Determination of Preferred RUC Expansion Strategy (60)

Description:

Creating expansion and transition strategies involves establishing pathways by which the state may transition from the base RUC-paying fleet to a program that includes most or all vehicles in the state. Once feasible strategies are identified, the preferred strategy should be selected by computing the economic, equity, and user impacts of each strategy. The goal is to pass new legislation enabling the growth strategy. Results of the analysis will support the lawmaking process.

Details:

All strategies start with the vehicles covered in the initial RUC program and generally continue by phasing in vehicles based on miles per gallon (MPG), age/model/year, or both. Commercial vehicle RUC strategies may identify subject vehicles by weight or class. Most strategies may begin by adding all new vehicles.

Beyond phasing in vehicles according to age/model/year and MPG, another path is to increase the fuel tax while leaving the RUC at a revenue-neutral rate. This allows users to stay at the previous fuel tax rate by paying RUC. Any transition path must be politically feasible, so strategies should also consider how a bill might pass through the legislature. Specific analyses to perform include the following:

  • Total cost of collection, including costs internal to state government and costs paid to external vendors. These costs should cover a 10- to 30-year period.
  • Revenue by year from both current sources (e.g., the gas tax) and future sources (e.g., RUC).
  • Economic impacts, such as inflation or drastic travel habit changes (e.g., pandemics).
  • Distributional impacts and equity, including equity by income, geography, and groups that may be systemically disadvantaged.
  • User acceptance, including a qualitative analysis of how users will perceive and interact with the system as the transition occurs.

Primary Use:

Prepare for legislation to transition to a large share of vehicles using RUC.

Best Practices/Lessons Learned:

  • Holding a workshop of stakeholders is a good way to generate feasible strategies for a state.
  • Transition strategies based on MPG are harder to implement. The biggest challenge is that a vehicle identification number does not always decode to a single MPG—there can be different vehicle trim levels with different MPGs possible from a given vehicle identification number.
  • Leverage lessons learned from creating the original RUC program to determine the transition strategy.
  • Determine political feasibility based on conversations with lawmakers and with the task force.
  • The cost of collections may decrease due to technology and operational improvements over time.
  • Realize some transition strategies may require new RUC concepts or technologies. Consider such changes where appropriate by revisiting the relevant building blocks from the research and planning stage and the setup stage.
  • There may be different transition timelines/approaches for passenger, medium-duty, and heavy-duty vehicles.
  • Transitioning medium-duty vehicles may be the most challenging because there is no authoritative source for medium-duty vehicle MPGs. Passenger vehicles have a U.S. Environmental Protection Agency fuel economy rating, and heavy-duty vehicles either pay the International Fuel Tax Agreement rate or they can use the International Fuel Tax Association’s class average values. The implementation of a medium-duty and intrastate informational tax return is one way to obtain this information.

State Government Context and Assumptions:

This task is completed by the lead and implementing RUC agencies in consultation with lawmakers and the task force.