The Road to Equity: Concerns and Analysis of RUC Pricing Mechanisms

“The Road to Equity: Concerns and Analysis of RUC Pricing Mechanisms”

Policy Brief: Completed for community-based advocates, in partnership with state environmental justice organizations.

You can view and download the full brief here.

In “The Road to Equity: Concerns and Analysis of RUC  Pricing Mechanisms,” a new publication from Just Solutions Collective, we address road user charges (RUC) and pricing mechanisms in pursuit of new transportation strategies and funding mechanisms for a clean energy future. Additionally, we include recommendations for an equitable approach to transportation funding. 

The following analysis aims to inform and better prepare community-based organizations (CBOs) and state advocates to participate more confidently in the conversations on road user charges and pricing mechanisms as they are discussed from state-to-state. If thoughtfully developed and implemented, these transportation funding mechanisms and strategies can also address climate, health, economic, and social equity in communities historically and disproportionately burdened by transportation inequities. 

Background: 

As states, regions, and cities aim to transition to a clean energy future, many search for new transportation strategies and funding mechanisms. Pricing mechanisms like gas tax revenues or the Highway Trust Fund revenues are decreasing due to the energy efficiency of modern cars and the growing uptake and adoption of electric vehicles. Planning and transportation agencies across the U.S. must replace their gas tax revenue with other pricing mechanisms like road user charges (RUC). Road pricing describes the different ways of charging the use of a road. There are various types of road pricing, such as cordon pricing, distance-based charging, area pricing, managed lanes, flat-rate tolling, and full facility tolling1.

Many states have begun researching and piloting RUC systems as the most likely long-term replacement for gas tax revenue. The federal government has supported these efforts via the Surface Transportation System Funding Alternatives (STSFA) grant program2. However, as states rush to find a solution for a long-term replacement for gas tax revenue, major equity considerations should be considered.

Impacts on Low-Income and Frontline Communities:

Historically, low-income communities and Black, Indigenous people of color (BIPOC) have borne the brunt of negative transportation planning. Such as the construction of highway systems that have divided communities, the negative impacts of high levels of exposure to traffic pollution and diesel emissions, or the disinvestments in the same communities that result in a lack of access to safe, reliable, and high-quality transportation options to get to work, school, and overall resources.   

Low-income households routinely face economic challenges. A change in costs can highly impact low-income commuters who are already dealing with housing burdens that cause them to live further from cities and rely on cars to go longer distances. Data on the average annual household expenditures in 2021 shows that housing accounted for the highest share (33 percent), followed by transportation (16 percent) and food (12 percent)3. Transportation expenditures increased by 11 percent in 2021. The largest increase in transportation was in public and another other transportation spending (+71 percent), followed by a 37 percent increase in gasoline, other fuels, and motor oil4. ​​The data is even starker among low-income earners, despite U.S. government subsidies in transportation5. Studies show that “lower-income households generally pay a larger portion of their expenditure on transportation, and as people move up in income brackets, they pay a smaller portion on transportation”6. An inequitable contribution to transportation funding and subsidies that do not benefit those who rely more on affordable and accessible transportation is why equity parameters and mobility justice frameworks are crucial when considering road pricing systems, as presented in the following two sections.

Equity Considerations for RUC: 

TransForm’s Pricing Roads, Advancing Equity (2019) report and toolkit aims to help communities advance a more equitable and affordable transportation system. They propose that structural inequity in our transportation system may be partially remedied by effective, equitable road pricing. The report outlines what should be considered with road pricing: affordability, access to opportunity, access to technology, and community health.

  • Affordability: Evaluate how road pricing will impact the budget of low-income households.
  • Access to Opportunity: Ensure pricing strategies do not negatively affect communities' mobility and access to resources in their communities if drivers choose to avoid priced roads. 
  • Access to Technology: Ensure low-income households and BIPOC communities have access to technological devices that are convenient for them.
  • Community Health: Invest funding into low-income and BIPOC communities for transit investment and bike and pedestrian infrastructure. 

Mobility Equity Framework

Greenlining’s Sustaining Clean Mobility Equity Programs (2021) report serves as a community-centered transportation planning and decision-making tool. The report outlines the following equity recommendations on road pricing:

  • Partner with stakeholders to identify an equitable fee structure and exemptions based on income, geography, and other factors. 
  • Reform how the revenue is distributed by partnering with stakeholders to identify how to prioritize the revenue distribution for walking, biking, public transit, shared mobility, or other clean mobility programs as opposed to additional highway improvements and on a needs basis identified by the community. 
  • Create policies and programs to distribute revenue in a way that advances equity, sustainability, and climate goals.

Models

As of 2022, 14 states and regional pilots (California, Delaware, Hawaii, Kansas, Minnesota, Missouri, New Hampshire, Ohio, Oregon, Texas, Utah, Washington, and Wyoming) have received federal grants to explore alternative funding mechanisms such as road usage charges7. View the policy brief here for more on how Oregon, Washington, and California have explored road usage charges as an alternative funding mechanism. 

Analysis

In the Fall of 2022, Just Solutions Collective spoke with state climate and environmental justice policy advocates about equity considerations of RUC and overall transportation funding mechanisms during the transition to clean energy. On October 2022, Just Solutions Collective hosted a roundtable discussion with over ten equity and transportation advocates and policy practitioners from Oregon, Washington, and California8. The roundtable provided a peer-sharing opportunity to better prepare states to participate more confidently in the conversations on road user charges and pricing mechanisms. The discussion was curated in collaboration with Verde, an environmental justice organization from Oregon, incorporating topics such as an RUC landscape review, equity concerns, and opportunities for transportation funding. The following examines key concerns and takeaways from the roundtable discussion with state advocates and policy practitioners:

  • RUC is a new emerging topic, and there are still more questions than answers.
  • Equity and mobility justice are not at the forefront of RUC conversations.
  • Insufficient inclusion of CBOs in RUC conversations.
  • Challenges aligning priorities on how the revenue will be spent.
  • Lack of public awareness of RUC.
  • Impacts of RUC for long-distance, rural and tribal commuters who rely on driving.
  • Dependency on cars and driving for revenue.
  • A need to activate an interstate network.

Conclusion/Recommendations

If designed well with equity goals to guide road pricing studies, RUC can benefit low-income communities. Thoughtful equitable development will allow states to replicate and scale transportation funding mechanisms so that they can aid the transition to a clean transportation future that centers equity.

View and download the full policy brief here.

Sources:

1 What you need to know on Road Pricing ClimatePlan Factsheet, 2022.
2 Surface Transportation System Funding Alternatives Program, U.S. Department of Transportation Federal Highway Administration.
3 Consumer Expenditures 2021, U.S. Bureau of Labor Statistics
4 Ibid
5 The High Cost of Transportation in the United States, ITDP, 2019
6 Ibid
7 Pricing Roads, Advancing Equity Report, TransForm, 2019.
8 Participants at the roundtable discussion included Verde, Front & Centered, The Greenlining Institute, PolicyLink, TransForm, UCLA Institute of Transportation Studies, Oregon Environmental Council, and Oregon Clean and Just Transportation Network members.