Paper No. 08-0183

A New Road Financing System for U.S. Metropolitan Areas

Patrick DeCorla-Souza, AICP
Federal Highway Administration, Washington, DC
Phone: 202-366-4076
Fax: 202-366-3225
E-Mail: patrick.decorla-souza@dot.gov

Abstract Word Count: 172
Paper Word Count: 6,812
Figures: 1
Tables: 2

November 15, 2007

Abstract

This paper discusses a broad congestion pricing approach that could potentially replace Federal and state fuel taxes, and possibly other taxes used to finance transportation needs, in congested metropolitan areas.  The approach may be implemented in the near term, since technologies needed to implement it are already deployed extensively.  The approach involves converting existing freeways (all lanes) into premium-service free-flowing highways that provide fast, frequent and inexpensive express bus service, while charging all private vehicles a variable toll -- except for authorized buses and certified vanpool vehicles.  The toll would vary by level of demand and would be set high enough to guarantee that excessive demand will not cause a breakdown of traffic flow.  Sketch-planning analysis for the five most congested U.S. metropolitan areas suggests that implementing the concept could provide sufficient revenue to replace the fuel tax and potentially other transportation taxes while providing large economic benefits.  Public acceptance would be a major hurdle, but could be achieved with careful system design along with a major public education and outreach campaign. 

1.0 INTRODUCTION

Krusee (1) notes that the current system of taxation for transportation is unfair.  “You pay 2 or 3 cents per mile, wherever you drive, in gas tax,” he states.  “But if you live in the urban core, you drive mostly on city streets, and none of the tax you pay goes toward those city streets , while the guy who lives in the suburbs is driving 40 miles each day on superhighways that cost billions and he’s paying only pennies…. You pay 2 cents to drive a rural highway that costs very little to construct …And, yet, you pay the same 2 cents when you cross an interstate interchange that costs $300 million.”  Vehicle property taxes, sales taxes and other such taxes used to finance transportation in many states are also totally unrelated to actual amount of use of the highway system – let alone the public expense involved in providing for that use.

The gas tax and other transportation taxes are not only inequitable from the user’s perspective (i.e., “horizontally” inequitable); they also result in huge operational and economic inefficiencies because they fail to provide market signals to the highway user about the value of scarce road space – leading to overuse and congestion.  Growing congestion on metropolitan highway networks poses a substantial threat to the U.S. economy and to the quality of life of millions of Americans.  Congestion pricing – sometimes called value pricing – can relieve this congestion and at the same time replace the current inefficient and unfair (to users) system for financing transportation.  Congestion pricing works by shifting some rush hour highway travel to other transportation modes, and by shifting some more discretionary travel to off-peak periods, taking advantage of the fact that many rush hour drivers on a typical urban highway are not commuting to work and may have some flexibility in their time of travel. For example, trips made solely for the purpose of shopping comprise 10% of vehicle trips made during the morning peak period, while purely non-work trips (i.e., those that are not part of a work commute “tour”) comprise 49% of vehicle trips (2).  In the afternoon peak period, 23% of vehicle trips are made solely to shop, and purely non-work trips comprise 75% of all vehicle trips (2). 

When traffic flow collapses under high traffic densities, highway capacity is lost. If only a fraction (even as small as 5-10%) of vehicles are removed from a congested highway at critical times during the rush hours, traffic would flow much more efficiently throughout the peak period, allowing many more cars to move through the same physical space than would be possible under congested flow.  By preventing congestion from taking hold, pricing recovers the daily waste of time and highway capacity that occurs on congested highways when traffic flow breaks down. Congestion pricing represents the single most viable and sustainable approach to reducing traffic congestion. 

Congestion pricing involves “open road” tolling.  This means there are no toll booths.  All tolls are collected electronically at highway speeds.  This paper introduces a congestion pricing concept termed “high performance highways” (3).  High performance highways can eliminate recurring freeway congestion in metro areas, while potentially providing sufficient revenue to replace some or all taxes and fees used to finance transportation needs.  The approach may be implemented in the near term, since technologies needed to implement it are already deployed extensively.  The approach is one (but not the only) approach to deal with multiple economic, social, technological, administrative and political considerations involved in implementing congestion pricing.  It illustrates ways to achieve high levels of transportation system performance, economic efficiency and equity within a broad framework of public acceptance and political reality.

2.0 THE ROLE OF CONGESTION PRICING

Once freeway traffic exceeds a certain threshold level (measured in terms of flow of vehicles per lane per hour, or in terms of density of vehicles per mile), both vehicle speed and vehicle throughput are reduced.  Data show that maximum vehicle throughput occurs at speeds of about 45 mph to 55 mph (4).  When severe congestion sets in, the number of vehicles that get through per hour may drop by as much as a third, while speeds may drop to “crawl” speeds of 15 to 20 mph (4). Traffic flow is kept in this condition of “collapse” with low throughput and speeds for several hours after the rush of commuters has stopped. This causes further delay for motorists who arrive later in the day when demand might have easily been handled by available capacity, had traffic flow not broken down earlier. 

With high performance highways, a variable toll dissuades some motorists from using limited access highways (generally freeways) at critical locations (such as bottlenecks) where traffic demand exceeds capacity in the peak hours, and where a surge in demand may push highway traffic volume over the threshold at which traffic flow collapses.  Pricing prevents a breakdown of traffic flow in the first instance, and thus maintains a high level of vehicle speed and throughput throughout the rush hours. Collapse of traffic flow from overcrowding is avoided.  Not only are more motorists able get to their destinations during each hour -- they also get there faster.  Each priced lane in the median of State Route 91 in Orange County, California (on which traffic flow is managed using variable tolls) carries twice as many vehicles per lane as the adjacent toll-free lanes during the hour with heaviest traffic (5).  Management of traffic demand through pricing has allowed twice as many vehicles to be served per lane at three to four times the speed on the unmanaged free lanes.

Currently, our freeway systems use congestion delay as a way to ration scarce road space during rush hours.  However, delay imposes huge social costs on the traveling public and on the economy, and is an extremely wasteful way to allocate scarce road space.  The same is true, to a lesser extent, about ramp metering. Ramp metering allocates road space by requiring motorists to wait at freeway entrance ramps, wasting time there instead of on the freeway.  Lines of queued vehicles can back up into local arterials, causing delays to other motorists.  If freeway road space were instead rationed using variable tolls, the revenue generated would simply be a transfer of resources from motorists to the highway operator, and would not be a waste.  The revenue could be used to generate further benefits for commuters, or to replace all or portions of the current inefficient tax system.  Unlike taxes, the toll revenue would be obtained from travelers willing to pay in order to get a direct benefit in return – the reduced waste of their time.  By reliably preventing traffic flow breakdown and thereby ensuring a predictable trip travel time, freeway pricing would also reduce the “buffer” time that commuters must otherwise plan into their schedules to ensure that they will not be late.  Finally, it would also reduce fuel consumption and emissions.     

Diversion of traffic to parallel toll-free facilities may not be as big a problem as is commonly believed.  Figure 1 shows the magnitude of the waste of time and vehicle capacity that occurs when traffic flow breaks down on the four eastbound lanes of I-66 outside the Capital Beltway in Northern Virginia, inbound towards Washington DC.  Traffic flows freely up to 7 am.  In the one hour period between 6 and 7 am, 8,000 vehicles are carried at an average speed of 55 mph.  Traffic flow breaks down between 7 and 8 am, with speeds dropping to 30 mph and vehicle throughput dropping to 7,000 vehicles.  From 8 to 9 am, throughput drops further to 6,000 vehicles, and average speed drops further to 25 mph.  The reduced flow of 6,000 vehicles per hour continues between 9 am and 10 am, with speed increasing slightly to 30 mph.  Table 1 provides estimates of time wasted, and the potential value of time savings on the freeway if free flow of traffic could be maintained.  As much as $10 million annually could be saved in travel time costs alone on the 10-mile eastbound freeway segment with good traffic flow management in the morning peak period. Charging an appropriate toll at the bottleneck location would balance demand with capacity.  What Table 1 also shows is that, with congestion pricing, after accommodating the 19,000 existing users of the eastbound freeway who travel during the 7 am to 10 am period, there will be spare capacity for up to 5,000 vehicles available for use from 9 am to 10 am.  This available capacity could draw drivers from alternative routes and from other times of the day, i.e., those who currently try to avoid congestion on the freeway. Thus, pricing the freeway to match demand with capacity could maximize corridor throughput and potentially reduce overall traffic demand on alternative routes and at other times of the day.

The ability of active freeway traffic management to increase vehicle throughput at a network level was demonstrated in the fall of 2000 in the Twin Cities, MN (6).    In 2000, a bill passed by the Minnesota legislature required Minnesota DOT to study the effectiveness of ramp meters being used to manage freeway access on 210 miles of freeways in the Twin Cities region. A ramp meter study was conducted in the fall of 2000. Ramp meters were shut down for a period of 5 weeks beginning in October 2000.  After the meters went off, there was an average reduction of daily traffic volume of 9% on freeways, with no significant volume change on arterials.  During peak traffic conditions, freeway mainline throughput declined by an average of

FIGURE 1.  TRAFFIC VOLUMES AND SPEEDS ON I-66 EASTBOUND IN NORTHERN VIRGINIA (FOUR LANES, MORNING PEAK PERIOD)

Source: Data for Monday, March 5, 2007, provided by the Virginia Department of Transportation.

Table 1. Potential Impacts of Congestion Pricing on I-66 Eastbound

14% in the meters-off condition.  This suggests that active traffic management can increase freeway throughput by as much as 15% compared to unmanaged congested conditions.  And this throughput increase could be achieved without major entrance ramp delays (and the waste of human resources that are involved) if traffic were managed using pricing instead.

It takes only a small reduction in traffic demand at critical times during the peak period to prevent breakdown of the free flow of traffic.  Motorists in the Northern Virginia portion of the Washington, DC metro area experience free flowing traffic during rush hours in August, with only a small fraction of workers away on vacation and less than a 10% drop in peak period traffic volumes (based on data of freeway daily traffic volumes obtained from the Virginia Department of Transportation).  Similar experiences are reported in metropolitan areas in California on State holidays, when only State employees are off work.  So the key is to induce a shift of a few rush hour travelers to other modes or to other times of travel. 

Estimates of transit price cross-elasticity with respect to driving demand (i.e., the % change in auto use resulting from a 1% change in transit user costs) range from 0.025 to 0.056 (7).  Long-term elasticities tend to be much higher (8), due to the ability of travelers to respond through changes in job or residential location in the longer-term.  This suggests that 2-5% reduction in driving could be achieved as a result of significant reductions in transit travel time and/or cost.   With free-flowing freeways, the entire freeway network could serve as a transit “fixed guideway” providing significant travel time advantages for express bus services. Since the user-perceived generalized cost of driving, including both travel time and toll costs, will actually increase on average with congestion pricing, an additional reduction in driving due to this increased cost may be expected.

Additional reductions could be achieved through an increase in incentives for carpooling, vanpooling, flextime and telecommuting. If freeways were free-flowing, the entire freeway network could serve as a virtual HOV network which would provide cost advantages to carpoolers, since they could share the cost of the toll.  Based on before and after data from 10 HOV lane projects implemented in the U.S., Richard H. Pratt, Consultant, Inc. et al (9) estimate that HOV lanes that provide travel time advantages to carpoolers result in an increase of 14% in average vehicle occupancy for autos, carpools and vanpools over all lanes of the freeway.  This is equivalent to a 12.3% reduction in driving.  With priced highways, cost advantages for carpoolers replace travel time advantages under HOV lane systems. With pricing, each carpooler saves as much time as an SOV driver, but pays only 25-50% of the price paid by the SOV driver, depending upon occupancy of the carpool.  Based on the average travel reductions observed in the Pratt study, it is plausible that a 50% cost advantage for carpoolers could result in an increase in average vehicle occupancy of 7% and a reduction in driving of about 6%. Thus, a combination of carpooling cost advantages and other inducements for transit and HOV use could potentially lead to a total reduction in commuter driving of up to 8%, i.e., about 6% from shifts to HOVs plus about 2% from shifts to transit.  Given that national data (10) indicating that 10% to 23% or peak period trips are made solely to shop, additional reductions may be expected from shifts of some of these trips to off-peak periods.

The toll price will need to be high enough that the total user-borne cost to drive on a priced highway (i.e., time cost plus money cost) will be equal to or higher than the user-borne cost to drive prior to pricing (i.e., time cost only).  If the perceived user-borne cost were lower after implementing pricing, the inducement to drive could increase, increasing traffic demand and endangering the free flow of traffic.  To counter this effect, increased inducements would need to be provided for other modes to compete effectively with driving (e.g., transit fare reductions).

3.0 THE HIGH PERFORMANCE TRANSPORTATION CONCEPT

System Operation 

A high performance highway system would involve conversion of all lanes on existing freeways into premium-service free-flowing freeways that provide fast, frequent and inexpensive express bus service.  All vehicles, except authorized buses and certified vanpool vehicles, would be charged a variable toll set high enough to guarantee that high demand will not cause a breakdown of traffic flow at any time.  A commuter would have several options:

• Pay a relatively low toll for the convenience of driving alone in free-flowing traffic on the priced highway system. Unlike separated priced lanes, all lanes of the freeway would be priced, increasing the “supply” of premium-service road space. Higher levels of supply will reduce the market price of premium-service rush hour road space, making the lanes more affordable to a larger share of the driving public.  To address vertical equity concerns, means-tested lower income drivers could be provided with toll credits scaled to their income levels.  Alternatively, direct income supplements could be provided to them, allowing them to choose the mode that is the most cost-efficient for them to use. Toll credits or income supplements could be distributed through employers of low-income commuters. Employers would certify that the beneficiaries are in the qualifying income range, and have work schedules that would require them to drive during the periods that tolls will be in effect.
• Join a carpool and enjoy a fast trip on the priced highway system for half the toll price or less by sharing the cost of the toll, or join a ridesharing agency-certified vanpool and pay no toll;  
• Use newly expanded, faster and more convenient transit services provided by express buses that run on the priced highway system, and where feasible, on designated priority bus/HOV lanes on the arterial street system; or
• Drive alone for free on the arterial street system, which would be enhanced with advanced traffic signal optimization and other traffic operations strategies that would help them to handle any net diversions from the tolled highways.   

Advanced multi-modal traveler information systems would provide real time information on travel times and costs of the various options. Employers would be encouraged to provide flextime and telecommuting options for their employees, when feasible. Licensed drivers in the area covered by the priced network, upon request, could be issued an inexpensive electronic transponder (e.g., a “sticker” tag) free of charge, along with a transportation account.  Non-residents could purchase the tags at retail outlets such as convenience stores, or from ATM-like machines.  For convenience, these machines could be located at welcome stations at approaches to the metropolitan area.  Those not having transponders could be “video-tolled.”  This means that cameras would take pictures of their license plates, and the vehicle owner would be billed for the toll plus a small administrative charge to cover the extra costs.  For example, on November 1, 2006, the Florida Turnpike Enterprise, in conjunction with the Tampa Hillsborough County Expressway Authority, launched a “Pay-by-Plate” system, the first video-toll account system in the U.S.   Customers who are occasional users of the Lee Roy Selmon Crosstown Expressway (between Tampa and Brandon, Florida), and do not have a transponder, can call a toll-free number to open an account.  They pay a toll of $1.25 (instead of $1.00 for those with transponders) in order to cover costs to process the license plate images.

Ramp meters could be used on freeway entrance ramps in order to ensure that merging of incoming traffic does not break down mainline traffic flow, and to discourage short trips on the freeway on sections where there may not be a toll gantry.  Since pricing and incentives to use alternative modes would reduce demand, queues at ramps would be much shorter than they would otherwise be.  Thus, waiting vehicles could be accommodated on the ramps without causing queue back-ups that endanger flow on surface streets.

In order to ensure premium service for buses and vanpools when lane blockages occur as a result of an incident, overhead lane controls would be installed.  The lane controls would provide priority for buses and certified vanpools during incidents.  When there is an incident, a clear lane would be designated for use only by buses and certified vanpools.  If there is spare capacity available in the lane, it could be opened up to other vehicles for a premium toll set high enough to ensure that the traffic in the lane continues to flow freely.  Vehicles in other lanes that do not get service at the guaranteed speed, due to the incident, would get an automatic refund on tolls paid.

To provide speedier service for buses and HOVs off the priced highway system, priority lanes could be designated for buses and HOVs on arterial streets.  Such lanes have been designated on existing arterial facilities in Jerusalem and Tel Aviv, Israel, and work well to speed the flow of buses, taxis and HOVs.

Addressing Traffic Diversion Issues

It is true that when toll rates are raised on existing tollways, some drivers divert to toll-free arterials or surface streets to avoid paying the higher tolls.  However, unlike conventional tollways, priced highways provide many more travel options.  A high performance highway system would have several differences relative to tollways.  These differences would reduce the potential for an increase in traffic on parallel toll-free facilities.

First, variable tolling would provide options to motorists to reduce or eliminate their costs for rush hour tolls by shifting their time of travel.  In the case of tollways with flat tolls all day, drivers cannot escape tolls or avail themselves of a lower toll rate simply by traveling at a different time. 

Second, introduction of variable tolls during congested periods would be accompanied by encouragement of flextime and telecommuting, and provision of high-quality transit services and enhanced carpool and vanpool options on free-flowing networks.  Thus, some solo drivers would shift to telecommuting, to earlier or later start times, or to using transit, vanpools or carpools, rather than diverting to parallel toll-free roadways.

Third, low-income commuters with less ability to afford the tolls would get monthly allocations of toll credits or income supplements, with the amount of the credit or supplement scaled to their income levels.  Thus, there would be less of an incentive for them to divert from the freeway. 

Fourth, when pricing is introduced on previously congested highways, some motorists who were previously deterred by freeway congestion and had diverted to parallel arterials may shift back to the free flowing priced highways, which would accommodate higher rush hour traffic volumes in a shorter period of time, as explained previously with the I-66 example.  Note, however, that while total hourly vehicle and person trip throughput in the corridor may increase, severity of arterial congestion cannot be expected to improve significantly during key congested periods. Despite the potential shift in traffic from arterials to freeways, as long as parallel arterials remain toll-free, new motorists (for example,those who shift from other less convenient times of travel) can be expected to take the place of any traffic that shifts from arterials to the priced highways during the peak hours.  However, the duration of arterial congestion (i.e., the length of the congested period) can be expected to be shortened.

Finally, if toll revenues are used to pay for optimizing traffic signal controls on parallel arterials (in cases where they may not currently be optimized), this could help to further improve traffic flow on them. Toll revenue will also be available to fund active traffic management techniques, including aggressive incident management to reduce non-recurring congestion and ensure that traffic will be free flowing for more hours of the day.

4.0 POTENTIAL BENEFITS, COSTS AND FINANCIAL IMPACTS

The potential of the high performance highway concept was assessed for five metropolitan areas which have the most heavily congested freeway networks in the U.S.  These five areas have a total population of approximately 32 million – more than 10% of the U.S. population – and freeway networks comprising a total of 15,260 lane miles.  A detailed discussion of analytical procedures used in the analysis is documented in a separate paper (11).  Key data was obtained from the 2005 Urban Mobility Study (12). Table 2 summarizes study estimates of toll revenues, benefits and costs of a multi-modal pricing package that includes new express bus services and park-and-ride facilities, in addition to highway system costs.  Benefit/cost ratios range from 4.3 to 8.3, depending on the severity of existing levels of congestion.  Total annual benefits exceed $11.5 billion, and net annual benefits are almost $10 billion, after accounting for added public costs for tolling operations, and new transit and park-and-ride services.

The results of the financial analysis suggest that the multi-modal pricing package would be financially self-sufficient in all five metro areas, and surplus revenues (after accounting for additional highway, transit and park-and-ride costs) would exceed annual Federal and state fuel tax revenues collected under the current system of financing.  Annual toll revenue surpluses would total over $8.5 billion for the five cities, while fuel taxes under the current financing system produce less than $5 billion.  This suggests that in addition to replacing all fuel taxes, other motorist taxes and fees could also be replaced in these five metro areas without reducing the total amount of transportation funding currently available.  Alternatively, surpluses could fund new capacity needs in corridors where high toll rates (and corresponding high toll revenues) provide an indicator of the potential economic efficiency of new investment.

In smaller, less congested metro areas, net revenue from peak-period tolls may not be adequate to allow replacement of all fuel taxes, since congestion-priced toll rates are likely to be lower.  In such cases, a lower flat toll could be charged for use of freeways during off-peak hours. The flat toll could be based on the average cost per vehicle mile to maintain and operate the system. Alternatively, instead of replacing all fuel taxes, only state fuel taxes or only Federal fuel taxes could be replaced.  If Federal fuel taxes are eliminated, the state could be required to reimburse the Federal Highway Trust Fund in an amount equivalent to lost fuel tax revenue, calculated based on vehicle miles of travel and average fuel economy.

Table 2.  Benefits, Costs and Financial Feasibility in Five U.S. Metropolitan Areas

5.0 PUBLIC ACCEPTABILITY

Findings from the financial analysis (as indicated above) suggest that revenues from congestion pricing of freeway systems in major metro areas could provide adequate revenue to replace all or a portion of existing fuel taxes, while providing for efficient use of the system.  Technology to deploy freeway congestion pricing with open road tolling is currently available and widely deployed on existing toll roads.  The major question is: Will the public accept such a new system of financing?

The Volpe National Transportation Systems Center, U.S. Department of Transportation (US DOT) researched public opinion with regard to such a new financing system through focus groups conducted in July 2007 (13).  Focus groups were convened in Northern Virginia and Philadelphia among the general public, business owners and managers, and owners and managers of shipping and transportation logistics firms.  The study’s primary objectives were to better understand the public’s concerns regarding congestion pricing and to obtain feedback on the specific congestion pricing scenario presented in this paper.

Overall findings from focus groups

Many were aware that the gas tax funds transportation, but few could name other sources of transportation revenue.  When asked to comment on the current tax-based system for funding transportation, respondents did not have strong feelings on the topic, but tended to express dissatisfaction with the way government spends their tax dollars and the perceived lack of results.   

Respondents were asked to consider the possibility that their current tax-based system for funding transportation would be replaced by a user-based congestion pricing system. As described to them in a handout, the portion of their taxes that is collected to fund transportation would be eliminated, and instead transportation would be funded through charging tolls on limited-access highways.  Tolls would vary by time of day, from 25 cents per mile during peak hours of travel down to 0 cents during off-peak, with tolls collected electronically and set high enough to allow for free flow traffic. Employers would be encouraged to provide their employees with telecommuting and flextime options. Public transportation would be expanded to include new express bus services.  New park and ride lots would be made available to encourage carpools and vanpools.

Participants had a mix of opinions with regard to this specific user-based congestion pricing system scenario with which they were presented.  Some thought it might work (even though they had concerns about certain aspects of the system), others were opposed, and the majority of respondents were lukewarm or unsure about its merits.  Despite any reservations, most participants were willing to consider the concept.

The shipper and transportation logistics groups appeared somewhat more open to the concept than business owners, with some shipper respondents saying that they would schedule their travel during off-peak hours.  Business groups appeared to be somewhat more sensitive to the costs of the new system, and felt that it would have an adverse economic impact.  A number of business respondents also indicated that they could not offer telecommuting or flextime to their employees due to the nature of their business.

Focus group participants’ concerns

In discussing the congestion pricing scenario, participants in both cities and across the three types of groups raised many of the same concerns, including the following:

• Diversion to arterials:  In all the groups, a key concern was that local roads would become far more congested. 

• Administrative costs:  Respondents perceived the system would require high start-up costs and on-going operating expenses.

• High personal and business costs:  Respondents in both cities and across the different types of groups worried that the system could be a financial burden and that it would cost them more than they are currently paying in taxes. 

• Distrust of government:Respondents in both metropolitan areas seemed to distrust government to effectively administer the new program.  Many respondents voiced doubts that the existing taxes that fund transportation would really be eliminated.  Others questioned whether the government would use the funds collected from tolls for transportation improvements, and whether it would keep raising toll rates.

• Equity issues.  Equity issues took on several different guises during the group discussions.  Some (more so in Northern Virginia than Philadelphia) were concerned about the ability of low-income people to pay the tolls.  Respondents also mentioned that it was unfair that commuters (especially those with less flexible work schedules) would be paying to fund the roads, whereas off-peak drivers would not have to pay anything.     

• Enforcement Difficulties:Some respondents questioned government’s ability to enforce the system.  Some predicted that people would try to “cheat” the system, especially if low-income drivers were provided with special tags that allowed them discounted tolls.

• Won’t solve the problem:  A number of respondents simply could not fathom that highways would be free of congestion, despite admission by some that they would consider changing their schedule, mode, or route if the system were implemented.

• Restraint of choice.  Respondents wanted the choice of whether or not they pay for their use of the roads.  With the congestion pricing scenario, some felt like they were being pushed off the roads.

• Privacy: Privacy was raised in nearly all of the focus groups, but was not an issue that resonated strongly or generated much discussion with most participants, perhaps because vehicle identification technology would be restricted to the freeway system, and would not extend to trip origins and destinations off the system.

Other findings

Despite their concerns, respondents were able to articulate congestion pricing’s potential benefits, including reduced congestion, time savings and reduced emissions.  Respondents reacted very positively toward electronic toll collection, and the general public groups were generally favorable towards telecommuting and flextime, with some respondents indicating that they would take advantage of such options (though others in the business groups pointed out that telecommuting or flextime were not feasible in their business).  While some mentioned that the new system would provide an incentive to carpool, most did not seem willing to carpool themselves.  Some respondents indicated that they would switch to public transportation if service were expanded to their area. 

Overall, respondents wanted more information about the mechanics of the new system and evidence that it would in fact reduce congestion.  Many were hopeful that congestion pricing might help solve the problem of traffic congestion and a number thought that the new system was worth a try. 

Suggested approaches to improve public acceptance

Based on the above findings, the following approaches are suggested to help improve public acceptance of the concept:

• Educate the public on how transportation is funded today, on successes of pricing systems implemented abroad, and the fact that relatively small shifts in travel behavior are sufficient to restore free-flowing traffic on limited-access highways.
• Be clear about the purpose of the pricing initiative.
• Explain how it will affect households – which taxes will be eliminated, and how much would be saved as a result.
• Provide information on the costs and benefits, especially costs for administering the system and how they compare with other methods of relieving congestion, and economic benefits to businesses.
• Explain clearly how toll revenues will be used.
• Explain how traffic diversion challenges will be met.
• Address concerns about equity for low income individuals.
• Make special efforts to address privacy concerns, e.g., through legislation that restricts access to or use of personal travel data.  

Lessons from other recent studies of public opinion

In August 2007, the Minnesota Department of Transportation (15) reported on findings from a similar focus group study of public opinion on mileage-based user fees to be charged on the entire roadway system (not just on limited-access highways).  Focus group participants saw the general idea of a mileage-based user fee as a fair and reasonable way to tax drivers.  They related it to other usage fees, such as electricity or water, believing that the more you use it, the more you should pay.  Mixed feelings existed, however, as to the need for more money for transportation in general, with a small portion convinced that existing funds were adequate but mismanaged.

The congestion pricing model was seen as negatively impacting those drivers who need to travel for work during standard rush hours.  It was also perceived by some as an attempt at social engineering. There was a tacit level of acceptance on the part of the younger participants that the technology would work, while older respondents had more questions and were slightly more hesitant.  However, regardless of age, participants were skeptical of the claim that the information would not be tracked, and being watched by “Big Brother” was mentioned frequently.  Many believed it would be expensive to implement and maintain the technology, and often wondered why, if additional funds were needed, they did not simply increase the existing fuel tax or registration fee. 
The study concluded that drivers may be more accepting of a change in the funding method if the reason for the change is clearly explained.  Additionally, acceptance of change will increase if the monies raised are dedicated to transportation funding, and allocations to different types of projects are identified.

Under sponsorship of the Transportation Research Board, NuStats (16) conducted a systematic review of how the public feels about tolling and road pricing through a “survey orf surveys.  In a presentation at the White House Surface Transportation Legislative Summit II, the study’s author suggested that the following themes run through the public opinion survey results:

• The public wants to be shown a concrete benefit.
• Specific projects get higher support than general policies.
• The use of revenues is a key determinant of public acceptance.
• Support from a majority of citizens cannot be expected from the outset, but support increases as citizens experience the benefits after project implementation.
• Support for a proposed pricing project strengthens when survey participants receive clarifying information on the features of the project.
• Public opposition is higher where there is perceived unfairness. Having an alternative toll-free route is important for public support.
• The public wants simple pricing structures and tolling mechanics.
• The public favors tolls if the alternative is taxes.

Both the above studies concluded that public education is necessary to communicate the value of tolling and pricing as solutions to critical problems in transportation. The Minnesota study also recommended the following approaches:

• Elevate the topic of transportation funding in the minds of consumers.
• Answer the question, “why not just raise the gas tax?” with a clear and convincing response.
• Clearly show how and why pricing will relieve congestion.
•  Address concerns about how information gathered by the technology might be used.

6.0 CONCLUDING THOUGHTS

A new system of highway financing that involves congestion pricing of the major highway networks in major metropolitan areas could provide social benefits that far exceed multimodal investment and operating costs.  Net revenues from tolls after paying for all costs (including new express bus services and park-and-ride services that would complement the pricing scheme) would likely exceed revenues currently obtained from fuel taxes in the most congested metro areas.  The new system could reduce delays and fuel consumption significantly, and create a reliable system of major highways.  Public acceptance will be a major hurdle, but could be addressed through concerted public involvement and education efforts, along with careful system design. Equity concerns relating to the ability of low-income commuters to afford tolls could be addressed by enhancing transit services and by providing them with toll credits or income supplements. Money-back guarantees for high quality service, and possibly private sector responsibility for operation of the system, may restore public trust that government will deliver on its promise of congestion relief.         

Acknowledgements: The authors would like to acknowledge the valuable contributions of Margaret Petrella, Lee Biernbaum and Jane Lappin to the focus group study discussed in this paper.

Disclaimer: The views expressed are those of the author and not necessarily those of the U.S. Department of Transportation or the Federal Highway Administration. 

REFERENCES

1. 1. Krusee, Mike.  A User Fee is Better Than A Tax. Tollways.  Autumn 2006.  Journal of the International Bridge, Tunnel and Turnpike Asociation.
2. 2. Federal Highway Administration. NHTS Briefs.  April 2007.
3. 3. DeCorla-Souza, Patrick. (2007) High Performance Highways.  Public Roads. May/June 2007.  Vol.70, No. 6. Federal Highway Administration.
4. 4.  Chen, Chao and Varaiya, Pravin. The Freeway-Congestion Paradox.  Access.  Number 20, Spring 2002: pp 40-41.
5. 5. U.S. Department of Transportation.  2005. Report on the Value Pricing Pilot Program through March 2004.           
6. 6. Cambridge Systematics, Inc. Mn/DOT Ramp Meter Evaluation. Minnesota Department of Transportation, May 10, 2002. 
7. 7. Glaister, Stephen and Lewis, David  (1978).  An Integrated Fares Policy for Transport in London.  Journal of Public Economics, Vol. 9.
8. 8. Lee, Douglass. “Demand Elasticities for Highway Travel.” Highway Economic Requirements System, Volume IV: Technical Report.  December 2000.
9. 9. Richard H. Pratt, Consultant, Inc. et al (2000).   Traveler Response to Transportation System Changes, Interim Handbook.  TCRP Web Document 12, Chapter 2, HOV Facilities, Table 2-22 on page 2-68.
10. 10. U.S. Department of Transportation. 2004. National Household Travel Survey 2001.
11. 11. DeCorla-Souza, Patrick. (2007). Estimating Costs, Benefits and Revenues from Regionwide Freeway Congestion Pricing.  Paper no. 08-0182. Prepared for presentation at the TRB Annual Meeting in January 2008.
12. 12. Texas Transportation Institute.  2005 Urban Mobility Study.  Texas A & M University, College Station, TX. 2005. 
13. 13. Petrella, Margaret, Lee Biernbaum, and Jane Lappin (2007).  Exploring a New Congestion Pricing Concept: Focus Group Fndings from Northern Virginia and Philadelphia. Prepared for the Federal Highway Administration.
14. 14. DeCorla-Souza, Patrick. (2006). Implementing Congestion Pricing on Metropolitan Highway Networks with Self-Financing Public-Private Partnerships.  Journal of the Transportation Research Forum 45(1): 5-22, Spring.
15. 15. The Dieringer Research Group (2007).  Mileage-Based User Fee Public Opinion Study: Report on Findings.  Prepared for Mn/DOT on behalf of the Value Pricing Pilot Program.  August 2007.
16. 16. NuStats (2007). NCHRP Synthesis 38-03, Compilation of Public Opinion Data on Tolls and Road Pricing. In process of publication by the Transportation Research Board.

Disclaimer: The views expressed are those of the author and not necessarily those of the U.S. Department of Transportation or the Federal Highway Administration. 

Disclaimer: The views expressed are those of the author and not necessarily those of the U.S. Department of Transportation or the Federal Highway Administration. 

Author’s note:  Major arterial streets within the city do get funding from the gas tax.