Prospects for transportation utility fees

Abstract

Transportation utility fees are a transportation financing mechanism in which the network is treated as a utility and properties are charged fees in proportion to their network use, rather than according to their monetary value as in property taxation. This mechanism connects the costs of maintaining the infrastructure more directly to the benefits received from mobility and access to the system. The fees are based on the number of trips generated and vary with land use. This paper evaluates transportation utility fees as an alternative funding source in terms of efficiency, equity, revenue adequacy and political and administrative feasibility. The experiences of cities currently using utility fees for transportation are discussed. Calculations are included to determine the fee levels necessary for transportation maintenance budget needs in three sample cities and a county in the Minneapolis-St. Paul (USA) metropolitan area. Proposed fees for each property type are compared to current property tax contributions toward transportation. The regressive effects of the fees and the effect of adjusting for the length of trips generated are also quantified.