1. Washington State Road Usage Charge Assessment
Anthony L. Buckley
Director, Office of Innovative Partnerships
Washington State Department of Transportation

2. By 2027, 70% OF State GAS TAX REVENUEs will Go TO DEBT SERVICE PAYMENTS*
This chart represents the growing percent of the state’s portion of gas tax revenue that goes to paying debt service.
in FY 2003, 39% of the state’s portion of gas tax revenue went to paying debt service.
By FY 2015, this had grown to 69%
And by FY 2027, the we project this will increase to 70%.
The percent of the state’s portion of gas tax revenue that goes to paying debt service remained rather flat between FY 1987 thru the mid-2000s.
However, as reflected on this chart by the increasing percentage of debt service, transportation revenue packages passed in 2003 (Nickel package), cents, and now in 2015 (Connecting WA) included gas tax increases that supported significant amounts of bond financed projects. As those bonds were sold, the debt service has resulted in a steady increase in the percent of the state’s portion of the gas tax going to those payments.
With each package, the green bars surpass the red line as the bond sales happen over time as the increased revenue comes in.
Notes:
Updated MVFT Debt Service totals available only thru Nov 2015 forecast, so also using MVFT Revenue from Nov 2015 forecast
MVFT Debt Service includes the principal & interest
MVFT Debt Service includes debt service on debt sales to date (Nov 2015) and projected debt service on future debt sales (after Nov 2015) (source: OST)
From OST:
WA State portion of the net fuel tax revenue does not represent the full amount of adjusted gross fuel taxes which are legally pledged to pay debt service.
The Connecting Washington Transportation package also pledges motor vehicle related license fees which are not presented in this chart.
*Based on Net Fuel Tax Revenue and Debt Service projections per the Nov 2016 Forecast.
- Debt service only includes debt first payable by the fuel tax. This excludes SR 520 corridor debt service (first payable by tolls), but includes Tacoma Narrows Bridge debt service (reimbursed by tolls).
- WA state’s portion of fuel tax revenue does not include all fuel tax revenue pledged for debt service. For example, revenue distributed to cities and counties is also pledged for debt service, and beginning in FY 2019, revenue from select vehicle fees (for selected projects).

3. Gas Tax Increases Will Not meet our revenue Needs
The gas tax in Washington State would have to be raised about 1.5 cents per gallon, per year on all vehicles from in order to equal net revenues from a road usage charge of 2.4 cents per mile.
This would keep funding at status quo levels. It does not address growing needs for improvements or maintenance.
If we want to stay with the gas tax, it would take annual increases of 1.5 cents EVERY year just to keep our funding levels for roads, at the level they are today.
If we did this, our per gallon gas tax would be at 65 cents per gallon in just ten years…..and 80 cents in 20 years.

4. WHAT’s Driving RUC? Increases in Fuel Efficiency & Production of EVs
Changes to federal CAFÉ Standards are not likely to stem consumer demand for higher MPG vehicles:
Volvo plans to produce only hybrid and electric cars starting in 2019
General Motors recently announced that its future fleet with be all-electric, with 20 electric models available by 2023
Toyota 2017 Mirai - powered by hydrogen fuel cell with an EPA rated 312-mile range. Plans to shift to hydrogen fuel cell fleet in the next 15+ years
Ford is investing $4.5 billion to transition to hydrogen fuel cell and other alternative fuels over the next 15+ years
Nearly 400,000 people put down a $1,000 deposit for Tesla’s all-electric Model 3

5. The Basis Of The Assessment
Identify a sustainable, long-term revenue source for Washington State’s transportation system, and transition from the current gas tax
Ensure there is consumer choice on how mileage information can be collected and paid
During the transition period of moving from the gas tax to a road usage charge, drivers would pay one or the other, but are note intended to pay both
For purposes of assessing the gas tax against a road usage charge, we have assumed revenue neutrality and focused on net revenue potential for both
Because a RUC is being looked at as a statewide, foundational funding source to play the same role as the gas tax today, we have deliberately separated RUC from Tolling.
But like tolling, we are keeping RUC at the state level, rather than the regional level, to ensure consistency of policy application and minimize costs with scale.
Tolling is used to raise funding for specific projects. In addition, in urban areas it is used to manage demand via pricing of lanes or facilities by charging variable rates at peak periods .  It is not used as a statewide funding source.
However, RUC COULD incorporate pricing as is feasible and desirable by the state in the future. As such, it could help to reduce costs related to tolling by streamlining processes and reducing tolling capital investments.
Ensuring consumer choice will be critical to successfully launching a RUC program. Not everyone wants a high tech. gizmo collecting their miles – privacy concerns will trump revenue needs.
The good news is that, unlike tolling, with RUC we CAN offer payment options that do not involve any technology.

6. SNAPSHOT: WASHINGTON’S RUC PILOT PROJECT
Federal FAST Act funding: Surface Transportation Funding Alternatives Program Grants:
Stage 1 - Final Design & Set-up, $3.874 M -- complete
Stage month live pilot, and Stage 3, evaluation and reporting: $4.6 M -- underway
Summary of Washington RUC Pilot Project:
Year-long, statewide test of Washington-designed RUC system for 2,000 volunteer test vehicles
Partners: Oregon Department of Transportation, City of Surrey, BC, Idaho Transportation Department, Seattle Electric Vehicle Association and Plug-in America
Mileage Reporting Choices: Mileage Permit, Odometer Charge, Automated Mileage Meter (2 types), and Smartphone
Idaho
Oregon

7. 2,000 PARTICIPANTS SELECTED FROM A POOL OF NEARLY 5,000 FROM AROUND THE STATE
Data as of February 23, 2018

8. SIX UNIQUE FEATURES OF THE RUC PILOT
1 RUC across borders: testing how RUC will be applied and function between states and Canada
2 Smartphone Innovation Challenge:
3 Private business partners: private vehicle licensing offices to help administer odometer readings
a new app to deduct out-of- state miles for RUC
4 Financial interoperability test: how two states with their own RUC rates reconcile tax collections for miles driven within their jurisdictions
5 Use of consumer products for RUC operations: using an existing consumer product (Automatic™) for RUC mileage reporting
6 Electric vehicle drivers: feedback whether drivers prefer RUC over other road funding options (EV fees)

9. WASHINGTON’S GUIDING PRINCIPLES FOR A RUC SYSTEM
Example of pilot measure
Transparency
Change in participant understanding of RUC rate, collection method, and use
Complementary policy objectives
Impact of pilot on driving habits of participants
Cost-effectiveness
N/A
Equity
Total and per-mile RUC vs. gas tax paid by participant income
Privacy
Participant perception of privacy protection, including any changes in perception during pilot
Data Security
Participant perception of data security, including any changes in perception during the pilot
Simplicity
Participant understanding of compliance requirements
Accountability
Accuracy of reported road usage, revenue collected, and revenue distributed
Enforcement
Reasons for non-compliance expressed by participants
System Flexibility
User Options
Reason for participant preferences of various mileage reporting methods
Interoperability and Cooperation
Participant understanding of interoperable RUC
Phasing

10. Thank you. Anthony L. Buckley Director, Innovative Partnerships
Washington State Department of Transportation