Financial Evaluation of Mileage Based User Fee: State of Florida - A Case Study

Fuel taxes, assessed on a per gallon basis, have been the major source of transportation funding for the past century. Despite increasing travel demand, aging infrastructure, soaring construction, operation and maintenance costs, and improved fleet fuel economy, the federal fuel tax rates have remained unchanged since 1993. It is recognized that the current fuel taxing regime will not be sustainable in the long term. Given the concerns over the future fuel tax revenues and highway funding, a new mileage based user fee (MBUF), based on the actual vehicle miles traveled (VMT) needs to be explored. Successful regional pilot MBUF projects have investigated the technological, institutional, operational and implementation aspects of an MBUF. In light of above stated observations, this study sets out to assess the financial impacts of conversion to an MBUF for the State of Florida. Several strategies including: Time of Day, Area Type, Facility Type, and Congestion Level pricing are financially assessed. An aggregate uni-variant time series model is constructed to forecast the analysis period annual VMT based on the historical data. A robust financial model is designed to estimate the annual net revenues associated with various pricing scenarios. Despite much higher cost of collection and administration, the MBUF (in lieu of the current per gallon taxes) is found to not only generate substantially more revenues, but also could assist in travel demand management by reducing congestion level and environmental impact of urban peak period travel.