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

As states, regions, and cities aim to transition to a clean energy future, many search for new transportation strategies and funding mechanisms. Equity and tax progressivity considerations need to be a part of any road pricing conversation, to transform the way regions raise revenue for transportation and ensure equitable and progressive transportation funding during the phase-out of fossil fuels.

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. are looking to replace their gas tax revenue with other pricing mechanisms like road user charges (RUC). However, any cost can highly impact low-income commuters already dealing with a lack of affordable public transit and affordable housing that causes them to live further from cities and rely on cars to go longer distances. Many low-income families have no option but to drive to work. Furthermore, any reliance on regressive taxes, meaning those with lower incomes pay more, will add to their challenges to make ends meet. Equity and tax progressivity considerations need to be a part of any road pricing conversation, to transform the way regions raise revenue for transportation and ensure equitable and progressive transportation funding during the phase-out of fossil fuels.

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.

Policy recommendations

For the long-term success of road pricing programs, policy, and state climate advocates recommend the following:

  • Intentionally incorporate equity into any RUC studies, pilots, and programs. 
  • Work with CBOs and increase awareness of RUC with the general public. 
  • Revenue from road pricing should be invested back as reparations to communities impacted by highways and transportation inequities.
  • A need for more cross-sectoral engagement between agencies and policy advocates around RUC and a need to activate an interstate network for policy and climate advocates.

Examples

As of 2022, 14 states and regional pilots (California, Colorado, 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 charges. The following illustrates how Oregon, Washington, and California have explored road usage charges as an alternative funding mechanism. 

Oregon: Oregon enacted the first bill (HB 3946) to study alternative transportation funding sources other than tax fuel in 2001, they were also the first to adopt and implement a pilot fuel-tax user charge. The Road User Fee Task Force (RUFTF) was created to lead the policy development of creating sustainable revenue to fund the repair and maintenance of roadways. They established their first RUC program in 2015, OReGO, which has been modified since. The permanent voluntary program is functioning with about 700 volunteer drivers and 2,100 vehicles enrolled to date and working to expand eligibility. The Oregon Department of Transportation's (ODOT) RUC program consists of four main objectives: evaluating compliance mechanisms; exploring interoperability; expanding the market via technology options, streamlining account management, developing new mileage reporting options, and sharing data with other public entities; and increasing public awareness.

Washington: In 2012, Washington’s Legislature enacted HB 2190, which directed the Washington State Transportation Commission (WSTC) to create the RUC Steering Committee to provide direction and guidance on transitioning to an RUC system. In July 2018, WSTC initiated a pilot project to test an operational RUC program using a flat per-mile rate. About 5,000 drivers volunteered to be one of 2,000 drivers participating in the year-long Washington RUC Pilot Project. In 2019, HB 1160 created the 2020 Road Usage Charge final report, which addressed topics such as privacy, rate-setting, and compatibility with tolling systems. It also required the state Department of Transportation to submit recommendations that considered the impacts of RUC on low-income households, vulnerable populations, and displaced communities. The report also recommends phasing in RUC over the next 10 to 25 years.

California: In 2014, the California State Legislature passed SB 1077, establishing a road charge pilot study and a Road Charge Technical Advisory Committee (Road Charge TAC). In 2016, California’s Road Charge Pilot Program was launched and lasted nine months. More than 5,000 vehicles participated through six different reporting and recording methods ranging from manual to highly technical methods with optional location‐based services. In 2017, the California Road Charge Pilot Program Final Report was published, the report was part of Senate Bill (SB) 339 (Wiener, Statutes of 2021). The findings from the pilot recommended further research on the impacts of RUC on disadvantaged communities. The Road Charge TAC was extended until January 2027 and directed to make recommendations about the RUC pilot by July 1, 2023, on the design of a pilot to test revenue collection, including the group of vehicles to participate in the pilot, and a final report is due to the legislature by Dec. 31, 2026.

References

Author

Zully Juarez, Senior Research & Policy Analyst

Contributing Organizations

Lead Contributor: Just Solutions Collective would like to thank Vivian Satterfield, Director of Strategic Partnerships at Verde for her contribution and leadership to this work.  

Contributing Organizations:

Hana Creger, Senior Program Manager, Climate Equity, The Greenlining Institute
Stuart Cohen, Founding Executive Director, TransForm
Adonia Lugo, Ph.D., Equity Research Manager, UCLA Institute of Transporation Studies and California Transportation Commissioner
Paulo Nunes-Ueno, Transportation and Land Use Policy Lead, Front & Centered (Washington State)
Axel Santana, Associate, PolicyLink
Jacqui Treiger, Campaign Manager: Climate & Transportation, Oregon Environmental Council 
Sara Wright, Program Director, Transportation, Oregon Environmental Council,
and Oregon Clean and Just Transportation Network Members

Suggested Citation

Juarez, Zully (2022). “The Road to Equity: Concerns and Analysis of RUC Pricing Mechanisms.”Los Angeles, CA: Just Solutions Collective.