PIRG Archives - Transportation For America

Drop in driving growth is likely permanent, FHWA acknowledges, compounding the threat to transportation revenues

The slowing growth in the number of miles we drive each year looks like a permanent trend, according to the Federal Highway Administration, adding still more fuel to the fire in the debate over how to pay for a transportation program with dropping gas-tax revenues.

The most recent projections, released quietly last year but highlighted this week by USPIRG, are a significant departure for the federal agency charged with projecting the need for highway capacity and expected gas-tax receipts in the U.S. For the last several years, projections have substantially over-estimated the growth of “vehicle miles traveled”, which actually declined for several years before rebounding to a tepid pace more recently.

In this short document, FHWA projects that the amount of driving done by each American is unlikely to grow in the years to come. According to PIRG’s research, the agency had issued 61 straight forecasts that overestimated the actual increase in driving. FHWA is to be commended for taking a problem, rethinking it, and coming up with a better projection. The action clears up a discrepancy with the potential to hamper planning and decision-making, as we have noted in the past along with number crunchers at the State Smart Transportation Initiative, the Frontier Group and U.S. PIRG.

In this new FHWA projection, though the actual amount of vehicle miles traveled (VMT) is still projected to increase by 0.75 percent annually from 2012 to 2042 (the red line in the chart below), U.S. population is projected to grow by about 0.7 percent each year in that period, which means that driving per person is likely to remain flat. As FHWA’s report notes: “This represents a significant slowdown from the growth in total VMT experienced over the past 30 years, which averaged 2.08% annually.”

It’s worth noting that this change also has huge implications for toll roads. Building a new road, tolling an existing one, selling the rights to toll a road to a private company — those decisions are often being made using these outdated VMT projections.

This adjustment by the feds underscores the trouble ahead for transportation funding, absent congressional action.

The gas tax has already lost a third of its value due to inflation, improvements in fuel efficiency, and the overall reduction in driving over the last decade. All of this means that the gas tax doesn’t bring in as much money as it used to — leading to the perpetual annual shortfall in the Highway Trust Fund that has required numerous bail-outs from the general fund, using increasingly creative accounting gimmicks.

The excessive projections of expected driving have allowed some to point to an expected rebound that would help overcome some of the losses due to increased fuel efficiency. That will be tough to do in the face of the new estimates.

As Congress returns to face a May deadline for figuring out how to continue funding for transportation, members will have to come to terms with the likelihood that the gas tax will continue to lose value. The pensions have all been fully smoothed and the couch cushions have been emptied out. If Congress plans to make up the funding gap, they’ll have to be willing to raise the gas tax or index it to inflation, or increase some other revenue source.

We live in a different time today. We aren’t flush with gas tax revenues. We have a backlog of maintenance that can’t be ignored. The amount of driving Americans are willing to do has come close to reaching a peak. People are looking for different ways to get around each day. More Americans are moving into walkable neighborhoods where their commutes are shorter and options are greater.

We need a system of funding transportation and making investment decisions that recognizes these realities.

What happens when driving rates continue to drop?

Anyone who follows this blog, or transportation discussions in general, is well aware that the miles driven per American has been dropping in recent years and that the millennial generation (16-34) is leading the charge. Indeed, the typical American drives less today than at the end of Bill Clinton’s first term.

But how likely is that trend to hold in the future? And if it does, what does that say about what we should be building, and how we will pay for it, if not with the gas taxes raised from driving? A report out today from the U.S. PIRG Education Fund and Frontier Group seeks to answer the first question, and to fuel a conversation about the second.

None of the likely scenarios sees miles of driving returning to the heights of previous trends.

None of the likely scenarios sees miles of driving returning to the heights of previous trends.

The short answer to Question 1: No plausible scenario sees per capita driving rates continuing their formerly inexorable climb, and all fall well below current government projections. And no, the authors do not assume that we are entering permanent economic recession, because the underlying are likely to trends persist whatever the strength of the economy:

Millennials. Americans under 35 drive nearly one-fourth less now than those who where the same age a decade ago. There are myriad likely reasons: The cost of car ownership, their tendency to live in more urban locales, reduced employment rates during the recession, etc. But the authors site many reasons why their driving rates may remain lower than previous generations, even during child-bearing years.

Baby boomers. The post-war generation drove workforce participation rates to unheard of levels, and now those workers are nearing the end of their commuting years. And while self-driving cars might allow granny to keep motoring, they will not replace those commute trips.

Technology. We already know the Internet allows work-from-anywhere and online shopping, replacing trips for those purposes. But now mobile tech makes riding transit far more accessible, and enables transit use to be complemented by a burgeoning array of options: Zipcar, Car2Go, bike share, Lyft, Scoot, etc.

Vehicle operating costs. The era of dirt cheap motoring really does seem to have come to a close. It’s not just gas prices, which have helped fuel much of the recent shift; they’ll stay high for a while. But more and more tolls are coming into our lives, parking is astronomical, insurance is usurious. As long as options are available and cheap, a lot of households will own one car rather than two, and leave the one they have parked, until they decide they don’t need it.

[See how these trends are playing out in Charlotte in the NY Times’ excellent piece on 1A of today’s edition.]

Based on these and other factors, authors Phineas Baxandall and Tony Dutzik ran three scenarios for the future. None assumed a wholesale continuation of the depressed driving rates among millennials; all forecast younger folks to drive more in the child-rearing years. Still, none of the scenarios approached a return to the yearly mileage growth of the previous 60 years, and all fall below current government projections.

What does this mean for the future of our transportation programs? A lot less money, for one thing, unless we change our dependence on the gas tax:

Coupled with improvements in fuel efficiency, reduced driving means Americans will use about half as much gasoline and other fuels in 2040 than they use today, making the real value of gas taxes fall as much as 74 percent.

Indeed, we are already seeing the impact of that fall-off. The tightening revenue suggests, first, that we should make sure we are setting aside existing dollars to ensure the good repair of our existing system. Second, we should review projects in the pipeline that assume escalating rates of driving. Third, we should help the metropolitan regions and mid-sized cities – our economic production zones – that are trying to give their citizens more reliable and affordable options. All of this suggests that we need shift to a mix of revenue sources to build a unified transportation fund that can cover all our infrastructure needs. You’ll be seeing a lot more from us on those ideas in the weeks and months to come.

Debunking some myths about the gas tax in a new report

A new report out today contains some fascinating facts about the federal gas tax – a subject sure to be of great contention as this new Congress tries to decide whether to raise it and how best to spend it.

Did you know, for example, that the original tax on gasoline was imposed to help reduce the federal budget deficit during the Hoover administration, and wasn’t dedicated to highways until creation of the interstate highway program in 1956 — and that that exclusive dedication only lasted until 1973? And did you know that the “interstate” highways are used far more for local travel than for long-distance travel? According to the report, two of every three miles driven are on urban segments of the system.

These are just two of the interesting findings in “Do Roads Pay for Themselves? Setting the Record Straight on Transportation Funding,” from the U.S. Public Interest Research Group. Since World War II, the authors calculate, the amount of money spent on roads has exceeded the amount raised through gasoline taxes by $600 billion, “representing a massive transfer of general government funds to highways.” Only about half the cost of road construction and maintenance is covered by gas taxes today, the report says, and this will only get worse as cars become more fuel efficient and gas tax receipts plateau.

The point, made here again as it has been by the U.S. General Accounting Office and many others elsewhere, is that every form of transportation is subsidized. Given that fact, and because no one mode of travel meets every person’s needs in every community, the authors conclude: “America should invest in transportation projects that bring the greatest net benefits to the greatest number of people, regardless of how they are paid for.”