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Guidebook for State, Regional, and Local Governments on Addressing Potential Equity Impacts of Road Pricing: Purpose and Introduction

1. Purpose and Introduction

1.1 Introduction

Addressing potential equity issues is often vital to obtaining the support needed to implement road pricing projects.  In order for road pricing projects to succeed, the implementing State, regional, and local agencies must understand equity issues, develop mitigating measures, and articulate the issues and mitigation strategy to both decisionmakers and the public. These steps are necessary because equity is a paradox: what may appear equitable in one dimension can be construed as inequitable in another.

Much has been learned over the past two decades both from successful projects and those that have not reached implementation but from which best practices can be derived. As a result, an equity guidebook is needed to provide agencies interested in implementing road pricing strategies with tools and methodology to properly address equity issues

Early consideration of equity issues is critical to the success of road pricing projects.

Equity concerns have been raised in the development stages of most proposed road pricing projects in the United States and abroad. Experience from projects that have reached implementation has shown that with proper consideration of equity and associated mitigation measures, road pricing projects can be successful. Most projects currently in operation have found pricing scheme acceptance levels to be similar in low-, mid-, and high-income groups.

Recent projects have illustrated the importance of appropriate and timely consideration of equity in the ultimate success of major pricing projects and programs. As part of Washington State DOT’s (WSDOT) Urban Partnership Agreement, the agency proposed to impose variable electronic tolls on all lanes of an existing non-tolled floating bridge on SR-520. The existing bridge was in need of replacement and there was not adequate funding available for the project. Such a strategy – tolling of existing non-tolled infrastructure to raise revenue for its replacement – has been considered for many projects nationwide, as our transportation infrastructure ages. However, no other agencies have succeeded in making the case to the public and decisionmakers to take this controversial step.

The WSDOT designed a strong public process to help build support for roadway pricing. A tolling implementation committee was established in 2010 to gauge and build public support and to provide guidance to the legislature. The committee succeeded in demonstrating the need for replacing the deteriorating existing bridge and the resulting mobility benefits of doing so to all users of all income levels. The WSDOT worked with the regional transit agency to initiate a substantial increase in express bus service within the SR 520 corridor for several months leading up to the start of bridge tolling. This created an expanded transit market and helped to reduce traffic diversion effects. In addition, WSDOT provided traffic mitigation funds to local agencies to assist in dealing with the expected traffic diversion. Toll collection began in December 2011 and has been received favorably by the public.

A key lesson learned from these congestion pricing projects is that equity issues should be addressed at the earliest practical phase in project development because those who perceive inequity are likely to object to the project’s implementation.

Road pricing projects of all kinds (tolling, HOT lanes, congestion pricing, parking, and vehicle-miles traveled (VMT) fees) are expected to become more important in the United States over the next decade. The U.S. Federal gas tax and many State gas taxes are not tracked to inflation. As an increasing percentage of the vehicle fleet switches to higher efficiency hybrid, plug-in hybrid, and non-gasoline modes such as electric, the gas tax revenues will continue to decline and will be insufficient to cover operations and maintenance costs. In this financial environment, funding for new infrastructure, needed to keep pace with expansion of vehicle miles traveled in congested cities, is even more scarce. To deal with this lack of funds, States may begin financing transportation projects more heavily from the sales tax, but this is highly regressive by any vertical equity measure. Schweitzer and Taylor stated, “Using sales taxes to fund roadways creates substantial savings to drivers by shifting some of the costs of driving from drivers to consumers at large, and in the process disproportionally favors the more affluent at the expense of the impoverished.” 1 Alternatively, State and local agencies may employ road pricing more extensively, such as current legislative changes being promoted in Oregon, and will thus need to quickly address vertical equity issues.

The need for a road pricing equity guidebook for State and local agencies

In today’s challenging financial and political environment, State and local transportation agencies need a common reference both to understand and to explain potential road pricing equity issues in common terms and using a consistent set of measurements. This guidebook will greatly help them understand and communicate both the horizontal and vertical equities of their plans or policies to reach a common understanding among key decisionmakers and stakeholders. This is especially true today as policy initiatives for sustainability, the environment, efficiency of provided services and congestion or demand management are key objectives for many transportation organizations. In the wake of the recent economic downturn, the funding and maintenance of our infrastructure will continue to dominate our debate for years in the future. These funding debates could raise further equity concerns.

1.2 Purpose of Study

Many road pricing projects and systems have been successfully implemented, despite experiencing setbacks in the concept development and planning stages with respect to equity concerns and other issues. Often, the perception of equity imbalances has been a significant issue introduced in the environmental review process, however it has been successfully mitigated through careful and thoughtful programs.

In order to assist transportation agencies to better assess and mitigate perceived and potential equity impacts of road pricing projects on local communities, commuters, and system users, the Federal Highway Administration (FHWA) developed a “Guidebook for State, Regional, and Local Governments on Addressing Potential Equity Impacts of Road Pricing.”The guidebook:

  • Provides comprehensive procedures and guidance to State, regional, and local agencies as well as decisionmakers and concerned citizens to follow when considering road pricing projects to ensure that equity is appropriately and adequately addressed;
  • Focuses primarily on time-of-day variable pricing as it may be applied to cordon and area-wide pricing, facility pricing (including high occupancy toll (HOT) lanes, express toll lanes, and traditional toll roads), and parking pricing.
  • Is built upon:
    • A comprehensive literature review of existing road/congestion pricing equity research and applications;2
    • A series of interviews with government staff, academics, private sector representatives, and other subject matter experts knowledgeable about road pricing equity; and
    • A workshop held in Washington, D.C. in October 2011 to review and finalize the guidebook. The workshop was attended by road/congestion pricing and equity experts including government officials, researchers and academics, as well as private sector representatives.3
  • Includes two road pricing scenarios/case studies identified by FHWA. These include:
    • Scenario 1: Agencies considering implementing roadway congestion pricing strategies for the first time.
    • Scenario 2: Agencies considering road pricing expansion along their network.

The remainder of the guidebook includes the following:

Section 2.0: Congestion and Road Pricing Strategies – Illustrative Scenarios describes two examples of relevant road pricing strategies that will be used throughout the guidebook for illustration purposes.

Section 3.0: Congestion and Road Pricing Equity – Definition and Factors provides a comprehensive review of equity concepts that should be considered during congestion pricing discussions.

Section 4.0: Incorporating Equity in the Transportation Planning Process describes how agencies should integrate equity indicators in transportation and project planning processes; and how to measure congestion pricing equity impacts both qualitatively and quantitatively.

Section 5.0: Evaluating Equity at the Project Level presents a methodology that can be used to measure congestion pricing equity impacts both qualitatively and quantitatively.

Section 6.0: Strategies to Address and Mitigate the Impacts of Congestion Pricing provides a comprehensive approach for minimizing the impacts of tolling and parking pricing initiatives on local communities and system users.

Section 7.0: The Role of Communications in Congestion Pricing Initiatives presents a summary on communications methods and strategies to address equity when seeking to successfully implement pricing projects.

Section 8.0: Recommendations and Next Steps

Appendix A: Glossary provides a detailed definition of key equity terms, types of equity, mitigation terms, key policy definitions, and other useful terms.

Appendix B: Detailed Review of Potential Remediation Strategies for Congestion Pricing Equity Impacts

Appendix C: Bibliography

1Schweitzer, L. and B. D. Taylor. “Just Pricing: The Distributional Effects of Congestion Pricing and Sales Taxes.” Transportation, 35(6). 2008, pp. 797-812. [ Return to note 1. ]

2The findings from the Literature Review are summarized in a report entitled Development of a Guidebook for State and Local Governments on Evaluating and Mitigating Equity Impacts of Road Pricing, Task 1 – Background Paper. [ Return to note 2. ]

3The findings from the Workshop are summarized in a report entitled Development of a Guidebook for State and Local Governments on Evaluating and Mitigating Equity Impacts of Road Pricing, Task 2 – Summary Report on Workshop Findings. [ Return to note 3. ]

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