This is part 3 of a special blog series on transportation issues in the Puget Sound Region. These issues are under consideration by the Transportation Futures Task Force, a group of stakeholders convened to recommend solutions to ease our transportation woes and better support transportation options. Transportation Choices’ Director of Programs, Shefali Ranganathan is a member of this task force.

PART 3: Assessing the Options on the Table


Written by an all-star TCC Volunteer

In the past installations of this series, we have laid out public opinion regarding our state’s transportation system, discussed why the current funding mechanisms are not keeping up with our need, and listed some of the key alternatives being considered. Today, we will discuss how funding mechanisms are evaluated, and examine how some of the key alternatives perform.

The PSRC’s Transportation Futures Task Force recently identified the following principles of a successful funding source:

  • Revenue Streams Should be Sufficient to Fund Projects and Programs in Regional Transportation Plans
  • Future Revenue Streams Should be Diverse, Stable, and Predictable
  • Revenue Sources must Support the Region’s Visionfor Growth, Land Use, and Environmental Sustainability
  • Transportation Revenue Sources Should Strive for Equity
  • Funding Sources and Financial Strategies Should beFeasible

 

Below, we evaluate a handful of key revenue options according to the above principles. The final funding solution will likely be a combination of more than one of these sources.

Traditional Funding Sources

Examples: Fuel tax, motor vehicle fees, motor vehicle excise tax, sales tax, tolled express lanes, tolled new capacity/bridges (facility-specific tolls), general property taxes, and project-specific property fees.

Evaluation: Fuel taxes and sales taxes currently make up the lion’s share of our transportation budget. However, revenue from fuel taxes is declining, and sales tax, despite its broad tax base, is not stable, especially during economic downturns. Both revenue sources also raise equity concerns and have limited political support. Sales and fuel taxes place a proportionally larger burden on low-income residents, and the region’s already-high tax rates make any further tax increases politically challenging.

Potential New Funding Sources

Examples:  Road usage charge, tolled expressway system, general carbon tax, carbon tax on motor fuels, motor fuel sales tax, and street maintenance utility. Of these, we will focus on some of the most promising options, which are also structured to encourage fewer cars on the road.

Evaluation:

  • Road Usage Charge (RUC):The RUC is a stable and predictable fee per mile driven, tracked via a mileage reporting device plugged into your vehicle. The RUC performs well across the Task Force’s principles: it has the ability to generate significant revenues that could replace many, if not all, traditional funding sources; the technology is flexible enough to allow for low-income alternative pricing; and it is a closer representation of a true user fee, capturing the cost of roadway maintenance regardless of vehicle fuel economy. The Washington State Transportation Commission is currently studying the feasibility of implementing such a system. Although there are significant public privacy concerns, political support may be increasing: Oregon State began a road usage charge pilot program on July 1st—the first of its kind in the nation.
  • Tolled Expressway System:Tolling existing expressways in the Puget Sound region could generate substantial revenue, increase bonding capacity for additional system improvements, and reduce peak congestion through variable pricing. Current law dictates that revenues from toll facilities must be dedicated to facility where the toll was collected, but modifying this law could expand the uses of toll revenues to other areas such as transit.
  • General Carbon Tax:Public opinion polls reveal a preference for funding the transportation system by taxing the highest polluters. A carbon tax is exactly this—a charge that directly links amount paid to users’ carbon dioxide emissions levels. The taxes are levied by taxing the carbon content of different fossil fuels, making coal, oil and natural gas more expensive. A carbon tax could generate substantial revenue and yields higher environment benefits than other funding options. However, funds generated would likely go to the general fund, where the transportation system would compete for them. Additionally, as with the fuel tax, low-income users could be adversely affected without thoughtful implementation.
  • Carbon Tax on Motor Fuels:This tax is similar to the fuel tax, but is implemented at the refinery rather than the pump. The rationale for an additional tax on motor fuels is that carbon dioxide causes environmental damage that is not accounted for in the price of motor fuel. However, the carbon tax on motor fuels will also struggle to generate stable revenue as fuel efficiency increases. A similar tax is collected in British Columbia, some of which is passed through to users at the pump.

 

Appropriately weighing the complex outcomes and implications of these different revenue sources is challenging task. The Transportation Futures Task Force is currently deep into discussions about the future of transportation funding. Details about many possible funding sources can be found here, and their performance under the guiding principles is evaluated here. The time is right to push for a creative and thoughtful solution that will support the region’s long-term goals and create vibrant, well-connected communities.

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