spending on things that benefit freight mobility.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

APPENDIX

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Equipment Matrix Definitions Equipment 1. Odometer: An odometer based system. Fleet simply reports odometer mileage, but needs to record miles for in state and out-of-state travel. 2. Store and Forward: Reporting device consists of a telematics device (GPS and recording medium) that automatically collects and records required data on vehicle location and time. The collected data are then transmitted wirelessly via WIFI or Bluetooth when the device is in proximity to a designated “hot spot”. Typically these “hotspots” are located at the carrier’s terminals, but can be located anywhere. Fee is then computed via back office computer operations (either by a third party or the carrier itself). 3. Basic Real-Time Reporting: Reporting device consists of a telematics device that routinely transmits GPS and time stamp data to a central communications provider who forwards the data to the motor carrier (for normal business logistics) and to a third party for fee computations. The transmitted variables are basic and include vehicle ID, date/timestamp and GPS position. Some additional data may be transmitted. 4. Enhanced Real-Time Reporting: An extended version of Basic Real Time Reporting. Additional variables could include anything found on the J1395 data bus. For example, information on whether or not a trailer is attached to the tractor could help tell whether or not the truck is carrying a load. 5. Certified Box: A self-contained device that calculates the mileage fee internally. The mileage fee is calculated using the vehicle’s position and the associated highway and a pre-loaded map with fees by road class and time of day. The mileage fee is computed continuously, at the conclusion of the trip or at designated intervals, and the fee is transmitted wirelessly to the taxation authority and the fleet owner. The device will need to be updated on a scheduled basis to reflect highway system changes and changes in the fee structure. Topic 1. Up Front Capital Expense: Per truck expense for equipment and does not include installation expense. Most units can be installed in under an hour. These are representative costs and may vary, depending upon specific equipment that is used. 2. Operating Cost: Per truck monthly expense to operate the equipment, usually in the form of a 3rd party telemetry provider and associated communications expense. These

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

are representative values and may vary, depending upon the telemetry provider and quantity data being reported. 3. Fleet Participation Capability: Whether or not fleets with currently used reporting methods and/or telemetry systems can participate with little lead time in a VMT based fee system. 4. VMT Fee Basis: Types of VMT fee determination basis the reporting method supports. 5. Fee Calculation Method: The manner in which the fee is calculated. 6. Communications Method: The manner in which the raw vehicle data is reported for the VMT fee determination. 7. Communications Frequency: The frequency with which the raw vehicle data can be reported for fee determination. 8. Privacy Protection: A qualitative assessment of how well the reporting method preserves the fleetâ&#x20AC;&#x2122;s privacy or is resistant to interception by an unauthorized third party. 9. Audit Cost and Method: The relative cost and method required to insure full compliance with a VMT bases fee method. 10. Reporting Frequency: The frequency at which the VMT fee could be reported by the fleet. 11. Flexibility to Change in Fee Policy: The relative ease for the fleet to comply with modifications to the fee basis in a VMT fee based collection system. This primarily involves changes in the VMT fee rate, differentiation for types of highways being used and/or the differentiation of the vehicle type being used. 12. Evasion Resistance: The relative difficulty for a fleet to knowingly misreport the VMT fee and the taxation authority not easily detecting the misreported values. 13. Compliance Effort: The relative ease for a fleet to participate in a VMT based fee system. Assumes any required equipment is installed (see Fleet Participation Capability concerning equipment). 14. Access to Data for Highway Planning Purposes: The relative usefulness of the telemetry data to better understand the highway system and plan improvements to it. 15. Benefits: The benefits of employing the fee determination method. 16. Drawbacks: The drawbacks of employing the fee determination method.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

NY VMT Equipment Matrix EQUIPMENT TOPIC

ODOMETER

STORE AND FORWARD

BASIC REAL TIME REPORTING

ENHANCED REAL TIME REPORTING

On or Under dash telemetry box (depends upon service provider), GPS unit, communications plan.

Under dash telemetry reporting box, GPS unit and separate WIFI or Bluetooth readers.

CERTIFIED BOX

TELEMETRY ANDREPORTING EQUIPMENT

N/A

Under dash telemetry reporting box, GPS unit and separate WIFI or Bluetooth readers.

Up Front Capital Expense (per unit)

$200 plus cost to install WIFI/Bluetooth hot spot.

$200 - $500.

$500 - $750

$1,000 - $2,000

Operating Cost (monthly, per unit)

$0 for equipment, but has personnel costs.

$15 - $30

$30 - $60

Fleet Participation Capability

Any fleet can participate. Basically changes current reporting paperwork with different paperwork.

Some fleets use store and forward technology that may be usable. Many other fleets have switched to near realtime reporting.

Works with most systems as long as the service provider has a direct data feed.

Works with most systems as long as the service provider has a direct data feed. Some fleets already have the equipment.

Fleet will have to obtain and install; will need to establish communications service if real time.

Single fee for the number of miles driven.

A) Single fee for the number of miles driven.

B) Variable fees by route/highway type, time period.

B) Variable fees by route/highway type, time periods.

VMT Fee Basis

April 2011

A) Single fee for the number of miles driven. B) Variable fees by route/highway type, time periods capability.

A PRACTICAL APPROACH TO TRUCK VMT FEES

NY VMT Equipment Matrix EQUIPMENT TOPIC

ODOMETER

Privacy Protection

April 2011

BASIC REAL TIME REPORTING

ENHANCED REAL TIME REPORTING

CERTIFIED BOX

Manually from trip sheets

Computerized with route estimated between individual GPS locations.

Automatic – software built into the unit tabulates VMT from engine odometer and GPS locations. Internal monitoring for reporting can be performed on a second by second basis.

None

WIFI or Bluetooth at terminal, then internet.

Cellular system using existing 3rd party telematics provider and internet.

Cellular or WI-FI coupled with internet.

Very Good

A) Moderate to very good, if telemetry is captured at a secure facility the fleet controls or trusts.

Very Good. Fleet receives own telemetry and a parallel data stream provided to a certified 3rd party for fee determination.

Excellent

Fee Calculation Method

Communications Method(s)

STORE AND FORWARD

B) Poor, if telemetry is captured at a designated “generic” hotspot (port, fuel depot, etc).

A PRACTICAL APPROACH TO TRUCK VMT FEES

NY VMT Equipment Matrix EQUIPMENT TOPIC

ODOMETER

No direct up-front cost

STORE AND FORWARD

A) Easy truck installation. Some units can obtain a large number of attributes that may be too costly to transmit wirelessly. B) Allows the determination of a non-tax event (idling, out of state/county, off public highway/lot activity).

Benefits

April 2011

C) Can be used for exact IFTA mileage computations when in other jurisdictions.

BASIC REAL TIME REPORTING

ENHANCED REAL TIME REPORTING

A) Dual use of existing systems, which are providing other useful operational data to the fleet.

B) If already installed, fleets have already expensed the installation costs.

C) Fleet has detailed data to confirm assessed fee is appropriate.

D) Allows the determination of a non-tax event (idling, out of state/country, off public highway/lot activity).

E) Additional data collected permits other fee considerations. Can be used for exact IFTA mileage computations when in other jurisdictions.

E) Additional data collected permits other fee considerations. Can be used for exact IFTA mileage computations in other jurisdictions.

CERTIFIED BOX

A) Definitively protects privacy. B) Good audit trail and automatic calculation. C) Allows the determination of a nontax event (idling, out of state/country, off public highway/lot activity), provided sufficient map detail is present. D) Can be used for exact IFTA mileage computations in other jurisdictions (provided sufficient map detail is present). E) Self contained monitoring systems tend to be difficult to tamper with.

A PRACTICAL APPROACH TO TRUCK VMT FEES

NY VMT Equipment Matrix EQUIPMENT TOPIC

ODOMETER

A) High personnel cost. B) Out of state travel reported on “faith.” Manual. C) Difficult to audit. Drawbacks

D) Unable to provide other useful data.

STORE AND FORWARD

A) Requires the vehicle to pass through a designated WIFI “hotspot.” B) Potential privacy loss if 3rd party “unsecure hotspots” are used. C) Small form factor and installation ease facilitates removal (tampering, etc). D) Cost to add equipment and pay monthly fee.

April 2011

BASIC REAL TIME REPORTING

ENHANCED REAL TIME REPORTING

A) Types of data gathered tend to vary.

A) Monthly operational costs.

B) If increased reporting frequency is required, fleet may incur additional cost.

B) Cost to add equipment and pay monthly fee.

C) Cost to add equipment and pay monthly fee.

CERTIFIED BOX

A) Initial installation cost. B) Internal maps for fee calculations must be periodically updated on each and every unit. C) Fee basis or policy change will likely require the unit to be brought in for servicing, taking the truck out of service. Alternatively incur an extra communications cost for wireless updates. D) Cost to add equipment and pay monthly fee.

A PRACTICAL APPROACH TO TRUCK VMT FEES

Study Team and Roles Funding for this project comes from the Federal Highway Administration (FHWA) Value Pricing program. The New York State Truck VMT fee project was selected through a competitive procurement process. Phase I of the project was designed to investigate various methods for calculation VMT fees and to prove that the technology exists to adequately measure VMT using instrumentation and data methodologies already in use. Greater Buffalo-Niagara Regional Council (GBNRTC) is the Sponsoring Agency for this project. GBNRTC is the MPO for the Greater Buffalo region and is focused on establishing a comprehensive, coordinated, and continuing transportation planning process for the Erie and Niagara Countiesâ&#x20AC;&#x2122; metropolitan area. Support was also received from MPOs in Albany and Binghamton. Two other MPOs were also partners in this project. The Capital District Transportation Committee (CDTC) is the designated MPO for the Albany-Schenectady-Troy metropolitan area and is located at the intersection of I-90 and I-87. The Binghamton Metropolitan Transportation Study (BMTS) is a regional transportation planning agency and the MPO for the bi-state Binghamton area straddling the NY/PA border. The consultant team for the project was comprised of Delcan Corporation and Calmar Telematics. Delcan is global transportation consulting firm with experience in finance, policy, economics and technology. Delcan has more than 800 employees worldwide. For this project Delcan performed much of the research, data collection and analysis of the telemetric data. They formulated the fee schemes and measured the expected impact of fees at various levels. Calmar Telematics is a small firm based in Syracuse, N.Y. that specializes in the collection and analysis of truck fleet management data. Calmar secured the raw data from the fleet management firms processing carrier data for the trucking companies which volunteered to participate in Phase I. Calmar used the individual GPS readings to map the routes traveled by each truck to calculate the vehicle miles traveled. Calmar assisted with the analysis of the data and the formulation of the fee schemes. An advisory board was selected to represent various stakeholders in the process. The board was used to evaluate the results of the Phase I efforts and to recommend future steps to be taken in the project.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

New York State Vehicle Miles Traveled as Estimated for VMT Fee Calculations

Thruway

Vehicle Class VMT (million)

% Total

% Trucks

A-1* Class Roads

A-2 Class Roads

A-3 Class Roads

Primary Highways with Limited Access

Primary Highways without Limited Access

Secondary and Connecting Highways

VMT (million)

% Total

% Trucks

F01- Motorcycles F02 - Passenger Cars

VMT (million)

% Total

% Trucks

VMT (million)

% Total

0.6

316

0.6

% Trucks

23,947

73.6

10,781

73.1

36,819

70.7

5,011

15.4

2,761

18.7

9,816

18.9

F04 - Buses

366

1.1

139

0.9

624

1.2

F05 - Two-Axle, SixTire, Single-Unit Trucks

873

2.7

28.8

490

3.3

50.2

1,695

3.3

37.9

208

0.6

6.9

0.6

9.1

326

0.6

7.3

0.1

1.0

0.1

1.9

0.1

1.4

334

1.0

11.0

119

0.8

12.2

607

1.2

13.6

1,424

4.4

46.9

219

1.5

22.4

1,616

3.1

36.1

108

0.3

3.5

0.2

3.0

101

0.2

2.3

0.1

1.2

0.0

0.4

0.1

0.8

F03 - Other Two-Axle, Four-Tire Single Unit Vehicles

F06 - Three-Axle Single-Unit Trucks

8,306

585

79.4

5.6

27.2

F07 - Four or More Axle Single-Unit Trucks F08 - Four or Fewer Axle Single-Trailer Trucks F09 - Five-Axle SingleTrailer Trucks F10 - Six or More Axle Single-Trailer Trucks F11 - Five or fewer Axle Multi-Trailer

April 2011

1,565

15.0

72.8

A PRACTICAL APPROACH TO TRUCK VMT FEES

Thruway

Vehicle Class VMT (million)

% Total

% Trucks

A-1* Class Roads

A-2 Class Roads

A-3 Class Roads

Primary Highways with Limited Access

Primary Highways without Limited Access

Secondary and Connecting Highways

VMT (million)

% Total

% Trucks

VMT (million)

% Total

% Trucks

VMT (million)

% Total

% Trucks

Trucks F12 - Six-Axle MultiTrailer Trucks

0.0

0.4

0.0

0.2

0.0

0.3

F13 - Seven or More Axle Multi-Trailer Trucks

0.0

0.3

0.0

0.7

0.0

0.4

TOTAL Truck VMT

32,520

14,751

52,048

3,038

977

4,473

* excludes Thruway

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Advisory Board Members

Advisory Board Members Appel, Alex

Planning and Program Development, FHWA -New York Division

Arnold, Bob

FHWA - New York Division

Basso, Jack

Director of Management and Business Development, AASHTO

Chau, Maria

Planning and Program Development, FHWA - New York Division

Davies, Michael

Acting Division Administrator, FHWA - New York Division

Jukins, David

Capital District Transportation Committee

McVoy, Gary R.

Director, NYS DOT – now with Parsons Brinkerhoff

Morse, Hal

Executive Director, Greater Buffalo Niagara Regional Transportation Council

O’Neil, Chris

Senior Transportation Planner , Capital District Transportation Committee

Poorman, John

Director, Capital District Transportation Committee

Schauer, Michael

FHWA - New York Division

Tario, Joseph

NYSERDA

Weber, Steve

NYC DOT

Whitty, Jim

Oregon DOT

Adler, Ken

EPA

DeCorla-Souza, Patrick

Congestion Management and Pricing Team, US DOT – FHWA

Greenberg, Allen

Congestion Management and Pricing Team, US DOT – FHWA

Kearney, Tom

FHWA

March, Jim

US DOT - OST

Schoener, George

Executive Director, I-95 Corridor Coalition

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

New York Truck VMT Advisory Board Meeting Albany, NY Meeting Date: March 9, 2010 Attending In Person: Delcan – Dick Mudge, Roz Wilson, Sumala Tirumalachetty Calmar – Ross Sheckler, Ralph Viviano CDTC – Chris O’Neil FHWA – Bob Arnold, Alex Appel, Michael Schauer GBNRTC – Hal Morse NYSDOT – Gary McVoy NYSERDA – Joseph Tario NYCDOT – Steve Weber Oregon DOT – Jim Whitty NYS Thruway – Anthony Longe Attending By Phone: EPA – Ken Adler FHWA – Allen Greenberg Background • Dick Mudge – This project has a lot of sensitive issues – economic, political and financial. Looking for advice on several of these here, we need to go ahead with private and public support. •

Bob Arnold - This project is a nexus between an alternate way of collecting fees (to gas tax) and increasing freight mobility, Simplicity is the key to implement this project.

•

Hal Morse gave a presentation on why MPOs are interested in this project. MPOs are looking at sources of revenue to increase mobility and relieve congestion. Buffalo region has one of the nation’s worst freight bottle necks – I-90/290 interchange. Buffalo MPO plans to use truck data from the project for GHG analysis, freight planning etc.

•

Jim Whitty explained briefly about the Oregon implementation of VMT fee project. The pilot project was implemented in 2006 - 07 for about a year with 200 participants (after a senator introduced VMT fee bill in legislature). Fees were varied by time of day and zone to account for congestion. In February 2010, a truck VMT fee pilot was started mainly to look at alternatives to collect the existing weight-distance tax electronically. Has support from both instate and out

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

of state truckers. Oregon has the highest truck fees in the nation. Suggested to do pilot test nationally. •

Ross Sheckler – Bigger truck companies have software and will figure out the low cost alternatives, it is the owner operators who might not b able to take advantage of variable pricing schemes.

•

Steve Weber – Trucks will get into this program only if they see they can make money. Owner operators in NYC travel on non-truck routes, damaging the roads, these operators use normal GPS devices which don’t have information on truck routes in the city.

Devices Used/Equipment Matrix • Ross Sheckler – Minimum standard for equipment is needed, might have to give money to trucks to buy equipment, if quality of equipment is not guaranteed. •

Steve Weber – questioned about cost of collection of VMT fees versus cost of paper logs, cost of collection will not be lower if only NY taxes are included, since truckers will still have to file for IFTA.

•

Jim Whitty – Drivers may oppose the installation of equipment since it may find violation of driving hour limits.

•

Ross Sheckler – If VMT fees and equipment are being used for enforcement, and then it might kill the concept. NY MTA is against VMT fees but prominent individuals are part of the project.

•

Steve Weber, Gary McVoy expressed concern over trucks traveling on bridges. Enforcing trucks to stay on truck routes is difficult. They want a box on the trucks with maps preloaded (with truck routes) and get started with the system.

•

Discussion of Rensselaer Polytechnic Institute’s effort – where businesses were given incentives to extend hours of operation.

•

Mike Schauer explained the different federal taxes being collected right now – truck sales tax (6 percent), fuel tax, heavy vehicle use tax, tire sales tax.

VMT Fee Rates Proposed and Reactions • Proposed rates – 11 cents/mile for tractor trailers and 5.2 cents for straight trucks – at revenue neutral condition, variable fee rates of 8-12-15 for tractor trailers for primary highways, other major highways and secondary roads. •

Federal taxes – simple calculations reveal at 6-7 cents/mile all Federal taxes can be replaced as well with VMT fee.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

•

Allen Greenberg - These rates are higher compared to the Thruway, need to give Thruway tolls a rebate perhaps outside the Thruway. Another option is to charge thruway rates on roads parallel to Thruway.

•

Bob Arnold and Allen Greenberg – We need to delink revenue collection and revenue distribution, costs charged need not represent costs to maintain.

•

Chris O Neil – Per volume, higher volume and class roads are difficult to constraint and maintain – wear and tear is more on these roads. The proposed differential rating makes sense, depends on how much revenue we want to generate. Form a technical standpoint, doesn’t have a problem getting money from local roads to maintain highways.

•

Gary McVoy – difficult to quantify livability benefits of moving trucks to higher class roads because of pricing.

•

Joe Tario -10 to 30 percent of fuel is used in idling heating and private roads, taxes are not accounted here.

•

Ross Sheckler – Trucks always have an incentive to reduce diesel consumption, private roads issue exists as these pay taxes for driving on these roads when they are maintained privately.

•

Mike Schauer – federal funds can be used for local roads, there are no rules against it.

•

Gary McVoy – We need a system that the industry is willing to adopt – this is very essential to move ahead, we need simple rationale that are easy to comprehend.

•

Ken Adler – interested in carbon credits/gas tax components in VMT fee, suggests tweaking fee in any way to include emission benefits. EPA has large fleets in their smart way program

Discussion Questions 1. One goal has been to emphasize simplicity. When should we violate this rule and add more detail? Adding more detail also runs into the need for additional data. 2. Flat fee versus variable by type of roadway? 3. Single fee for all trucks versus variation by type of truck? We currently proposed tractor-trailers versus straight trucks.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

4. Time of day pricing versus one fee? •

We have avoided converting this to a weight distance tax, partly for technical reasons and partly since this would likely be a “deal killer” for the motor carrier industry

•

Bob Arnold – Answers depend on what we want to achieve with this pricing, if goal is to shift trucks to interstates, variable pricing makes sense.

•

Gary McVoy – if we are going with a flat fee, we can raise diesel taxes, VMT fees has capacity to do many good things. We need to have a sophisticated system and learn, even if it means it doesn’t work.

•

Shifting to primary roads depends on capacity issues on primary versus local, and leads to livability benefits. If alternate highways are already congested, we are better not having trucks on them.

•

Don’t discount empty trucks – Truckers will figure out ways to drive more efficiently.

5. Odometer versus GPS-based system – see question below 6. Is an off-peak discount a reasonable approach to congestion pricing? How large does the discount need to be to have a noticeable impact on truck traffic? •

Bob Arnold – Time of day ensures reliability

•

Different peaks for upstate, downstate – so need to vary per location, again leads to what the goals are.

•

Chris O Neil – Albany has congestion for an hour in the morning and evening, rest of the day there is no congestion anywhere

•

NYC truck routes have congestion with trucks – can’t move elsewhere

7. What do we know about price elasticity’s for truck movements by route and by time of day? • We are receiving advice and comments from our pool of trucking firms, but this is a limited sample. 8. Trucks that travel across state lines already report their mileage by state to IFTA on a quarterly basis. This would seem to offer a low-cost way to implement a simple VMT fee system and one that technically could be done on a national basis quite quickly. Is this worthwhile exploring in more detail?

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

9. How important is auditing? 10. What options are there to handle this? A third party data handler is one option. Is current auditing by IFTA and New York state agencies adequate? 11. We are considering a third party to handle the GPS data, calculate sums owed, and provide the truckers with a bill? •

This might reduce administrative costs for public agencies and would make it easier to implement changes in the location of roads and in the per mile rates.

•

A third party might be one way to generate a practical data set of truck movements, yet respect the privacy concerns of the motor carriers.

•

Jim Whitty – Third party advisable if tax structure has any complexity,

•

Bob Arnold – With all the complexities – congestion pricing, special boxes, third party auditing, and this system has all components of German system. Steve Weber suggested we focus on specific issues at specific locations.

12. We suspect that a truck VMT fee system will encourage some trucks to shift to the Thruway. This will generate more total revenue (given the higher per mile rate of the Thruway), but it will reduce the revenue received by NY state. It should also reduce the costs to maintain non-Thruway roads as well (both due to shifting miles onto the Thruway and due to shifting some traffic from local roads to limited access roads). How should this revenue difference be addressed? 13. A full statewide VMT fee system should generate additional funds for NY State due to the apparent under payment of the ton mile tax and the diesel tax. How should these funds be spent? The motor carrier community feels strongly that any additional fees that they pay should be focused on expenditures that benefit them. Should this apply to all net new revenues or merely a portion? 14. We could use advice regarding implementation issues. This is particularly relevant for a single state or a regional implementation. • •

How to handle out of state trucks? How to handle IFTA reporting?

15. Is there a logical order in which to implement this? • Volunteers • State registered trucks • Regional approach • National

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

16. Many trucks do not have fleet management systems. What are practical ways to encourage greater use of these devices? What are possible sources of funds? •

Grant programs to provide equipment costs – with truckers committing to pay monthly fees and to provide data for public use.

•

Loan programs (low interest from TIFIA or other public sources)

•

A choice to add the new equipment or to pay a higher odometer-based fee – say equivalent to the rates used for local roads

•

A simple mandate

17. Where does livability fit in this? For example, should we include much higher fees for travel in sensitive areas? How do we ensure that the fee is only paid by trucks that are passing through rather than making a local delivery? 18. The next phase of this will likely require additional funds – say for side payments as part of a voluntary system. What are possible sources of funds? •

AASHTO and Congress may fund, FHWA may not fund entire project, EPA and USDOT may have some money if it is projected to improve livability.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

GPS Data Point Processing Telematics information is collected from trucking fleets of varying operations, sizes, and technological savvy. A number of different telematics companies provide solutions to the carriers aimed primarily at improving fleet operations. All of these systems periodically record information specific to individual vehicles within the company's fleet, which at least includes a time stamp and location information (usually in a latitude/longitude format). Most of the fleets also include basic information like current speed, GPS heading and odometer reading. Other metrics are available as well. Using the simple metrics for a vehicle, reported periodically, an accurate mileage reading can be determined. The process for doing so requires several steps, starting with collecting the information from the fleet, followed by geo-referencing (or snapping) the telemetry points to specific links within the map set, then routing the most probably used links between consecutive snaps, and finally computing mileage based on the desired map and time breakdowns. For the purposes of this study the fleets have agreed to allow the use of their original raw data, allowing specific vehicle details (i.e., which fleet the vehicle is in) to be associated back to the computed mileage. All telemetry points are geo-referenced, or snapped, to the link the vehicle was on. If the map set is setup as a series of simple line segments, defined by two points, the simplest of cases only requires determining which line segment allows for the closest perpendicular distance from the telemetry point. This alone would cause some errors in the non simple cases, so other factors are considered. Points near intersections, between several possible links (i.e., directional highways), and in areas where the map set or the GPS readings themselves are poor or inaccurate require more complex algorithms. Using proprietary techniques, developed by team member Calmar, concerning telemetry patterns, confident snaps are achieved roughly 95 percent of the time. Most of the sample vehicles for this study provided a real odometer reading, so the initial mileage estimates were used as a guide the snapping process. For each vehicle, the total distance between points was assigned to the link which the second of the point pairs snapped to (even in cases of low confidence snaps). This total was then summarized based on the urban area code (2000 census) and the FCC major classification of the link which was snapped to; select time ranges were also included for peak period pricing considerations. In order to ensure that the VMT fee is fairly charged and collected, the VMT must be as accurate as possible. Therefore, the accurate routing estimates of the links most likely

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

used between snapped points are required. This will include various scenarios such as when a vehicle passes from a freeway to an arterial, by means of ramp, to include the correct distances for each and every road classification (and vice versa). In essence, the fleets don't want to be over charged, and the taxation authority doesn't want to under collect! We are using the NYSDMV Accident Location Information System (ALIS) map sets.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Carrier Data Snapped to Map Dataset Characteristics The Snapped Pts dataset contains records of vehicle's locations and the roads to which they've been Snapped. Column Name

Data Type

Description

ptID

Integer

Unique point identifier

FleetName

String

Name of the Fleet: Masked

vehID

Integer

Randomized, unique vehicle identifier

timeGMT

DateTime

GMT Timestamp of the data point. (yyyy-mm-dd hh:mm:ss.sss)

latitude

Decimal

Locational latitude of the data point

longitude

Decimal

Locational longitude of the data point

heading

Decimal

GPS heading of the data point (0=North, 90=East, 180=South, 270=West)

odometer

Decimal

Vehicle's Odometer Reading

distance

Decimal

Miles traveled by the vehicle since its last point, based on its odometer

speedMPH

Decimal

Vehicle's speed in MPH during the data point

Country

String

Three character country code for the point's location (USA, CAN)

SPFIPS

Integer

2002 State or Province FIPS code for the point's location (NY=36)

CoFIPS

Integer

2002 County FIPS code for the point's location

UrbanArea

Integer

2002 Urban Area FIPS code for the point's location

Dynamap_ID

Integer

The road link ID which the point snapped to (Publicly Available ALIS)

headingDiff

Decimal

The degree difference in the point's heading compared to the tangent line of the snapped segment of the road link in the

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Column Name

Data Type

Description defined node direction

feetToSeg

Decimal

The closest distance from the point to the road link segment, in feet

feetFromSegA

Decimal

The distance, in feet, from the road link's first defined node to the Point's snapped location

snapConfidence

String

The confidence with which the point was snapped to this road link (High, Low)

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Detailed GBNRTC Pricing Case Study Freight congestion problems are most apparent at bottlenecks: specific locations that experience recurring congestion and traffic backups because traffic volumes exceed highway capacity and also due to issues associated with highway geometrics. This study was statewide in nature, with a strong emphasis on truck movements in the Buffalo-Niagara region in northwestern New York State. As previously referenced, studies by Cambridge Systematics and Battelle Memorial Institute showed that, based on 2004 data, the I-90/I-290 interchange east of Buffalo was the worst freight bottleneck in the nation, with nearly 1.7 million hours of annual truck delay. At a delay cost of $32.15 per hour, the conservative value used by the FHWA's Highway Economic Requirements System model for estimating national highway costs and benefits, the direct user cost of freight delays at this single bottleneck is about $55 million per year. While the I-90/I-290 interchange is an extreme example of a freight bottleneck, there are numerous occurrences in the Buffalo-Niagara region of inferior Levels of Service (LOS) on both the primary and secondary highway freight systems.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

This situation, coupled with availability of a regional travel model, makes the region a good candidate to test the feasibility and impacts of imposing a value-pricing program on truck trips during peak periods of travel. Subsequent to development of assumptions and testing a peak period reduction of truck trips in a portion of the I-190 corridor, the observed results appear to suggest improvements in highway levels of service, but only at significantly higher rates of truck trip reduction. The second objective was to test the impacts of similar assumptions off the freeway system. As observed in the test results, the more significant levels of peak period truck trip reduction resulted in decreased traffic volumes on lower tier facilities. The model showed that vehicles moved up to the freeway to take advantage of the higher speeds and reduced travel times. This also demonstrates the opportunity for pricing to address the issues of livability and asset management, if sufficient levels of truck trip reduction can be attained. Within this region, two corridors were targeted as potential locations to test value pricing strategies. These corridors are highlighted below. A major corridor for trucks and autos in the Buffalo-Niagara region is I-90 between Exit 50 (interchange between I90 and I-290) and I-190. Known as the free section of I-90, this corridor is heavily used by trucks (10 percent of average annual daily traffic) passing through the region (from east to west/ west to east) as well as between Canada and the east via I-190. Another corridor to observe the impacts and potential benefits of reducing truck trips at peak periods is the I-190 corridor between the I-190/I-90 interchange and the Peace Bridge which spans across the Niagara River to Fort Erie, Ontario, Canada. This particular corridor serves as a crucial trade link between the United States and Canada, where medium and heavy trucks make up between 8 and 10 percent of the average annual daily traffic (AADT) in both directions. Not only is this a significant trade corridor for the region, but it is also a major commuter corridor during the AM and PM peak periods, connecting first and second ring suburbs and the central business district of Buffalo. For this study, the I-190 corridor was selected.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

The Travel Demand Model at the Greater Buffalo Niagara Regional Transportation Council (GBNRTC) was developed to allow GBNRTC to obtain independent traffic forecasts, provide GBNRTC with additional tools to perform regional and corridor analyses, and perform air quality emissions analyses required by environmental agencies. The GBNRTC Travel Demand Model is similar to most other integrated travel demand forecasting model systems in structure and purpose. In this study, the Travel Demand Model was used to simulate the various degrees of truck reduction on the network during peak periods of travel as a result of an imposed value pricing strategy. To reflect various degrees of pricing, truck trips would be reduced by predetermined factors provided by Calmar Telematics of 1, 2, 5, and 10 percent to be applied to the truck trip table at the AM and PM peak periods. These reduction factors represented assumptions of the various degrees of impact such a program could have on trucks during the peak periods. It was also assumed that greater reduction in trucks trips would have a positive impact on level of service (LOS) on major routes in the Buffalo-Niagara region.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

The figures below depict the current LOS for the AM and PM peak periods along the I190 corridor between the Peace Bridge and I-90.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

Levels of service as depicted during the AM peak period show some congestion on the inbound legs of I-190 towards the central business district for both I-190 North and I-190 South. Conversely, the outbound legs of I-190 North and South show heavy congestion during the PM peak periods. It was further assumed that an improvement in LOS on major facility types would render these roads more attractive to remaining trips in the network, favoring expressways over slower parallel roads and arterials during the AM and PM peak periods. GBNRTC was also interested in observing at which level of truck reduction would pose the greatest improvements in LOS on major facility types (i.e. the I-90 and I-190). As modeled, improvements in LOS on I-190 were more noticeable with greater reductions to truck trips. While there were slight improvements at 30 percent and 40 percent, more significant improvements in LOS were clearly visible when truck trips were reduced by 50 percent during the peak periods:

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

• •

Improvements to LOS along the I-190 corridor became evident during the AM peak period Slight improvements occur on the AM inbound legs of I-190, especially on I-190 south between Niagara Street and Church Street ramps and on I-190 North between I-90 and Ogden Street ramps Overall improvement on all links in LOS is not dramatically different The most significant improvement in LOS during the PM peak period is observed on I-190 North beyond the Church street on-ramp, indicating that a major reduction in truck trips could significantly ease congestion for northbound commuters leaving the central business district.

The decrease in truck traffic as assumed and modeled on I-190 has, as expected, increased the attractiveness of the facility to remaining trips. As a result, some of the trips previously assigned to parallel routes to I-190 have been rerouted using I-190 for both the AM and PM peak periods. Shifting from parallel routes to the faster expressways is less prevalent on I-190 during the PM peak period.

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

In the context of this pilot project, the observed results from application of peak period reduction of truck trips in a portion of the I-190 corridor of the Buffalo-Niagara region appear to suggest the viability of pricing as a means to achieve the major stated objectives, but only at significantly higher peak period truck trip reduction rates. The initial objective was to examine the ability of pricing to affect congestion levels. In the test case, reductions in peak period truck trips resulted in incrementally improved volume to capacity ratios on the freeway system. In this test instance, the level of service indicators remained unchanged at the lower levels of truck trip reduction, with the more significant and observable service level improvements occurring at truck trip reduction levels of as much as 50 percent in the peak period. While the theory and modeling technique suggest that pricing can be an effective tool to achieve the stated objectives, it is unlikely that diversions of that magnitude are achievable at this location, with these circumstances, within the bounds of the proposed user fee system being proposed. Acceptable levels of objectives satisfaction at lower levels of peak

April 2011

A PRACTICAL APPROACH TO TRUCK VMT FEES

period truck trip reduction might possibly be achieved in corridors or urban areas with overall higher levels of congestion and/or higher percentages of truck traffic. In progressing to the next phase of this initiative, an actual live test of the strategy, it is recommended some conditions be considered. An appropriate circumstance would include a more congested corridor or urban area, with a higher percentage of truck traffic and an established road network including freeways and parallel arterials to permit observation of traffic diversions.

April 2011