SURFACE TRANSPORTATION: THE CASE FOR GROWTH Michael S. Bronzini, PhD, P.E. Dewberry Chair Professor Emeritus and Research Professor George Mason University, Fairfax, VA Tel. 615-788-0039, mbronzin@gmu.edu ABSTRACT This paper reviews the history and background of the development of our surface transportation system, and the salient issues surrounding investment in the system. Surface transportation investments have demonstrable economic and social benefits that go well beyond the sums invested. These benefits include net increases in economic output and productivity, improved national security and disaster response, and equitable access to economic and social opportunities for our citizens. There is widespread consensus that public investments in surface transportation have been lagging needs for several decades, to the point where our crumbling and congested infrastructure threatens our economic and social well being and our competitiveness in world markets. While some gains can be made through better use of existing revenue, rehabilitating the existing system and investing in our future will require spending that is tens of $billions per year above recent levels. How to raise the required revenue is a more complex and controversial issue. Federal and state revenues are primarily derived from liquid fuel taxes, and the combined effects of greater vehicle fuel efficiency and the tax structure have severely eroded purchasing power in real dollar terms. Over the long term we must face up to the inevitable conclusion that the fuel taxes, by themselves, are not sustainable as our primary revenue source. The pending shortfall in the federal Highway Trust Fund has forced the issue. It is urgent that we get on with the process of identifying and analyzing acceptable alternative or supplemental funding methods. INTRODUCTION Surface transportation policy in the U.S. comes down to answering some rather simple and straightforward questions:  What role does transportation play in the economy and society?  What are the benefits of investing in transportation?  What role should government have in providing and investing in surface transportation, and what is the private sector’s role?  What levels of government investment are appropriate, and how should the money be spent?  What mechanisms should government use to raise public funds to pay for justified transportation projects? This paper takes up each of these questions, relying on both the writer's knowledge of the development of the U.S. surface transportation system, and an array of recent papers on this topic sparked by the current debate over the future of the federal government's role in funding the system. Hence this paper serves primarily as a survey and summary of the most salient issues, but some brief policy conclusions are offered at the end. 1 Before turning to the questions some definitions are needed. By “surface transportation” we mean all systems for moving people and goods across the earth’s surface, including highways, railroads, and marine systems, and intermodal systems and services utilizing two or more of the surface modes. Included within the foregoing are public transportation—also called public transit—services, which make use of all three of the surface modes. We deliberately exclude the somewhat specialized topics of air and pipeline transport, which may be dealt with in separate papers later. “Government” includes public bodies at all levels—local, state, and federal. Both elected and appointed officials, and their various operating agencies and entities, are included. Now, let’s go on to the questions. WHAT ROLE DOES TRANSPORTATION PLAY IN THE ECONOMY AND SOCIETY? The basic role of transportation is to connect people and places, so as to support economic and social activity. Expanding on this are some classic statements about the nature and purpose of transportation systems. The purpose of transportation is to move people and goods safely, efficiently, economically, and in an environmentally sensitive and sustainable manner. Transportation demand is a derived demand, arising from society’s need and desire to accomplish other activities. Since ancient times transportation routes have enabled communication and commerce. From the network of chariot roads that facilitated the conquest and control of the Roman Empire, to the Silk Road and modern oil tanker ocean routes, and on to the worldwide marine container shipping network of today, transportation has been a key factor in the development of civilization. It can be argued that the history of the U.S. is largely the history of its transport systems. The first settlements were limited to coastal cities with favorable harbors (Boston, New York, Philadelphia). The country’s vast interior natural resources could be tapped only when they were reached by rivers, canals, and later railroads. Major cities were located at inland ports and railroad hubs (Pittsburgh, Chicago, Memphis, St. Louis, Atlanta). The national highway network connected rural and urban America, and fostered urbanization and the creation of autodominated megacities (Houston, Los Angeles). The role of transportation in modern agricultural and industrial societies is well known, and stems from the economic concepts of specialization of labor and efficient utilization of natural resources, sometimes studied under the rubric of “location theory.” In simplistic terms, there are virtually no locations on earth that have in abundance all of the natural resources and labor supply needed to support the agriculture, industry, and commerce of modern settlements. Hence efficient production requires transport of people and resources to locations that allow maximum output at minimum cost, and subsequent movement of that output to demand points. Transportation cost also puts a cap on prices in local markets, equal to the cost of producing something at a low cost production point plus the cost of transporting it to the local market. 2 WHAT ARE THE BENEFITS OF INVESTING IN TRANSPORTATION? Transportation has a definite and provable link to economic development. A vacant piece of land will be developed to its best and highest use only to the extent that it is accessible to potential users. Other things being equal, locations that are more accessible to more people and businesses have higher economic value, as reflected in land prices and rents, than other properties that are less accessible. To see this one needs only to look at virtually any modern large metropolitan area, where development density and building heights are the highest at the area’s central point and other highly accessible nodes of development. More formally, using input-output analysis and other economic models it can be shown that lowering production costs through investments in transportation makes an economy more efficient, permitting more output and a higher gross regional product than would otherwise occur. For example, a recent study by Fuller (2011) for the Virginia Secretary of Transportation showed that investing in 16 proposed Virginia Public Private Transportation Act projects would expand Virginia’s post-construction economy by $4.1 billion annually and support more than 56,000 additional jobs in the Commonwealth. A review of highway economics studies published by the American Road and Transportation Builders Association (ARTBA, 2011) found that: The benefits of highway investment to private sector productivity and economic activity are well documented in the economics literature. There are numerous studies that have found a positive correlation between transportation infrastructure investment and economic development. Although exact impact of the investment has varied among studies, the fact that there is a positive relationship is widely accepted. A recent RAND (2011a) study reached the same conclusion. Some specific findings reported by ARTBA, and reviewed by the writer, include:  Locations near transportation investments have higher land values than other sites (TRB, 1995).  Investments in non‐local roads over the period 1950 to 1989 yielded annual production cost savings to industry of 24 cents for each dollar of investment (FHWA, 1996). Figure 1 illustrates the general nature of this relationship.  During the 1980s the net social rate of return on investment in the road network was 10 percent. For non-local roads the return was an even higher 16 percent. (FHWA, 1996)  The rates of return quoted above were significantly higher than the returns to private capital and the long‐term interest rate (FHWA, 1996), although the RAND (2011a) study reached the opposite conclusion for the years since 1980. Another way to measure the economic impact of transportation is to count up the losses to an economy that occur when a major transportation asset suffers a service disruption. Some recent such impacts documented in the ARTBA (2011) report are as follows:  The collapse of the Minnesota I‐35W Bridge over the Mississippi River in 2007 cost the Minnesota economy $60 million in economic activity before the replacement bridge opened in 2008. 3 Industry Production Costs Highway Network Capital Stock Figure 1. Relationship Between Production Costs and Highway Investment. Source: Federal Highway Administration (1996).   New York’s subways and buses suffered a two and a half day worker strike in December 2005. The city lost approximately $400 million the first day and $300 million each of the next two days, largely due to cancellations of economic activity and lost productivity as the city adjusted to alternative means of transportation. Analysis by the U.S. Congressional Budget Office in 2006 estimated that a one week shutdown of just the Los Angeles and Long Beach ports would cost between $65 million and $150 million per day. The daily cost of a three‐year shutdown for those two ports, as would occur under certain terrorism scenarios, would be higher–between $125 million to $200 million per day. That translates into a reduction in real GDP of $45 billion to $70 billion per year. The highway system has a major role in national defense and homeland security. We sometimes overlook the fact that the official name of the interstate highway system is the “National System of Interstate and Defense Highways.” The defense benefits of the system became evident in the military mobilization leading up to Operation Desert Storm. Use of the highways for emergency evacuation and response has occurred with every recent hurricane, and is a major element of the emergency response plan of every metropolitan area. Transportation also provides social benefits. In more primitive times a person’s social interactions were limited to the small circle of individuals who could easily be reached by walking, or by occasional trips on horseback or in animal-drawn carts and wagons. It was not uncommon for a person to spend his or her entire life within a few miles of their place of birth. Modern transportation and communication systems have greatly enlarged one’s interaction sphere, to the point where information and other cultural resources are available almost instantly from all over the globe. People apparently place high value on this enlarged interaction ability, as evidenced by how heavily they make use of it and how much they are willing to pay for it. Efficient urban transportation systems allow families to choose housing locations which provide desired open space and lifestyle amenities, while still being within reasonable commuting 4 distance and time to their employment locations. In fact easy access to shopping choices, schools, and social and recreation facilities dominate urban transportation, where less than 25 percent of trips are now work-related. Urban transit systems, including commuter rail, rapid transit or “heavy rail,” streetcars and trolleys or “light rail,” and bus have their own unique benefits. It is an observable fact that every major city in the world has successful public transit. Rail transit systems running on their own separate guideways carry significantly more passengers per hour than urban expressway lanes, and often have faster peak-period travel times as well. Public transit also has equity benefits, in providing mobility to urban residents who lack access to automobiles, and to those who cannot drive due to age or physical limitations. In some cities transit permits low-income inner city residents to commute to good jobs in suburban locations. Finally, urban transit resources can be an important security asset in responding to natural disasters or terrorist threats. Many city emergency response plans call for heavy use of transit and school transportation assets. Transit has a unique role in evacuating the carless and special-needs populations—such as the disabled, the elderly, and the medically homebound—in an emergency (TRB, 2008). Investments in public transit also have economic benefits. A study by Weisbrod and Reno (2009) showed that each $1 spent on transit generates an increase in Gross Domestic Product (GDP) of $1.80. Properties near rail transit stations sell for 10 to 25 percent more than other comparable properties. A study of transportation projects by the University of Utah (Nelson, et al., 2009) reported that public transportation investments generate 31 percent more jobs per dollar than new construction of roads and bridges. Putting or keeping public transportation in communities with high unemployment produces up to 2.5 times more jobs than putting public transportation in communities with low unemployment. Similarly, a Smart Growth America (2011) report on the impacts of ARRA project spending found that public transit investments produced 1.7 times as many jobs per dollar as did investments in highways and bridges. The National Surface Transportation Policy and Revenue Study Commission (NSTPRSC, 2008) nicely summarized the importance of good transportation as follows: A modern, smooth-functioning national surface transportation system is essential for economic success in a global economy and is also a key determinant of the quality of life enjoyed by citizens throughout America. They also proposed as a fundamental goal that “the United States should create and sustain the preeminent surface transportation system in the world.” Now, how do we get and maintain such a system? WHAT ROLE SHOULD GOVERNMENT HAVE IN PROVIDING AND INVESTING IN SURFACE TRANSPORTATION, AND WHAT IS THE PRIVATE SECTOR’S ROLE? Considered as a whole, the U.S. surface transportation system is a joint public-private enterprise, with the roles of each sector varying by mode. Highway system infrastructure (roads, bridges, tunnels) is designed, built, operated, and maintained by governments at all levels. The national highway network includes over 4 million miles of public roads, and total lane-miles are more than double that, at 8.2 million miles (FHWA, 2009). The vast majority of the total highway mileage, 77.5 percent, is owned and operated by units of local government. States own 19.3 5 percent and the federal government owns only 3 percent. The Interstate highway system, comprising 47,011 miles, accounts for only 1.2 percent of total miles but carries 24 percent of annual vehicle-miles of travel. State arterial highways that are part of the federal aid system, including the interstates, are designed, constructed, and operated by state governments, but following federal standards and guidelines and making use of federally-sponsored research results. Other state and local highways also benefit from various forms of federal assistance. Another important subsystem is the National Highway System (NHS), a Congressionallydesignated system that includes the Interstate highways and 117,084 miles of additional arterial roadways. The NHS includes about 4 percent of roadway miles and 7 percent of lane miles, but caries over 44% of total vehicle-miles of travel (FHWA, 2008). Highways are by far the dominant mode of passenger travel in the U.S., and trucks operating on the vast highway system carry 29 percent of domestic freight ton-miles (BTS, 2010b). Within this largely governmentprovided highway system there are some toll roads, bridges, and tunnels that are operated by private or quasi-public agencies, usually under concession agreements with government agencies. While the infrastructure is predominately in the public sector, the vehicles that use it are nearly all privately owned and operated. In contrast with the highway system, the U.S. railroads, including both infrastructure and rolling stock, are nearly all privately owned and operated. The Class I railroad network in the U.S. presently consists of 94,082 miles. This mileage has been decreasing over the past 50 years; in 1960 the Class I railroads owned 207,334 miles of track (BTS, 2010a). Railroad mergers, rail line abandonment, and sales to short line operators account for the decrease. While this mileage is limited, the rail mode continues to provide vital transportation services to the U.S. economy. For example, railroads carry 39 percent of domestic freight ton-miles, which exceeds total truck ton-miles, and Amtrak provides passenger service over 21,178 miles of track (BTS, 2010a). The public role in freight rail is largely limited to safety and some state funding programs of the Federal Railroad Administration, and limited economic regulation by the Surface Transportation Board. Intercity passenger services are primarily provided by Amtrak, a U.S. governmentowned corporation, in partnership with the freight railroads who own most of the track over which Amtrak operates. The inland waterway system comprises 25,320 miles of navigable channels. Of this total, about 12,600 miles are commercially significant shallow-draft waterways (BTS, 2010a), consisting primarily of the Mississippi River and its principal tributaries (notably the Ohio River system and the Gulf Intracoastal Waterway). To this could be added thousands of miles of coastal deepdraft shipping routes serving domestic intercoastal shipping (e.g., routes such as New York to Miami), and providing access to U.S. harbors by international marine shipping. The water mode carries about 12 percent of domestic freight ton-miles (BTS, 2010b). Public and private roles in the marine sector vary by function. The inland waterway channels, including those connecting coastal ports to the oceans, and navigation locks are constructed and maintained by federal and state agencies, with the U.S. Army Corps of Engineers normally the lead agency. Ports and terminals are owned, built and operated under a variety of agreements involving state and local governments, port authorities, and private companies. Commercial vessels that use the system are nearly all privately owned and operated. 6 The foregoing describes the essential makeup and organization of the U.S. surface transportation system, as it has evolved since colonial days. An intriguing policy question is whether or not this structure should be maintained as is, or modified in significant ways. It might be noted that most of this structure, particularly in the highway and maritime modes, is much the same worldwide, especially in the developed countries, which lends credence to the conclusion that this assignment of public and private roles may be in some sense optimal. There are differences in other countries, particularly in Europe, in how rail transport is organized, with governments taking on a more prominent role than in the U.S. Much of the organizational policy issue is bound up in the funding and financing issues, so we will come back to this later. Is government involvement in the surface transportation system necessary? Historically the answer worldwide has been "yes." The basic reason is that private enterprise will not, on its own, provide the needed systems and services. A full network of highways, for example, is needed to provide the desired inter-regional service. Were these roads all to be toll roads many segments would not have sufficient traffic to pay for themselves, so private operators would not choose to build them. Only state and federal governments have the capitalization, long-term outlook, and broad span of control required to build and operate the highway network. Also transportation routes have the characteristics of natural monopolies. It would not be efficient for rival highway operators to provide competing parallel links in densely populated corridors. Finally, safety considerations dictate that highways be built to the same standards over wide areas, which requires government involvement at least at the level of setting and implementing design standards. While government is necessarily involved in transportation there is room for debate about the relative roles of federal, state, and local governments and the private sector. WHAT LEVELS OF GOVERNMENT INVESTMENT ARE APPROPRIATE, AND HOW SHOULD THE MONEY BE SPENT? Recent national panels appointed to the task of assessing our surface transportation investment needs have all reached roughly the same conclusions—investment has not kept pace with needs. The National Surface Transportation Policy and Revenue Study Commission (2008) stated: Conditions on America’s surface transportation systems are deteriorating. In some cases, the physical infrastructure itself is showing the signs of age. In almost all cases, the operational efficiency of our key transportation assets is slipping. This was echoed in some observations of the National Surface Transportation Infrastructure Finance Commission (NSTIFC, 2009):  Our surface transportation system has deteriorated to such a degree that our safety, economic competitiveness, and quality of life are at risk.  Real highway spending per mile traveled has fallen by nearly 50 percent since the federal Highway Trust Fund was established in the late 1950s.  From 1980 to 2006, the total number of miles traveled by automobiles increased 97 percent and the miles traveled by trucks 106 percent. Over the same period, the total number of highway lane miles grew a scant 4.4 percent—meaning that over twice the traffic was traveling on essentially the same roadway capacity.  Over half of the miles that Americans travel on the federal-aid highway system are on roads that are in less than good condition, more than one-quarter of the nation’s bridges 7 are structurally deficient or functionally obsolete, and roughly one-quarter of the nation’s bus and rail assets are in marginal or poor condition.  An ever-expanding backlog of investment needs is the price of our failure to maintain funding levels—and the cost of these investments grows as we delay. If the Finance Commission’s third observation is true (and it is) there can only be two possible explanations: either we had excess highway capacity in 1980, or we are not expanding the system so as to keep up with demand. The remarkable run up in highway congestion nationwide since 1980 suggests that the latter is true. What level of surface transportation investment is needed? The American Society of Civil Engineers (2009), in its report card on U.S. infrastructure, gave grades of “D” to roads, transit, and inland waterways, and pegged the annual spending need for highways alone at $186 billion (versus current spending of only $76 billion). The other annual modal spending needs were estimated at $53 billion for transit and $10 billion for inland waterways (no estimates were made for other maritime transport facilities). The Policy and Revenue Commission set the total annual surface transportation investment need in the range $133 billion to $250 billion. The American Association of State Highway and Transportation Officials (AASHTO, undated) has estimated average annual federal funding needs over the next four years (2012-2015) to be $68 billion for highways, $15 billion for transit, and $10 billion for intercity passenger rail. Finally, the FHWA (2008) biennial report to Congress, 2008 Status of the Nation's Highways, Bridges, and Transit: Conditions and Performance, estimated annual capital investment needs of $175 billion for highways and $21 billion for transit. While these estimates come from various sources and cover different time periods and subsets of total transportation funding, they are all within the same general neighborhood, and show spending needs well above current expenditure levels. There is more agreement on how to spend surface transportation funds. Preservation and rehabilitation of the existing physical plant should receive top priority, that is, quit deferring maintenance of existing highways, bridges, and transit systems and restore them to first class condition. Next in line on most lists are projects to add capacity for congestion reduction and service of newly developed areas; enhance safety; and provide needed public transit upgrades. Underlying this is recognition of a need to put in place better project selection criteria, such as those founded on economic analysis, to ensure that public funds are expended only on the best performing projects. Congressional earmarking of transportation improvement funds increased from 10 projects in 1982 to more than 6,300 projects in 2005 (NSTPRSC, 2008). Merit-based project selection following accepted economic and other benefit evaluation principles would decrease substantially the role of Congressional earmarking of funds for projects that have not been subject to such scrutiny, and also end the practice of diverting transportation revenues to non-transport uses. Intercity passenger rail has been a matter of some controversy recently. As noted earlier the core service is provided by Amtrak, but high ridership exists in only a few high volume corridors, mostly in the Northeast. While the Amtrak service network does span the U.S., the network is not dense—many states have a single Amtrak line passing through, and two states have no service at all. The combination of a sparse service network, limited train frequencies, and schedule disruptions is such that it might be said that the U.S. lacks a truly effective intercity rail system that is on par with our highway and air transportation systems, or is comparable to 8 passenger rail service in Europe. The geography and population density of the U.S. make providing a high-quality and truly national service by a capital-intensive mode like rail a major challenge. Like intercity rail systems throughout the world Amtrak requires public funding to stay in business, most of which comes from the federal government. Amtrak has been under constant Congressional scrutiny, and has had to fight each year for its appropriation. As a result federal funding has been uneven over the years, ranging from $600 million to $2 billion. In comparison, federal funding for highways has been consistent, and presently stands at about $43 billion. Critics argue that other modes do a better job and require less subsidy. So far Congress has deemed maintaining intercity passenger rail to be in the public interest and has continued funding Amtrak's capital needs, and some operating costs, albeit at levels that keep Amtrak continually on the verge of financial failure. Despite these difficulties Amtrak ridership has risen from 21 million passenger trips in 2000 to 28.7 million trips in 2010 (Amtrak, 2011). High Speed Rail (HSR) has drawn interest as a means of revitalizing the intercity passenger rail mode and providing the U.S. with a world class system. High speed trains operate at top speeds of 180 to 220 miles per hour in Europe and Asia, notably in France, Japan, and China. The immediate high speed goal in the U.S. is a more modest 150 mph, although speeds as high as 250 mph have been mentioned as longer range goals. Even proponents agree that the costs of providing such a system are formidable, since it would require a new and separate right of way and tracks. Capital costs for the Northeast Corridor alone would exceed $100 billion, and a national system would run several hundred $billion. This would be a long term project similar in magnitude to development of the interstate highway system. Congress has thus far provided about $10 billion for intercity and high speed rail projects, and the administration has proposed a program of $53 billion spread over Fiscal Years 2012 through 2017, with the ultimate goal of providing HSR access to 80 percent of the population within 25 years. A few states are also planning HSR systems using their own funds to supplement anticipated federal grants. The funding path has not been smooth, however. The governors of Florida, Ohio, and Wisconsin have turned back several $billion of federal funds awarded to their states for HSR projects, on the grounds that those projects would saddle state taxpayers with long term costs to keep those systems in operation, and Congress has dropped HSR funding from the FY 2012 federal budget. Many observers feel that the high costs and worsening federal budget problems will at least delay the HSR program, if not kill it entirely. Freight transportation programs also deserve mention as possible government investments. Freight transportation is primarily a private sector business, though it does make use of highways and waterways provided by governments at all levels. Efficient, safe, and secure freight operations benefit the public in the form of lower prices for goods, so federal and state (and some local) transportation programs are beginning to include a freight component. Recent federal surface transportation program legislation has provided some modest funding for freight projects, such as improving connector roads serving freight terminals and removing bottlenecks that impede freight flow. The argument for government involvement is that the benefits of freight projects are diffuse, while most of the costs are local. For example, projects to improve highway and rail access to marine ports in Southern California provide benefits to shippers located in far 9 flung locations such as Chicago, Columbus, OH and New York, hence there may not be enough local benefits for state and local agencies in California to fund such projects. The public will support government investment in the transportation system if that spending meets certain criteria. The paramount one is economic efficiency, that is, the benefits of the project must exceed its costs. This should be analyzed over a broad geographic area, particularly when federal and state funds are being spent, since (as noted above) the benefits may not accrue only at the location of the expenditure. Benefits should also be broadly defined, to include improvements in mobility, safety, security, land development, economic productivity, environmental quality, public services, and so on. A second widely accepted criterion is equity, where public resources are expended to insure that all citizens have reasonable access to transportation services. Surveys, such as a recent one by the Rockefeller Foundation (Hart Research Associates and Public Opinion Strategies, 2011), have consistently shown that the public will support funding of transportation projects if it can be shown that the money is being spent on needed improvements such as better highways and public transit, and that government funds are being expended efficiently and wisely. Other surveys have also shown public support for increased transportation taxes if the proceeds are used to fund identified transportation improvements. For example, in a survey by the Mineta Transportation Institute (Agrawal, et al., 2011), 62% of respondents supported a gas tax increase of 10 cents per gallon to improve road maintenance. However, "for tax options where the revenues were to be spent for undefined transportation purposes, then support levels varied considerably by what kind of tax would be imposed, with a sales tax much more popular than either a gas tax increase or a new mileage tax." The Rockefeller Foundation survey was one of the first to show resistance to increased taxation, despite the support shown for investments in transportation infrastructure. WHAT MECHANISMS SHOULD GOVERNMENT USE TO RAISE PUBLIC FUNDS TO PAY FOR JUSTIFIED TRANSPORTATION PROJECTS? Any discussion about how to fund surface transportation must begin with federal motor fuel taxes and the Highway Trust Fund. The federal government first imposed a tax on motor fuel in 1932, at the rate of 1 cent per gallon. The revenue from this tax went to the General Fund, which was also the source of federal highway aid at the time. In 1956, spurred by the desire to establish a stable source of funding for the interstate highway system, the Highway Trust Fund was established as the repository of federal highway taxes, and the proceeds from the tax were dedicated to the federal highway program. The fuel tax rate was set at 3 cents per gallon. Congress has periodically raised the tax rate since then, most recently in 1993 to the present rates of 18.4 and 24.4 cents per gallon for gasoline and diesel fuel, respectively. The higher tax on diesel fuel, which is primarily used by large trucks, is an attempt to recognize the extra costs of construction, maintenance, and rehabilitation that large trucks impose on the highway system. The HTF also derives revenue from three separate taxes on heavy trucks. The states were actually ahead of the federal government in imposing fuel taxes. By 1932 all states and the District of Columbia had enacted motor fuel taxes (Talley, 2000). Today the state taxes on motor fuel range from 8 to 37.5 cents per gallon on gasoline, and 8 to 39.6 cents per 10 gallon on diesel fuel (Federation of Tax Administrators, 2011). The fuel tax is dedicated to highways in 30 of the states (U.S. PIRG Education Fund, 2011). Originally all HTF revenue was dedicated to the federal-aid highway program, but there have been and continue to be "diversions" of the funds to other purposes. The Mass Transit Account of the HTF was created in 1983, to fund public transit projects, and 2.86 cents per gallon of the fuel taxes (both gasoline and diesel) are dedicated to this account. In 1986 Congress created the Leaking Underground Storage Tank Trust Fund and diverted 0.1 cents per gallon of the fuel taxes to that account, which funds related enforcement and cleanup activities administered by the Environmental Protection Agency. The remainder of the fuel tax revenue and all of the truck taxes are deposited in the Highway Account. Just as the original federal motor fuel tax was levied for deficit reduction, twice in recent years the fuel tax was increased and dedicated to that purpose for a few years, but subsequently those increases were redirected to the HTF. In recent years Congress has diverted HTF revenue to a wide variety of non-highway purposes, including community preservation, scenic byways, recreational trails, and an array of public buildings (Utt, 2008). While some of these diversions are arguably transportation-related, critics feel that projects such as these should be funded from general tax revenues rather than the HTF. One reason for the controversy about diversion of HTF revenue is that since ever since the first gasoline tax was introduced in Oregon in 1919 and dedicated to road improvement motor fuel revenues have been considered to be a user fee. That is, the more you drive the more you pay, but what you pay is plowed back into the highway system to fund roadway construction, operation, and maintenance. Purists argue (U.S. PIRG Education Fund, 2011) that motor fuel taxes are not strictly a user fee, since the taxes you pay may not go to support the roads that you use. For example, the federal portion of fuel taxes goes primarily to support interstate and other primary highways, but a particular driver may mostly use local streets. Also many drivers rarely use the public transit systems funded by the HTF, and much of the gas tax money paid by urban residents goes to support rural highways. Nonetheless the consensus view is that motor fuel taxes are a user fee that should remain dedicated to surface transportation. As noted in a recent RAND (2011b) report: "For decades, taxpayers have considered gasoline and diesel taxes to be “user fees” for roads and transportation. Through these taxes, those who use the roads bear their costs. When roads and public transportation are funded out of general revenues, they compete for funding against schools, police, and parks at the state level, and against defense, health care, and other expenditures at the federal level." A second reason for the diversion concern is that the HTF no longer covers the cost of the federal surface transportation program. In fact three transfers from the General Fund since 2008 totaling some $34.5 billion have been needed to keep the fund solvent (Kile, 2011). Again from the RAND (2011b) report: "As a consequence of the effects of inflation and improved fuel economy, federal fuel taxes are no longer sufficient to cover the costs of federal highway programs. In 2008, HTF revenues ran $36.4 billion; expenditures ran $49.2 billion." The long term outlook is for continued shortfalls. Figure 2 illustrates the recent history and projected future of the 11 Figure 2. Status of the Highway Account of the Highway Trust Fund Source: Congressional Budget Office. Highway Account balances and shortfalls. As noted by the National Surface Transportation Infrastructure Finance Commission (2009): "The current federal surface transportation funding structure that relies primarily on taxes imposed on petroleum-derived vehicle fuels is not sustainable in the long term and is likely to erode more quickly than previously thought." Despite the shortfalls in the HTF, which have been predicted for some time, legislators have been unwilling to increase fuel taxes. If these taxes were ad valorem taxes rather than excise taxes the present HTF shortfalls would likely not exist. As noted earlier, the federal fuel tax rates have not increases since 1993. In the 1990s the federal tax constituted about 14 percent of the fuel price (RAND, 2011b). With the recent run-up in gasoline prices to around $4.00 per gallon the federal tax of 18.4 cents is now only 4.6 percent of the price. So increasing the fuel tax is one possible means of dealing with the funding issue. As noted in the report of the NSTIFC (2009), an increase in the fuel tax of 10 cents per gallon that would maintain the federal program at current funding levels represents $5 a month per vehicle, or about $9 a month per household. Obviously those who drive more than the average number of miles or who use less fuel efficient vehicles would pay more than this. Looking beyond the fuel tax, other funding means that have been proposed include greater reliance on toll roads, public-private partnerships to develop new capacity, and innovative financing mechanisms. Some of the latter that are already available include the Transportation Infrastructure Finance and Innovation Act (TIFIA) program credit assistance, Grant Anticipation Revenue Vehicles (GARVEES), Private Activity Bonds, and State Infrastructure Banks. TIFIA credit assistance is typical of these financing sources. It provides federal credit assistance in the form of direct loans, loan guarantees, and standby lines of credit to finance surface transportation projects of national and regional significance. TIFIA credit assistance provides improved access to capital markets, flexible repayment terms, and potentially more favorable interest rates than can be found in private capital markets for similar instruments. 12 In considering innovative financing mechanisms it is worth remembering what the Finance Commission noted, that "financing approaches—as distinct from revenue-raising mechanisms— are not a substitute for solving the underlying problem of insufficient funding." That is, financing deals with the timing of capital expenditures and repayments, and the interest rates charged. There must still be an underlying revenue stream, in the form of some mix of tolls, taxes, and user fees, to pay the bills. Both of the national commissions whose reports have been referenced concluded that, in the long run, the motor fuels taxes must be replaced with some other user fees, and the most likely candidate is some type of a vehicle miles traveled (VMT) user fee. In the words of the Policy and Revenue Study Commission: "The motor fuel tax continues to be a viable revenue source for surface transportation at least through 2025. Thereafter, the most promising alternative revenue measure appears to be a vehicle miles traveled (VMT) fee, provided that substantial privacy and collection cost issues can be addressed." The VMT tax has proven to be a controversial proposal. Many do not like the prospect of being charged by the mile for driving their cars, even though this is not, in reality, much different than the fuel tax which most drivers grudgingly accept. Consider, for example, a vehicle with an average fuel efficiency of 25 miles per gallon. If the combined federal and state fuel tax is 40 cents per gallon, the driver of that vehicle is, on average, paying a mileage tax of 1.6 cents per mile. The difference is that the tax is paid periodically, when the gas tank is filled, and it is buried in the price of the fuel so is not as obvious as would be a monthly tax bill for the miles driven. The second, and perhaps strongest, objection for most people is the privacy issue. VMT tax collection mechanisms rely on methods like GPS transceivers or license plate identification systems to measure and report miles driven. In some schemes the miles by specific location or type of road and time of day can be recorded, to allow for differential pricing. There are strong concerns about unauthorized access to and uses of such data, and the accompanying personal privacy violations. An AASHTO forum in September 2010 on surface transportation financing options considered an array of funding options in detail, and the forum report (AASHTO, 2011) is worth a look. Figure 3 provides the forum's summary of the illustrative fee levels and resulting revenue potential of these various funding options. Some conclusions stated in the conference report are: "Some of the highlights of the alternatives discussed include: conversion of the current volumebased excise tax on gasoline to a sales tax levied proportionately to the price of fuel, more efficient use of federal-aid highway apportionments to leverage every dollar of federal investment, value capture-based public-private partnerships, use of the tax code to accelerate financing of transportation investments, and expansion of existing programs such as TIFIA." It is interesting that of the 28 funding mechanisms identified in Figure 3 only two of them, the dedicated personal and business income taxes, come from non-transportation related sources. This reflects the widespread mindset in the U.S. that transportation investment should be funded from user fees rather than from the general treasury. This “user pay” principle has become an almost sacrosanct feature of U.S. surface transportation policy. The motive seems to be that by fencing off transportation funds from other government spending the program will largely be shielded from the vagaries and instability of the annual legislative appropriations process. While 13 Figure 3. Summary of Options for Federal Surface Transportation Funding Source: AASHTO. this has worked well in the past it has become obvious that maintaining user pay funding will require user fee increases. It is also worth noting that the user pay system does not exist in most of the rest of the world, where motor fuel and other transportation taxes are deposited in the general treasury and transportation investment must compete with other government programs for its share of spending. Perhaps it is time reconsider the merits and drawbacks of user pay funding of surface transportation. Finally, in thinking about how to fund the system in the long run, the Finance Commission suggested the following guiding principles:  The funding and finance framework must: o support the overall goal of enhancing mobility of all users of the transportation system; o generate sufficient resources to meet national investment needs on a sustainable basis. 14  The funding and finance framework should: o cause users and direct beneficiaries to bear the full cost of using the transportation system to the greatest extent possible; o encourage efficient investment in the transportation system—recognizing the inherent differences between and within individual states—such that investments go toward projects with the greatest benefits relative to costs; o incorporate equity considerations—for example, with respect to generational equity, equity across income groups, and geographic equity; o support the broad public policy objectives of energy independence and environmental protection. It's pretty hard to argue with most of these principles as design guidelines, even with the implied continued reliance on user pay financing. A NEW STATEMENT OF NATIONAL TRANSPORTATION POLICY IS NEEDED This paper has often referred to the history of the development of our national transportation system. Early transportation links were developed to connect our towns and cities and to open up the country's vast interior, and highway programs were driven by basic needs such as postal service and getting farm products to urban markets, sometimes characterized as "get the farmer out of the mud." The 1950s ushered in the interstate highway system and other major expressway building programs as the focus of highway policy. Since the interstate system was largely completed in the1990s, many argue, our surface transportation program has lost focus, and it certainly has not been articulated effectively. The Revenue and Policy Commission offered the following recommendation as a starting point for surface transportation policy:  The federal government must continue to be a major part of the solution, in partnership with states, local governments, and the private sector.  The federal program should be performance-driven, outcome based, generally modeneutral, and refocused to pursue objectives of genuine national interest.  The 108 existing surface transportation programs in SAFETEA-LU and related laws should be consolidated and streamlined, essentially replaced by 10 new federal programs focused on areas such as infrastructure rehabilitation, global competitiveness, mobility, safety, and energy security. We should take advantage of the Commission's deliberations and continue the dialog. SOME POLICY CONCLUSIONS Based on the foregoing survey of the current surface transportation policy issues and discussion of the history and forces that have brought us to this point we offer the following policy conclusions:  Surface transportation has a significant--even vital--role in supporting and facilitating modern industrial and agricultural societies, so fostering cost-effective transportation systems should be a national priority.  Surface transportation investments have demonstrable economic and social benefits that go well beyond the sums invested. These benefits include net increases in economic 15   output and productivity, improved national security and disaster response, and equitable access to economic and social opportunities for our citizens. Governments at all levels are the primary providers and maintainers of most of the highway, public transit, and maritime surface transportation infrastructure, and that role must continue since the private sector will not on its own provide the necessary national and regional interconnected networks of transportation services. That being said, the private sector does have an important and increasingly larger role in financing (and sometimes operating) critical infrastructure projects, and governments need to form effective public-private partnerships to better leverage their surface transportation financial resources. Public investments in surface transportation have been lagging needs for several decades, to the point where our crumbling and congested infrastructure threatens our economic and social well being and our competitiveness in world markets. While some gains can be made through better use of existing revenue, rehabilitating the existing system and investing in our future will require spending that is tens of $billions per year above recent levels. How to raise the required revenue is a more complex and controversial issue. Federal and state revenues are primarily derived from liquid fuel taxes, and the combined effects of greater vehicle fuel efficiency and the tax structure have severely eroded purchasing power in real dollar terms. One often discussed near-term option is to increase the fuel tax rates to restore real revenues to at least the 1993 levels, which was the year of the last increase in the federal fuel tax. Whether increased or not fuel taxes should be converted from excise (per gallon) to ad valorem (percentage of price) taxes, in order to preserve future purchasing power. Equally as important, any changes in the fuel tax structure must be combined with improved performance-based project selection criteria, to ensure that public funds are being spent only on truly beneficial projects. Currently only federal navigation projects are subject to a requirement that national economic development benefits must exceed project capital and operating costs, and the freight railroads, being private rather than public, employ return on investment and profitability criteria to justify their expenditures. Appropriate performance metrics and economic analysis methods for highway projects have been available for many years, and it is high time that we begin to apply them. In a recent blog Patrick Natale (2011), Executive Director of the American Society of Civil Engineers, nicely summed up the required action as follows: "It is clear from public opinion polls and focus groups that the American public’s faith in the federal government’s ability to deliver transportation solutions is waning. Surface transportation authorization legislation must clearly define the federal role and responsibilities, and from that definition, the framework for a performance-based and fully accountable system can emerge. By introducing a new authorization bill that establishes a set of specific performance standards in areas such as congestion relief, asset protection, safety and financial stewardship and then imposing tangible enforcement mechanisms, these standards can be achieved. Congress would therefore be responsible for incorporating reliable units of measurement, in order to ensure that the best projects are selected by the Department of Transportation." 16 It may take some years to get the performance measures, selection criteria, and funding levels right, but we need to surmount these challenges and insist on near-term improvement. That is, we must not allow the search for perfection to delay immediate improvement. Almost anything that we can do along these lines will be better than what we are doing now. Longer term we must face up to the inevitable conclusion that the fuel taxes, by themselves, are not sustainable as our primary revenue source. Beyond looking for new user pay and innovative financing mechanisms, it may be time to recognize that investing in surface transportation is one of the most productive uses of tax revenue, hence citizens should expect their legislators to accord this high priority. If non-productive spending on other programs is eliminated or at least reduced there should be funds available for maintaining and improving our surface transportation system. This, of course, raises the policy issue of whether or how much to continue to rely on dedicated transportation user fees. That is, what portion, if any, of the surface transportation program should be funded from the HTF and how much from general tax revenue? The pending HTF shortfall has forced the issue. It is urgent that we get on with the process of identifying and analyzing acceptable alternative or supplemental funding methods. REFERENCES Agrawal, Asha Weinstein, and Nixon, Hilary (2011), What Do Americans Think About Federal Transportation Tax Options? Preliminary Results from Year 2 of a National Survey, Mineta Transportation Institute, San José State University, San José, CA, May. American Association of State Highway and Transportation Officials (AASHTO, 2011), The Forum on Funding and Financing Solutions for Surface Transportation in the Coming Decade: Conference Report, Washington, DC, January. AASHTO (undated), AASHTO's Framework for Surface Transportation Reauthorization, Washington, DC. American Society of Civil Engineers (2009), 2009 Report Card for America's Infrastructure, Reston, VA, March. Amtrak (2011), http://www.amtrak.com, accessed June 19, 2011. ARTBA Transportation Development Foundation (2011), The 2010 U.S. Transportation Construction Industry Profile, American Road and Transportation Builders Association, Washington, DC. Bureau of Transportation Statistics (BTS, 2010a), National Transportation Statistics, U.S. Department of Transportation, Washington, DC. BTS (2010b), Pocket Guide to Transportation 2010, U.S. Department of Transportation, Washington, DC. 17 Federal Highway Administration (FHWA, 2009), Highway Statistics 2008, U.S. Department of Transportation, Washington, DC. FHWA (2008), 2008 Status of the Nation’s Highways, Bridges, and Transit: Conditions and Performance Report to Congress, U.S. Department of Transportation, Washington, DC. FHWA (1996), Productivity and the Highway Network: A Look at the Economic Benefits to Industry from Investment in the Highway Network, U.S. Department of Transportation, Washington, DC. Federation of Tax Administrators (2011), State Motor Fuel Tax Rates, January. Fuller, Stephen S. (2011), The Impact of Sixteen Proposed PPTA Mega Projects on the Commonwealth of Virginia Economy, Center for Regional Analysis, School of Public Policy, George Mason University, Fairfax, VA, February. Hart Research Associates and Public Opinion Strategies (2011), The Rockefeller Foundation Infrastructure Survey, The Rockefeller Foundation, Washington, DC, February. Kile, Joseph (2011), The Highway Trust Fund and Paying for Highways, Testimony before the Committee on Finance, United States Senate, Congressional Budget Office, Washington, DC, May . Natale, Patrick (2011), A Performance-based System Is Needed, in Has Time Come for MeritBased Funding? National Journal, June. National Surface Transportation Infrastructure Finance Commission (NSTIFC, 2009), Paying Our Way; A New Framework for Transportation Finance, Washington, DC, February. National Surface Transportation Policy and Revenue Study Commission (NSTPRSC, 2008), Transportation for Tomorrow, Washington, DC, January. Nelson, Arthur C. et al. (2009), The Best Stimulus for the Money: Briefing Papers on the Economics of Transportation Spending, Metropolitan Research Center, University of Utah, April. The RAND Corporation (2011a), Highway Infrastructure and the Economy: Implications for Federal Policy, Santa Monica, CA. The RAND Corporation (2011b), The Option of an Oil Tax to Fund Transportation and Infrastructure, Santa Monica, CA. Smart Growth America (2011), Recent Lessons from the Stimulus: Transportation Funding and Job Creation, Washington, DC, February. 18 Talley, Louis Allen (2000), The Federal Excise Tax on Gasoline and the Highway Trust Fund: A Short History, RL30304, Congressional Research Service, Washington, DC, March. Transportation Research Board (TRB, 2008), The Role of Transit in Emergency Evacuation, Special Report 294, Washington, DC. TRB (1995), Expanding Metropolitan Highways: Implications for Air Quality and Energy Use, Special Report 245, Washington, DC. U.S. PIRG Education Fund (2011), Do Roads Pay for Themselves?, Boston, MA, January. Utt, Ronald (2008), Congress Undermines America's Infrastructure by Looting the Highway Trust Fund, Web Memo #2046, The Heritage Foundation, Washington, DC, September. Weisbrod, Glen and Reno, Arlee (2009), Economic Impact of Public Transportation Investment, American Public Transportation Association, Washington, DC, October. ACKNOWLEDGEMENTS Preparation of this paper was sponsored by the Free Congress Foundation, Alexandria, VA, with funding from the American Public Transportation Association and the Rockefeller Foundation. 19 Emerging Commuting Trends: Evidence from the Chicago Area Joseph DiJohn Director, METSI joedi@uic.edu, (312) 996-1458 Joost Gideon Berman PhD Student jberma1@uic.edu, (312) 996-2667 Siim Sööt Director Emeritus siim@uic.edu, (312) 996-2666 Urban Transportation Center 412 South Peoria Street (MC 357) University of Illinois at Chicago Chicago IL 60607-7066 ABSTRACT Over the last several decades commuting distances have increased in both miles and travel time. Our analysis focuses on the 2000 county-to-county commuting data from Census Transportation Planning Package that show intercounty commuting has increased substantially. In the Chicago six-county region these data indicate that three of the six counties are now net importers of commuters. In the past only Cook County (Chicago) had more commuters into than from the county. There are, however, demographic changes that contribute to lower increases in growth in commuters. Namely, the 1990s signaled the first increase in household size in over a hundred years. This was partially responsible for a decline in the portion of the population that is employed, a statistic that had been steadily increasing. In fact, in previous decades there was a larger growth in the number of commuters than in people thereby disproportionately adding to peak-period traffic. At the same time the exceptionally high increases in homeownership added to the size of the urbanized area. These data suggest that commuters are making housing choices that contribute to commuting travel distances. The ability and willingness to increase commuting distance makes it possible for employers to find their employees from an extended geographic region. As the economy is becoming more specialized, we may achieve the desired match between the jobs sought by commuters and the skill needs of employers. INTRODUCTION As part of the decennial census the Census Bureau collects information on where we live, where we work and how we commute. This commute is very predictable but causes recurring stress to the transportation system. Numerous studies have been conducted to examine these data (e.g., Reschovsky 2004 and Sööt et al. 2004). Further, the 2001 Nationwide Household Travel Survey has also received considerable scrutiny in achieving a better understanding of how commuting trends change (Pucher and Renne 2003). Many of these and other studies have achieved a comprehensive overview of the multitude of changes that have characterized commuting in the last few decades (e.g., Pisarski 1987; Pisarski, 1996). Using the Census Transportation Planning Package (CTPP) and by focusing on two competing trends, we will show that in the last several decades the Chicago area experienced evolutionary changes in economic activity and traffic. On the one hand demographic changes are ameliorating the growing number of commuters. Despite a sizeable increase in population, the number of commuters has not increased as rapidly as it did in previous decades. Conversely many home purchasers are acquiring homes on the fringe of the metropolitan area thereby raising homeownership rates but increasing commuting distances. Further, this paper provides a brief overview of the most noteworthy changes in commuting patterns since 1960. It highlights a substantial decline and shift in bedroom communities. All of the Chicago-area collar counties experienced major increases in commutes to the county. Since 1970 DuPage County, immediately to the west of Chicago, experienced a growth of more than 100,000 commuters to the county (23% increase since 1970) while Lake County, to the north, registered a lower growth in numbers (81,000) but a higher percentage change (33%). Now both counties import more commuters than they export. The stereotypical bedroom communities no longer characterize these counties. The face of suburban Chicago has changed dramatically. In a major shift, growth in population now outpaces growth in commuters for the first time in at least forty years. Specifically, the alarms raised in the 1970s and 1980s about major increases in congestion, due to expected increases in population, have not materialized. Still, congestion has increased, with longer commutes, perhaps reflecting the increasing specialization in the labor force in which employers draw workers from an expanded geographic area. The choices urban residents make regarding life style and affordable housing on the fringe of the region also contributes to higher travel times to work and the associated congestion. 2 DATA AND STUDY AREA The findings in this paper are based on the county-to-county work-trip information released by the U.S. Bureau of the Census in March 2003. The data were tabulated from the census question: “At what location did this person work last week?” This would refer to the last week of March 2000. When using these data, it is important to note that there are several reasons why these data do not precisely represent the number of jobs. They exclude persons not working during the reference week and do not account for persons with multiple jobs or multiple work sites. Neither do they record trip chains or multiple transportation modes in one trip. There is a difference between the size of the civilian labor force (that includes the unemployed), the number employed and the number of commuters as examined in this paper. For 2000, the Census Bureau reports the size of the resident six-county labor force as 4.17 million, 3.78 were employed and the number of commuters residing in these counties as 3.73 million (Table 1). Further, 3.83 million workers commuted to the six-county area, regardless of their place of residence. It is important to understand the differences in these definitions. Despite these differences, the commuting data represent a unique product that has been collected consistently for many decades. While they do not report the exact number of jobs, the data provides important information on trends, such as the generalized increases and decreases in jobs in large geographic areas, e.g., counties. We further recognize that the Chicago metropolitan area has grown during the past 30 years from six to over a dozen counties. However, our focus is on the original six-county metropolitan area (Cook, DuPage, Kane, Lake, McHenry and Will). Of the current 13county metropolitan population, 88% lives in the six-county study area. Most of the metropolitan population outside the six-county area resides in Indiana (7% of the total population). 3 CHANGE IN POPULATION AND COMMUTERS The Chicago area has traditionally been a very concentric region with population and employment moving outward in a concentric pattern. Figure 1 illustrates the current population distribution and the recent growth rates. Notice that since 1990 the central county, Cook, grew by only five percent and the most distant counties, Will and McHenry, grew by over forty percent.  Figure 1 Population in 2000 and Percent Change, 1990-2000 (population in thousands) Both the number of people and commuters has grown since 1970 (Table 1). Commuters had increased by double digits from at least 1960 until the last decade when it dropped to 6.9%. With the recent decline, the encouraging news from a travel congestion perspective is that both the rate of increase and the growth in the number of commuters declined in the 1990s. The growth in the number of commuters and the distances traveled by private vehicles contribute to congestion. In the 1970s and 1980s the number of commuters grew much faster than the number of people. The proportion of the population that was commuting rose from 40% in 1970 to 48% in 1990, raising concerns about the effects of looming increases in population and the number of commuters in this future population. Nationally, the proportion of the population that commutes to work rose from 36.1% in 1960 to 37.8% in 1970, 42.6% in 1980 and 46.3% in 1990. There was a ten-percentage point increase from 1960 to 1990. This indicates that, on average, without an increase in population there would be a 28% increase in the number of commuters (dividing the 0.463 proportion of commuters to work in the 1990 by 0.361 in the baseyear 1960). For a 20% growth in population, an increase of 54% in the number of commuters would be expected. It did not take a large increase in population to find a substantial increase in the number of commuters and the effect it had on the rush hours. Coupled with the increase in trip chaining, the afternoon rush-period traffic grew with little population growth. 4 The national pattern is quite similar to the Chicago area model. The disproportionate growth in commuters accounts for much of the ensuing increase in traffic. Further, if working is a sign of prosperity then congestion and prosperity are related and in times of prosperity we find more congestion. An illustration for this relation is the temporary decline in traffic in the Houston area after the collapse of Enron. The 1990s marked a noticeable change in the trends discussed above. Most noteworthy is the modest increase in commuters given the large increase in population. For the first time in decades the population began growing in the 1990s at a robust pace. Between 1970 and 1990, population grew by only 4% in contrast to the 11% population growth in the 1990s. Table 1 Change in Population and Commuting, 1970-2000 Year 2000 1990 1980 1970 Change Change Total Total Commuters/ Population Number Percent Commuters Number Percent Population 8,092 831 11.4% 3,726 239 6.9% 0.46 7,261 157 2.2% 3,487 328 10.4% 0.48 7,104 129 1.8% 3,159 341 12.1% 0.44 6,975 754 -2,818 407 -0.40 The 4% increase in population can also be contrasted with a more than 20% jump in commuters between 1970 and 1990. Had this previous ratio of commuters to population continued between 1990 and 2000, commuters would have increased by 55%, bringing the transportation system to an effective stand still. While the likelihood of this ‘doom scenario’ to occur is small - as some of the population would shift modes, origins and destinations - there is no doubt that a substantially larger increase in the number of commuters would have caused a considerable increase in highway congestion. Indeed, in the 1990s there was a growing concern that when the population began to grow at a higher rate, it would result in an even greater increase in the number of residents commuting to work and therefore increases in congestion. Inevitably, increases in the number of commuters contribute to peak period traffic, particularly in the morning. Since the ratio of population growth to commuter growth has not held constant, the direct congestion consequences of major increases in population have not occurred. Still, population has grown and so has the number of commuters contributing to traffic congestion. The 1990s decline of the population that is employed is both a national and Chicagoarea phenomenon. In the Chicago area it declined from 48% to 46% while nationally it declined from 46.3% to 45.6%. The Chicago area decline is slightly more dramatic, perhaps partly because it started from a higher base. 5 WORKING WITHIN COUNTY Based on county units the 2000 census data also indicate the numbers and proportions of workers who are employed within the county of residence. In a place such as suburban Chicago, where the counties are roughly equivalent in area, it also provides some information on commuting distance and distribution of jobs. Quite expectedly, the trend is toward a smaller proportion of the commuters working within the county of residence (Table 2), suggesting an increase in commuting distances. In particular Cook County exhibits an increase in reverse commuting (see also Christopher et al., 1995)—each increase in out of the county work is an example of reverse commuting. The fact that the intracounty percentage declined from 98% in 1960 to 88% in 2000 is more an indication of the size of Cook County (the second largest county in the U.S.) than of the growth magnitude in reverse commuting. Conversely, the percent commuting from the county rose from 2% to 12% more accurately reflects this trend. Conversely, DuPage County has had a steady increase in intracounty commuting from 44% to 59%. While this reflects a substantial increase in the number of local jobs, as will be established in Table 3, the number of workers commuting from DuPage has also nearly doubled since 1970. This leads to considerable more traffic within and around the county. Similar to Cook County, in Will County to its south, the proportion of the population working within the county has dropped, but more dramatically, from 77% to 44%. This suggests a large growth in households seeking modestly priced housing on the fringe of the metropolitan region beyond the centers of employment. According to the 2000 Census, 47.5% of the homes in Will County had a value under $150,000 while in DuPage County the equivalent percentage was only 21.8%. While the number of workers employed in the county increased by approximately fifty thousand the number of workers residing in Will County increased by just over seventy thousand. Clearly, the number of workers moving into the county has outpaced the growth in jobs. Will County is a large low-density county (600 persons per square mile in 2000) with large tracts of undeveloped land. It is reminiscent of DuPage County in the 1960s, when it was the choice of households seeking affordable housing. Note that the number of employees who live and work in the same county is both 44% for DuPage County in 1960 and for Will County in 2000 (Table 2). It raises the interesting question whether Will County will follow DuPage’s model of increased local employment over future decades. 6 Table 2 Employees Who Live and Work in the Same County County Cook DuPage Kane Lake McHenry Will 1960 98% 44% 85% 79% 73% 77% 1970 95% 49% 74% 73% 63% 69% 1980 94% 53% 70% 69% 59% 56% 1990 91% 58% 60% 63% 51% 46% 2000 88% 59% 56% 67% 51% 44% Lake County also had an increase in workers working in the county, from 63% to 67%. This is analogous to the increase in jobs found in DuPage County. The proportion of the workers in the entire six-county area, that lived and worked in the same county, dropped from 87% to 73%. This suggests that workers are commuting longer distances. While the drop in in-county employment may contribute to longer commuting distance and travel time, it may also reflect the increasing specialization in the labor market. Employers need workers with well-defined skills and are able to tap nearly the entire sixcounty area in search of the right person. With growing affluence, workers with the requisite skills may be adequately compensated for long commutes. IMPORT AND EXPORT OF COMMUTERS Embedded in the county-to-county commuter flows is another remarkable story describing how the region is changing. Table 3 depicts those individuals who live and work within the same county, the number of commuters entering the county to go to work, the number leaving their home county to go to work, as well as the net flows or commuting balance (import minus export). Counties that import workers have job centers attracting labor from surrounding areas. With the exception of Cook County, that shows little change, all of the counties display increases in commuting within the county. From 1990 to 2000 there was a 43% commuting increase in McHenry County, a 37% increase in Will County and a 24% increase in Lake County. This suggests that decentralization of jobs into the suburban counties has changed commuting patterns in these counties and the transition of the Chicago region in the direction of the multinuclei metropolitan area model. 7 Table 3 Changes in Within and Between County Commuting, 1970–2000 County Cook DuPage Kane Lake McHenry Will Total Year 2000 1990 1980 1970 2000 1990 1980 1970 2000 1990 1980 1970 2000 1990 1980 1970 2000 1990 1980 1970 2000 1990 1980 1970 2000 1990 1980 1970 Commute Import of Export of Commuting within Commuters Commuters Balance County 2,077,798 476,320 293,363 182,957 2,147,598 424,755 222,026 202,729 2,150,111 305,896 130,739 175,157 2,105,178 199,593 108,630 90,963 277,934 256,617 191,439 65,178 244,898 188,352 180,386 7,966 178,473 89,504 156,487 -66,983 97,226 44,435 100,050 -55,615 107,807 67,543 85,055 -17,512 94,614 49,147 62,868 -13,721 90,702 30,156 38,088 -7,932 76,982 25,045 26,953 -1,908 212,450 113,717 104,992 8,725 171,535 73,630 98,709 -25,079 145,550 33,637 65,923 -32,286 121,183 29,695 44,491 -14,796 68,108 28,534 65,149 -36,615 47,757 17,241 46,119 -28,878 40,354 9,349 27,553 -18,204 28,076 5,183 16,529 -11,346 107,456 53,377 134,431 -81,054 78,614 31,617 91,631 -60,014 75,175 17,285 60,183 -42,898 63,957 10,193 28,266 -18,073 2,851,553 996,108 874,429 121,679 2,785,016 784,742 701,739 83,003 2,680,365 485,827 478,973 6,854 2,492,602 314,144 324,919 -10,775 All counties experienced a growth in both commuters from and to their counties (exports and imports). As expected, Cook County had the largest increase in exports, over 71,000 from 1990 to 2000. Will County is not far behind with approximately 43,000. The other counties had more modest increases in the export category. On the import side, DuPage County registered an impressive gain of approximately 68,000 from 1990 to 2000. Also large increases in commuters to a county were recorded by Cook County (52,000) and Lake County (40,000). These three counties are establishing themselves as job destinations. Still, regardless of origin of trips and county 8 location, all counties had increases in commutes entering the region. In particular the collar counties imported nearly 160,000 additional commuters in the 1990s. The net changes in commuting indicate that two suburban counties are no longer ‘bedroom counties’ that export their workers to the central county. DuPage is now solidly an importing county, barely achieving that status in 1990 (Table 3). New to the list is Lake County that now has 8,725 more workers commuting into as opposed to out of the county. This reinforces the growing suburb-to-suburb pattern that began to emerge a few decades ago and will be explored in a future paper. COMMUTING TIME Another dimension to congestion is commuting time. Commuting times in the region have continued to increase. However, given the modest population growth in the 1970s and 1980s, the growth in the 1990s only contributed to a slightly higher rise in commuting travel times. Average commutes grew by two minutes in the 1980s and by less than three minutes in the1990s. This reflects not just increases in commuters but also work-trip lengths and disproportionate increases in vehicle-miles driven versus growth in lane miles of highways and streets. Average commute times have increased in the Chicago area. There has been a decrease in the number of short commutes, defined here as less than twenty minutes. Even with a growth in the number of commuters, there has been a disproportionate increase in long commutes of more than 45 minutes. Despite the increase in the number of commuters, the number commuting less than twenty minutes declined by approximately 5% while the number commuting over 45 minutes increased by 21%. Increasing travel times were found throughout the study area (Table 4). In Will County, where the growth of resident commuters (71 thousand) outpaced the growth in work destinations (50 thousand), median travel times to work grew the most (4.7 minutes). Despite this noticeable growth, the median level (32.0 minutes) remains less than in Cook and McHenry Counties. Table 4 Changes in Median Travel Times by County (travel times in minutes) County Cook DuPage Kane Lake McHenry Will 1990 29.4 27.3 23.5 26.4 28.8 27.3 2000 32.6 29.0 27.3 30.1 32.2 32.0 Change 3.2 1.7 3.8 3.7 3.4 4.7 9 At the other end of the spectrum, DuPage County, with its growth in jobs, experienced the smallest increase (1.7 minutes) in commuting time. At 29.0 minutes, the DuPage County median is second lowest in travel time to work behind Kane County’s 27.3 minutes. The concentration of people and jobs in the Fox River Valley (including Aurora and Elgin) accounts for the low travel times in Kane County. TRAFFIC AND HOMEOWNERSHIP RATES One of the major contributing factors to rising travel times is the rising homeownership rate. In the Chicago area the distant suburbs offer land at lower costs and thereby the lowest costs for new homes in the region. Recent housing transactions indicate that satellite cities such as Joliet and Aurora have median sales prices less than half those of the Chicago neighborhoods with the largest sales rates. Homeownership is promoted by many organizations as an important household investment, contributing to financial stability (STPP and CNT 2000). The highest homeownership rates, however, are in places that can grow territorially providing households with the opportunity to buy new homes at modest prices. This allows the household to spend more on transportation and in many cases leads to long commutes, at least in distance (Sööt and Sen 1977) if not in time. The ability to buy modestly priced housing on the fringe of the metropolitan area has traditionally accounted for long commutes in the Chicago area. Homeownership rates are positively correlated with the physical size of the metropolitan area. The highest rates are in mid-size areas. Another indicator of home ownership is the location of the metropolitan area. Home ownership is higher in the central sections of the US where metropolitan areas can sprawl. These include (with their 2003 homeownership rates) Chicago (68.6%), Detroit (75.3%), Minneapolis-St. Paul (75.2%), Indianapolis (72.9%) and Milwaukee (70.0%). Lower rates are found in places in California and Florida where local topographic conditions limit territorial expansion. These include Los Angeles (50.0%), San Francisco (50.8%) and Miami (55.9%). Further, the Chicago area has had one of the highest increases in homeownership rates in recent years. It has increased from 54.7% in 1986 to 68.6% in 2003, accounting for a 13.9 percentage point increase. The nationwide average for the 75 largest metropolitan areas was 5.3 points. Other places with double-digit increase are Dallas (11.9 points), Baltimore (11.6), Minneapolis (11.0) and Atlanta (10.4). One can expect noticeable traffic effects from major shifts in homeownership rates. This has particularly been true in Atlanta. On the lower end of the homeownership increase range are places that cannot sprawl. This is the case for Los Angeles (1.7) and San Francisco (2.1). Both have small overall homeownership rates but major traffic congestion problems due to the concentration of a large number of people and cars in a relatively compact space. They rank first and second in annual hours of traffic delay (Shrank and Lomax 2004). 10 Another metropolitan area with limits on territorial expansion is Portland, Oregon, where the state has enforced an urban growth boundary. Homeownership grew by only 0.9 points from 1986 to 2003, reminiscent of many California metropolitan areas that are constrained by topography. Portland now has a homeownership rate that is lower than the Chicago area (66.1% versus 68.6%). In the Chicago area, then, some of the demographic trends may be ameliorating traffic impacts but increasing homeownership rates and urban territorial growth have contributed to higher travel times to work. Other than Cook County, where the use of public transportation and road congestion account for high average travel times, the two fastest growing and most distant counties from Chicago, Will and McHenry, have the highest average travel time to work. Lastly, the growing number of homeowners may have an effect on the number of workers employed at home. Increasing homeownership rates in the U.S. are associated with declining population densities and these declining densities may make working at home in more traditional business more difficult. This would not generally affect internetbased businesses. Nationally the number of persons working at home has decline from 4.7 million in 1960 to 4.2 million in 2000, though it has increase in the last twenty years. During the forty-year period the number of employed persons nearly doubled from 65 million to 128 million. SUMMARY AND CONCLUSIONS Census data show that the average household size in the Chicago area has now stopped declining. For the first time in over 150 years the number of persons per household in this region is now stabilizing at 2.65 (in 2000). This is important since households generate workers and work trips. When household size declines as it had for 150 years, a constant population resulted in more households, more workers, and more traffic. Now that the portion of the population that is commuting is also declining in the Chicago area (for the first time in forty years), the factors that translate population growth into travel consumption and traffic generation are changing. Traffic congestion may be increasing but the two factors, household size and proportion of the population commuting, tend to moderate the effect of population growth on traffic. Summary Demographic trends • For the first time in many decades population is growing faster than the number of workers. Therefore the association between population growth and increased congestion is changing. Distribution of jobs • Half of the counties are now net importer of workers. • Decentralization of jobs: in the last decade within-county commuting rose sharply in the collar counties. 11 • • A smaller portion of workers works in their home county. DuPage and Lake Counties are exceptions. A county such as DuPage that had high growth rates in the 1960s and 1970s is now more centrally located contributing to net inflow of commuters, low travel times and low increases in travel times. Commuting trends • The work force is becoming more mobile, contributing to more intercounty work trips and longer work trips. • Increase in mobility: there is more county-to-county commuting, travel times are increasing and automobile commuting is on the rise (not documented here). • The commuting patterns in the region are becoming more diverse and harder to describe through a simple model. Reverse commuting • Cook County continues to exhibit a large increase in the work trips to the county but the reverse commute from the county is growing even faster. • Reverse Work trips to the five collar counties from Cook County have grown by more than 160,000 between 1980 and 2000. • Reverse commute vs. decentralization— jobs are decentralizing into the collar counties and the 1990s saw a sharp increase in within-county commuting, especially in McHenry, Will and Lake County. Homeownership rates and traffic • Homeownership rates are positively correlated with urban territorial expansion. • Metropolitan areas that have few limits on territorial growth have high ownership rates. • This urban expansion contributes to long commutes to work. Conclusions and Implications A major finding of this research is that an increasing proportion of the workers commute to sites outside their home county and therefore commute times are increasing. This has two interpretations. First, work sites are decentralizing and workers commute greater distances or on roadways that are more congested. This suggests that the search for affordable housing (large houses with large lots) may well be contributing to longer commutes. To the extent that this is true, as it reflects personal choice, it is difficult to devise a transportation-related solution to increasing commuting times. Urban dwellers are participating in the traditionally cited trade-off between housing and transportation costs. The second interpretation is from the perspective of the employer. The job market is undergoing a process of specialization and since workers are increasingly mobile, nearly the entire region is the labor shed for an employer. This means that a specific job may be filled by almost anyone in the metropolitan area, providing employers with a better match between the job requirements and the skills of the worker. The rise in intercounty 12 commuting suggests that the market is shifting into an employers market. A better match between employer need and employee skills will likely add to worker productivity, the major contributing factor to increasing living standards. Conversely, if the commute becomes more onerous it may detract from productivity. This needs more research. The study also concludes that over the decades employment has followed population to suburban counties. The relocation of employment centers can lead to shorter commutes for those that work locally. Many, however, are choosing to work in distant suburbs. This has lead to a dispersed distribution and relatively low densities for both population and employment. This process has two implications for transportation planners and providers. First, the densities are frequently too low to offer frequent transit service unless local communities are willing to change their zoning ordinances to allow highdensity land uses, residences and employment. Second, as trip origins and destinations become more dispersed, highway planners may need to focus their attention more on local arterials than on expressways and transit planners need to focus on more specialized services, such as van pools. REFERENCES Christopher, Ed, Matthew Rogus and Siim Sööt. 1995. “Changes in the Directions of Urban Travel for the Chicago Area 1970 to 1990,” Transportation Research Record 1477: 48-57. Gordon, Peter, Bumsoo Lee and Harry W. Richardson. 2004. Travel Trends in U.S. Cities: Explaining the 2000 Census Commuting Results. Los Angeles, CA: Lusk Center for Real Estate, University of Southern California. Surface Transportation Policy Project (STTP) and Center for Neighborhood Technologies (CNT). 2000. Driven to Spend, The Impact of Sprawl on Household Transportation Expenses. Washington DC: Surface Transportation Policy Project, http://www.transact.org/report.asp?id=36 (accessed December 2004). McGuckin, Nancy, and Nanda Srinivasan. 2003. Journey to Work Trends in the U.S. and its Major Metropolitan Areas, 1960-2000. Washington DC: U.S. Department of Transportation. Pisarski, Alan. 1987. Commuting in America. Lansdowne, VA: Eno Transportation Foundation. Pisarski, Alan. 1996. Commuting in America II. Lansdowne, VA: Eno Transportation Foundation. Pucher John, and John Renne. 2003. “Socioeconomics of Urban Travel: Evidence from the 2001 NHTS,” Transportation Quarterly. Vol. 57: 49-78. 13 Shrank, David, and Tim Lomax. 2004. The 2004 Urban Mobility Report. College Station, TX: Texas Transportation Institute, Texas A&M University System. Reschovsky, Clara. 2004. Journey to Work: 2000. Washington DC: U.S. Census Bureau, Economics and Statistics Administration, C2KBR-33. Sen, Ashish, Siim Sööt, Vonu Thakuriah, Paul Metaxatos, Vidya Prasad, George Yanos, Duck-Hye Yang, Victor Rivas, Lise Dirks, Kathleen Stauffer, Pamela Freese and Trisha Sternberg. 1998. Highways and Urban Decentralization. Chicago, IL: Urban Transportation Center, University of Illinois at Chicago, http://www.utc.uic.edu/Publications/HighwaysUrbanDecentralization.htm (accessed December 2004). Sööt, Siim, Joseph DiJohn and Ed Christopher. 2003. Commuting in the Chicago Area: Emerging Trends. Chicago, IL: Urban Transportation Center, University of Illinois at Chicago, http://www.utc.uic.edu/Publications/Co2Co9.pdf (accessed December, 2004). Sööt, Siim, and Ashish Sen. 1979. “Metropolitan Work-Trip Energy Consumption Patterns,” Traffic Quarterly, Vol. 33, No. 2: 275-296. 14 Paper Prepared for Presentation at the 2005 Annual Meeting of the Transportation Research Forum LESSONS LEARNED FROM THE VALUE PRICING PILOT PROGRAM Patrick DeCorla-Souza, Susan Lee and Angela Jacobs Federal Highway Administration, Washington, DC December 15, 2004 ABSTRACT Value pricing projects implemented in the U.S. during the past decade have demonstrated that pricing can be politically and publicly acceptable – so far, four priced lane projects and four variably priced toll facility projects are operating without any significant public or political controversy. On operating projects, pricing keeps congestion from occurring on priced lanes, reduces congestion on toll facilities, changes travel behavior, and improves utilization of existing highway capacity. Revenues from tolls have been used to provide funding for transportation improvements. Yet, issues remain with regard to public attitudes toward projects involving tolls; equity concerns; and political acceptance. Technical issues have also stalled several projects, including high construction costs that limit self-financing capability; access to and egress from priced lanes within freeways; and difficulties with regard to enforcement of toll exemption restrictions for high-occupancy vehicles (HOVs) on priced lanes. Private sector involvement in investment and operation of priced lanes has also encountered problems. This paper summarizes the promises and challenges of value pricing, and how the challenges are being addressed in the various projects implemented or under development under the Value Pricing Pilot Program. INTRODUCTION In the United States, market-based approaches to reduce congestion are now widely referred to as “value pricing”, a term often used synonymously with the more traditional “congestion pricing” or “road pricing.” The term “value pricing” was proposed by the U.S. Department of Transportation during the development of federal legislation to promote use of a broad range of pricing strategies, in order to emphasize the positive benefits (or value) gained by using pricing to reduce congestion. The U.S. established the Value Pricing Pilot Program in 1998. This Federal grant program, authorized under the Transportation Equity Act for the 21st Century (TEA-21), provides states, local governments, or other public entities with 80 per cent Federal matching funds to establish, maintain and monitor a wide variety of pricing projects. Since Program authorizations first became available in the fiscal year 1999, about $35 million have been obligated under the Program to support almost 50 projects in 15 states. This amount is in addition to about $30 million expended under the predecessor Congestion Pricing Pilot Program authorized in 1991 under the Intermodal Surface Transportation Efficiency Act (ISTEA). While many of the projects are in early stages of development, many more are under study, and several have already been implemented and have proven to be successful. This paper focuses on the successfully implemented operational projects and lessons learned from these projects. Four types of value pricing strategies have been implemented in the U.S. to manage congestion (see Table 1): 1. New variable tolls on existing toll-free facilities, including tolls for vehicles not meeting normal occupancy requirements for use of High Occupancy Vehicle (HOV) lanes; 1 2. Variable tolls on lanes added to existing highways, including tolls on newly-constructed lanes with tolls for vehicles not meeting occupancy requirements; 3. Variable tolls on existing toll roads, bridges, and tunnels. The difference between this strategy and the preceding two is that strategies 1 and 2 impose new tolls on existing toll-free facilities, while with strategy 3, flat tolls on existing or new toll facilities are changed to variable tolls. 4. Usage-based vehicle charges, including mileage-based vehicle taxation, mileage-based charges for insurance, and car sharing. Table 1. Operating Value Pricing Projects State Locality/ Year Implemented A. Pricing on Existing Roads California San Diego/ 1996 (low tech) 1998 (electronic tolls) Project HOT lanes on I-15: Toll varies dynamically from 50 cents to $4 depending on traffic demand. Texas Houston/ 1998 HOT lanes on Katy Freeway (I-10): $2 toll charged to two-person carpools in the peak hour of the peak period; 3-person and larger carpools are free Texas Houston/ 2000 HOT lanes on US 290: Toll policy same as for I-10, but applies only to morning peak period B. Pricing on New Lanes California Orange County/ 1995 C. Pricing on Toll Roads California Orange County/ 2002 Express Lanes on SR91: Toll varies from $1 to $6.25 depending on traffic demand Peak pricing on the San Joaquin Hills and Foothill Toll Roads: Toll surcharge ranging from 25 cents to $1.00 during peak period at selected toll plazas Florida Lee County/ 1998 New York New York metropolitan area/ Variable tolls on interstate crossings: Off-peak tolls 2001 discounted by 20% relative to peak period tolls, i.e., $4 vs. $5 New Jersey Statewide/ 2000 D. Usage-Based Vehicle Charges California San Francisco/ 2001* Variable pricing of two bridges: 50 percent toll discount (amounting to 25 cents) offered in shoulders of the peak periods. In 2003, the program was expanded to allow heavy vehicles (three plus axle trucks) to participate during off peak hours. Variable tolls on New Jersey Turnpike: Peak period toll exceeds off-peak toll by 12.4%; for the entire 238 km (148 mile) length, off-peak toll is $4.85 vs. peak toll of $5.45 Car sharing: Charges are $4 per hour (10 AM –10 PM) and $2 per hour (other times); plus 44 cents per mile * Car sharing programs are also operational in other locations in the U.S. 2 There are other types of pricing strategies that are being explored, but have not yet been implemented. The Value Pricing Pilot Program supports project pre-implementation studies, project implementation, and post-implementation monitoring and evaluation studies. In addition, the Program supports regionwide studies within metropolitan areas attempting to identify candidates for implementation of pilot pricing projects. The projects listed in Table 1 are now operational, and are discussed briefly in the next section. A comprehensive listing of all projects, with brief project descriptions and current status, is provided in the Program’s Quarterly Progress Report available on the Federal Highway Administration web site at: http://www.fhwa.dot.gov/policy/otps/valuepricing.htm PILOT PROJECTS Projects on Existing Toll-free Facilities “HOT” is the acronym for “High Occupancy/Toll”. On HOT lanes, low occupancy vehicles are charged a toll, while High-Occupancy Vehicles (HOVs) are allowed to use the lanes for free or at a discounted toll rate. HOT lanes create an additional category of eligibility for travelers wanting to use HOV lanes, since drivers can be eligible to use the facility either by meeting its minimum passenger requirement, or by choosing to pay a toll to gain access to the HOV lane. HOT lanes currently operate in Houston, Texas and San Diego, California. The difference between HOT lanes and other pricing systems is that with HOT lanes drivers can choose between meeting the vehicle occupancy requirement or paying the toll in order to use the HOV lane. Tolls are set high enough to ensure that vehicle demand for use of the lane is within certain thresholds, in order to ensure free-flowing traffic conditions. San Diego’s FasTrak Lanes: San Diego’s HOT Lanes were originally approved as part of the FHWA’s Congestion Pricing Pilot Program in ISTEA. The first implementation effort consisted of collecting tolls via monthly permits in the window in 1996; subsequently, the FasTrakTM pricing program was implemented in April 1998. Under this program, customers in single-occupant vehicles pay a toll each time they use the Interstate-15 (I-15) HOV lanes. The unique feature of this pilot project is that tolls vary dynamically with the level of demand for use of the HOV lanes. Fees can vary in 25-cent increments as often as every six minutes. Motorists are informed of the toll rate changes through variable message signs located in advance of the entrance to the FasTrak Lanes, so that they can elect to enter the Express Lanes or remain on the free lanes. The normal toll varies between $0.50 and $4, but during very congested periods it can be as high as $8. All transactions are electronic. Pricing is based on maintaining a Level of Service “D” for the carpoolers. Overhead antennas read a transponder affixed to the inside of a vehicle’s windshield and deduct the toll electronically from the driver’s pre-paid account. “QuickRide” Lanes in Houston, Texas: The “QuickRide” pricing program was initially implemented on an existing reversible HOV lane on Interstate-10 (I-10, also known as the Katy Freeway) in Houston in January 1998. A similar project was subsequently implemented on Houston’s US 290 highway in November 2000. The HOV lanes are reversible and restricted to vehicles with three or more people during the core hours of the peak periods. The pricing program allows a limited number of two-person carpools to pay a toll to access the HOV lanes during these hours. Single-occupant vehicles are not allowed to use the HOV lanes. Participating two-person carpool vehicles pay a $2 per trip toll, while vehicles with higher occupancies continue to travel for free. As in San Diego, the QuickRide project is completely automated and no cash transactions are handled on the facility. Projects under Development: Under the Value Pricing Pilot Program, pricing of existing HOV lanes is being studied for implementation in Minneapolis, Minnesota on I-394; in Denver, Colorado on Interstate25 (I-25)/US 36; in the San Francisco, California Bay Area on I-680 in Alameda County; and in the Seattle, Washington metropolitan area on State Route 167. In addition, the potential conversion of 3 existing HOV lanes to HOT lanes is under study for route I-95 in Miami-Dade County, Florida; I-30 in Dallas, Texas; I-75 in Atlanta, Georgia; and I-95/I-395 in the Northern Virginia portion of the Washington, DC metropolitan area. Houston, Texas, is examining the feasibility of pricing a network of interconnected HOV lanes. Introducing new tolls on existing toll-free facilities without continuing to allow some opportunity for free travel on the same facility (as HOT lanes allow) has generally been considered to be unacceptable to the public in the U.S. However, two such projects are under consideration. In one Western city, the City government is currently exploring a cordon toll scheme for its downtown area. In New York, a proposal by the Regional Plan Association (RPA) to introduce cordon tolls in Manhattan is under consideration. The proposal includes tolling existing toll-free bridges over the East River, which connect Manhattan with the Burroughs of Queens and Brooklyn. Another concept involving tolling of existing t...
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