As of October 1, 2016, the SWUTC concluded its 28 years of operation and is no longer an active center of the Texas A&M Transportation Institute. The archived SWUTC website remains available here.


SWUTC Research Project Description

A Comprehensive Mileage-based User Fee (MBUF) Equity Impact Analysis

University:  Texas A&M University

Principal Investigator:
Tina Geiselbrecht
Texas Transportation Institute
(512) 467-0946

Project Monitor:
Brian A. Weatherford
Fiscal and Policy Analyst
Legislative Analyst’s Office
925 L Street, Suite 1000
Sacramento, CA 95814

Funding Source:  USDOT and State of Texas General Revenue Funds

Total Project Cost:  $56,625

Project Number:  600451-00007

Date Started: 4/1/12

Estimation Completion Date:  3/31/13

Project Summary

Project Abstract:
The funding challenge facing transportation investment in the United States is well documented. Two national commissions, the National Surface Transportation Infrastructure Financing Commission and the National Surface Transportation Policy and Revenue Study Commission, have looked into the problem and both agreed that the long term solution is likely a shift from the gas tax to a mileage-based user fee. However, the path from the current gas tax funding system to a mileage-based user fee funding system is unclear at best, and will require extensive research, policy analysis and outreach prior to implementation.

Project Objectives:
This project will use the data collected and research methods developed in a previous SWUTC project on mileage-based user fees (Larsen, Burris, Pearson and Ellis 2012) combined with transportation funding knowledge gained as part of a UTCM project ( headed by Tina Geiselbrecht). Based on this, several likely funding scenarios will be developed – with a focus on (a) asset management and (b) environmental sustainability.

For example, one scenario will be to direct all revenues to the repair and maintenance of the most degraded portions of infrastructure. As part of the project we will investigate what infrastructure TxDOT deems most degraded – possibly based on the statewide infrastructure evaluation results based on pavement scores, using best asset management principals. This may not be significantly different than current TxDOT spending and thus the equity impacts would be similar to those of the gas tax. However, as funding levels decrease further, the department will be forced to make even more cuts. In fact, there is current consideration to allow lower functional classification roads be maintained at a lower pavement score than those in a higher functional class. The impact of such a scenario will be examined with respect to geographic equity.

A second scenario will be one which charges green/low emission vehicles a lower MBUF rate while focusing more spending on environmentally beneficial projects such as transit system expansion projects. Thus, the second example scenario would entail a significant shift in how revenues are spent and could cause considerable equity implications. Research has shown that MBUF fees could improve the vertical equity of the transportation funding system by shifting more of the funding burden to high income travelers. This is due to higher income drivers, on average, having vehicles with higher fuel efficiencies. Thus, they currently pay a lower amount of gas tax per mile traveled. A shift to a uniform per mile fee would increase the cost of travel to drivers of more fuel efficient vehicles the most, thereby impacting higher income drivers more.

However, there is interest in development of a MBUF that is lower for vehicles with high fuel efficiency. Such a MBUF would likely shift benefits back to the high income group. Therefore, an examination is needed to determine  if such a policy would unduly shift the burden of funding infrastructure maintenance to lower income drivers. Additionally, the scenario could fund transit options and thus benefit the very low income travelers.

Based on these kinds of scenarios, we will examine the equity impacts of each scenario. With National Household Travel Survey (NHTS) data for Texas, we will estimate the change in user fees for travelers under a new fee system. By combining this with how the new funding is allocated we will determine how much travelers are spending on MBUFs and what portion of those revenues are benefiting them. In this manner, a full picture of the equity impacts, both costs and benefits, will be obtained.

These analyses will help advance the understanding of the impacts of a MBUF. Understanding the impact of different MBUF scenarios and revenue allocation options on travelers will help us to understand and shape future transportation funding.

Task Descriptions:
Task 1. Literature Review:
Previous research regarding transportation funding and equity with special attention to MBUFs will be reviewed. Also, we will investigate issues such as asset management, equity impacts, along with current TxDOT funding.

Task 2. Development of Scenarios:
At least two different MBUF scenarios will be developed with a focus on asset management and environmental sustainability to assess the impacts of the MBUF on equity.

Task 3. Analysis of the Scenarios:
Using the NHTS dataset, we will (a) determine how much each driver currently pays and then (b) analyze the scenarios to determine how much they would pay under an each new system.

Next we will allocate the funds based on the different scenarios developed and estimate the amount of funds each traveler benefits from  in the form of how much is spent on infrastructure/transportation services they use. We will then compare the revenues collected versus funds received for equity impacts.

Task 4. Final Report:
The research team will prepare a final report documenting the literature, methodology, data used, and results of this research.

Implementation of Research Outcomes:
One proposed alternative to the gas tax is the creation of a mileage-based user fee (MBUF), which would then shift how revenues are collected.  This research examined potential equity impacts of these shifts in the collection and disbursement of transportation funds.

This research used 2009 National Household Travel Survey (NHTS) Texas data along with detailed spending estimates from the Texas Department of Transportation to consider the equity impacts surrounding three MBUF and spending scenarios.  NHTS data were weighted to reflect results representative of Texas vehicle-owning households.  Each scenario was run both statically and dynamically under the assumption that the MBUF would replace the state gas tax.  Results indicate that the impact of the MBUF on geographic equity can be different depending on allocation of transportation funding.  However, the MBUF was essentially as equally vertically equitable as the current state gas tax.

Results from this research will be presented at the annual meeting of the Transportation Research Board in 2014 and is being published in the journal of the Transportation Research Forum.

Impacts/Benefits of Implementation:
The results of this project provide a deeper understanding of how future transportation funding decisions may impact equity.  The research explored numerous funding allocations to understand the impact on various transportation policy decisions.  By understanding how transportation is funded and the consequences of new funding mechanisms, DOTs and others may influence traveler behavior.

Web Links:

Final Report