Talking Michigan Transportation
The Talking Michigan Transportation podcast features conversations with transportation experts inside and outside MDOT and will touch on anything and everything related to mobility, including rail, transit and the development of connected and automated vehicles.
Talking Michigan Transportation
Drive on the roads, pay for the roads
On this week’s Talking Michigan Transportation podcast, Baruch Feigenbaum of the Reason Foundation returns to talk about developments in Michigan for a road user charge (RUC) model for funding roads.
The concept is also referred to as mileage-based user fees (MBUF) by some.
Feigenbaum, senior managing director of transportation policy at Reason, testified June 24 at a Michigan House Transportation and Infrastructure Committee about the concept, addressing concerns about privacy and other aspects.
A pilot program included in both the Gov. Whitmer’s and the Senate’s proposed budgets would gather feedback from residents and examine implementation strategies.
Hello, welcome to the Talking Michigan Transportation Podcast.
Jeff Cranson:I'm Jeff Cranson.
Jeff Cranson:Baruch Feigenbaum, the Senior Managing Director of Transportation Policy at the Reason Foundation and a frequent guest on the podcast, was in Michigan again recently to testify to a transportation panel about mileage-based user fees. Some also refer to these as road user charges but basically to continue advocacy for figuring out a long-term, sustainable way to fund surface transportation in an era where the fuel tax is diminishing returns.
Jeff Cranson:He has a lot to say about what's going on in other states with this and how states that are piloting in it are seeing success and people volunteering. And he also is optimistic about discussions about including money for a pilot in the budget that's being negotiated right now the fiscal year 26 budget. So, I hope you enjoy the conversation. So, Baruch Feigenbaum, thank you for making yet another appearance on the podcast. I always enjoy talking to you about this. I mentioned in the introduction for folks that you've been studying these things different ways to fund roads for a long time and for at least for my part, you and your boss at the Reason Foundation are probably among the most knowledgeable people on the planet about these issues, so I appreciate you taking time to talk.
Baruch Feigenbaum:Well, thanks very much, Jeff. It's great to be on, and after those kind words I've got to say some nice things. So, absolutely.
Jeff Cranson:Yeah. Well, let's start with set the table again with your background and what you do with the Reason Foundation.
Baruch Feigenbaum:Sure. So I am the Senior Managing Director of Transportation Policy, which means I manage our transportation team's work, and I have a master's degree in transportation planning and engineering from Georgia Tech, and I also worked on Capitol Hill in DC doing some transportation policy for a time. And so, at Reason, I focus a lot on revenue and financing issues, so mileage-based user fee is a big part of them. Obviously, tolling is also important and looking at what the successor to the gas tax would be and how we implement it.
Jeff Cranson:When did you first really develop an interest in this? Does this go back to when you were in your master's program? And when did transportation funding and how we do it or in some cases don't do it, when did that become a real passion of yours?
Baruch Feigenbaum:Yeah, so that's a great question. So, I'm one of the unusual folks who has always been interested in transportation, from when I was maybe three years old. But when I was in grad school and we had a course on policy and funding, I was the person asking the professor about mileage-based user fees and about we got to do something about this fuel tax, and that was a few years ago, let's just say. So, this idea has been around for a while, and I think it's been. A lot of folks have seen it as a coming problem, and now we're really at the point in time where we really need to do something about it.
Jeff Cranson:So, make your argument. We've talked about this before, and I know that you are a firm believer that user fees are the way we should fund transportation. Now, there isn't a similar model for every government service, but it's always made sense like for you know, more than 100 years in the United States that that is the way we should do it. Can you talk about that?
Baruch Feigenbaum:Yeah, so we are strong believers in what we would call the user pays, user benefit principle, the idea being that the people who are paying for the infrastructure are the ones who should benefit, and we shouldn't have people who are not driving, for example, paying for roadways. And the reason that we believe in that is really many fold. One it comes down to economic efficiency. It's just the most efficient thing to have people who are actually paying for the system being the ones who are benefiting from them. You don't have these weird sort of incentives to get money from other places or to overbuild your infrastructure.
Baruch Feigenbaum:We also see it as an investment signal in terms of how much infrastructure to build. We see it as being, shall we say, politically protective of transportation revenues. One of the challenges we see in other countries that don't have a users pay, users benefit principle is when it goes to the general fund. That gas tax can go to anything, and so a lot of those other countries have much higher fuel taxes, but that money is not actually going toward roadways by and large, and so our concern would be if we got rid of the user's pay principle, you would have this money that was collected from motorists that would be going to places that were more politically connected, shall we say, and the roadways would be in worse condition, both in terms of potholes and in terms of congestion.
Jeff Cranson:So legislators and policymakers who say that one thing they don't trust is that if somebody votes for something, that the money is going to go where it was supposed to go, should be aligned with what you're talking about, right, that this is a way to make sure that this money is restricted and has to go to what it was intended to.
Baruch Feigenbaum:That's correct, and that's one of the ways that we pitch it is that if you want this money spent on its intended purposes, a user's pay system is the best way to do that, and if you want this money diverted to something else, well then, maybe a sales tax or some other type of general fund is the way that that would happen.
Jeff Cranson:So talk about the sales tax briefly, because I've had people say to me over the years lawmakers in Michigan and others that they think that is also a user fee, because everybody, the goods, have to travel on the roads and so if you tax the goods, the people that pay that are also paying like a user fee. I don't buy that argument. I don't think it's as pure a user fee as mileage-based user fee or road user charge or even a gas tax. But talk about how you frame that.
Baruch Feigenbaum:Yeah, and so the thing with the sales tax is a couple of problems. So, first of all, as you note, it is not a pure user fee because you're paying something on a good and there's no necessarily relation to how much you're paying and how much that good is using the infrastructure. So, for example, you pay a sales tax on a new diamond ring that's only going to require a very little amount of infrastructure. You get a new shipment of tires in. You're going to pay less sales tax on that because it's valued at less, but that's going to require a lot more infrastructure because those tires weigh a lot more. So it's really an imprecise measure. The other problem with the sales tax is that in times of economic recession, sales tax tend to crater. They're not reliable, and so if you're trying to fund a transportation system with a sales tax, you're going to have to really ratchet down your program. In a time of an economic recession, which is probably not the time, you want to be ratcheting down your transportation program.
Jeff Cranson:Yeah, the roads don't stop being used. There might be less traffic, but the roads are still doing the same amount of deterioration regardless. So, yeah. So recently you testified in Michigan again before our House Committee about mileage-based user fees. You've been here before a couple times. You actually were instrumental in advocating for a tolling study that the legislature approved. Would you say that we've graduated from the discussion about tolling and are more focused on what is really mileage-based user fees now, or do you feel like it's kind of all of the above situation?
Baruch Feigenbaum:Yes, well, first of all, I have been fortunate to make some trips to Michigan. It's very nice in the spring and summer, so I appreciate the invitations. And I would say they go together. I do think the main focus now is on milage-based user fees. I think we've talked about it for a few years now, and it can be a challenge in terms of education, especially when we have new folks coming in who aren't familiar with it, but I think there's really support in the House and the Senate and the governor's office right now to go ahead and get a pilot through. Which is important because a number of other states have done a pilot, but Michigan is not like those other states, so it's important to have a state-specific pilot.
Baruch Feigenbaum:The interstate tolling is, I view it as a type of mileage-based user fee. Because it's basically a mileage-based user fee for interstates, and interstates because they have more tractor trailers, traffic's going at a faster speed, it makes sense to charge a higher rate, and so some folks think that a permanent program might be rolled out first on some of the interstate highways that need to be rebuilt in Michigan. Think places like I-94 that have a good amount of traffic and also only two lanes and are 50 years old and that could be coupled with mileage-based user fees. So, I think the two are working together. We already have a lot of tolling around the country, so we really don't need a pilot of that. We do need a pilot of these mileage-based user fees, and so I think it's important that that moves forward right now, and hopefully the tolling can follow. I will note Indiana passed some legislation where they are looking to now toll all of their interstates. They have the authority to do it, and so it'll be interesting to see what the southwest neighbor of Michigan chooses to do.
Jeff Cranson:I agree, I've been following that too. Before we get into what's been going on in some of these other states, talk a little bit about your conversations with the lawmakers here in Michigan and what you see as kind of an evolving mindset about this.
Baruch Feigenbaum:Yeah, I think the initial conversations were one of they just didn't know what they didn't know. This was a new concept. It seemed kind of scary because we have this mileage who's going to know where I am, how are they going to know it? And also not an appreciation for the problems with the gas tax. When we look at the fuel tax, really because of the improvement in internal combustion engines, we're talking about something that's not going to be real viable past the next, say, 10 years.
Baruch Feigenbaum:And of course, you can increase it, you can do things with indexing, but it just gets to be very complicated and that was an argument that we had to make that most folks did not understand that they just hadn't thought of the math. When they realized the problems with the fuel tax, and then we talked about other options. We talked about sales tax and Michigan has a sales tax on gasoline right now, but there's other legislation that's trying to put that in transportation, where in my opinion it belongs.
Jeff Cranson:And there's broad agreement on that right now.
Baruch Feigenbaum:Correct, right, right, and I think that I'm hopeful that will happen as well this session. There's political infighting a little bit there, not related to that, but other things. But they saw some of the challenges with the sales tax, they saw some of the challenges with the general fund in terms of competing with other priorities, and so we sort of got back to the mileage-based user fee and they understood it on a fairness principle, they understood it on a logical principle, they understood it on a technology principle. We just had to make the argument that the gas tax wasn't feasible. Mileage-based user fees were the best alternative that we saw at this time and the concerns such as privacy, fairness in rural areas, etc., could be mitigated. And once we did that, we've seen support from basically everyone we've spoken with.
Jeff Cranson:And privacy is what we hear the most. I've heard that from members. People they'll admit look, I carry a phone or a couple of electronic devices. I have other ways that I'm being tracked, but I don't want them knowing where my car is going. So talk about that mitigation.
Baruch Feigenbaum:Yeah, privacy is such a perception thing, because you have your phone, your car has data on you, who knows what other data is out there, but people are concerned about it. So, what we did was really twofold. One, we explained how GPS worked, how the fact that GPS itself is a one-way stream of information and it's paired with other technologies in order for a mileage-based user fee to work, but GPS technology by itself does not track anyone for you to work. But because that's kind of a complicated answer that might not please everyone, we also stress the importance of options so having an odometer reading, having something simple that doesn't require what might be considered invasive technology. And once we gave people those choices both the explanation of how the GPS works and the choice of a low-tech option that really brought, I would say, about 90% of people around.
Jeff Cranson:Okay, so let's talk about well in the context of other states and you'll have a lot to say about states that have made great strides with this and could be models for what Michigan and others could do. But one of the other things I hear a lot is well, if I live near the border and I do a lot of traveling in multiple states and some states have mileage-based user fees and some don't. How does that work?
Baruch Feigenbaum:Yes. So right now how it works is that you would only be charged in the mileage-based user fees in the state that you're driving in, so only be charged in Michigan, wouldn't be charged in Indiana or Ohio or Wisconsin, and if you're fueling up on gas tax or fueling up on gasoline in those other states, you're only going to be charged the gas tax in those states, which is going to those states anyway. In the long term, several coalitions, both on the East Coast and the West Coast, are studying how states can work together, similar in some ways to how DMVs work together or how tolling agencies work together. We have in many eastern states the EASY Pass, which is connected tolling agencies, where you have an account in one state and your tolls are deducted in other states, and so there's a lot of study on that. Right now I wouldn't say we're there, but I would say we're probably about five years away from having interconnectivity in the mileage-based user fee space, just like we have more or less now in the tolling space.
Jeff Cranson:Stick around. There's more to come. Right after this short message.
MDOT Message:If you need to get out and stretch your legs, don't forget about the annual Mackinac Bridge Walk. Make your plans to attend the walk on Labor Day and take in some of the best views in the state of Michigan on the Mighty Mac. For more information, go to mackinacbridge. org/ walk.
Jeff Cranson:So, talk about some of the states that have been doing this. I mean Oregon, for instance. I think maybe Iowa, Minnesota did they pilot it some time ago. They were kind of early in on this, and then Utah has been doing things. Can you talk about all that?
Baruch Feigenbaum:Sure. So right now there are five states that have permanent mileage-based user fee programs. Oregon was being the first and they have an extensive program. Oregon, I will also say, has a very, very strong approach to protecting data. That's actually written into the Constitution as a whole, which I think can be a model. Utah has a program, very low administrative costs. Virginia a lot of people don't realize actually has the largest program almost 40,000 people signed up right now.
Baruch Feigenbaum:And Hawaii.
Jeff Cranson:Voluntarily signed up?
Baruch Feigenbaum:Voluntarily signed up, yep, it's all. It's all the choice. Uh, and I can get into that in a minute. Hawaii has a program as well, um, as does Vermont, and there's a couple other States. Uh, that may pass something. I think we'll pass something in 2026 in terms of a permanent program.
Baruch Feigenbaum:And then in the region, Minnesota has been doing research for a long time and they've actually had several bills introduced for a permanent program, but they just haven't been quite able to get together, not really because of the mileage-based user fee aspect, but just because of other political aspects. Who's been in charge. Iowa has done quite a bit of research. They've looked at it. Ohio is now doing some internal research on the DOT in terms of what they would be able to do. Pennsylvania has done several pilots. They're a state that has worked with the Eastern Transportation Coalition looking at some of those interoperability issues with Delaware, New Jersey, New York and Ohio.
Baruch Feigenbaum:And several other coalitions, both the Eastern Transportation Coalition, which has tended to be on the East Coast states, and what's called Ruck America, which is primarily Western states, have done research, multi-state research, looking at interstate travel, for example, between Oregon and Washington.
Baruch Feigenbaum:Looking at truck travel, for example, along the I-95 corridor between Virginia and Florida, and so there's quite a bit of research that's underway or has been going on, both funded at the federal level and the state level.
Baruch Feigenbaum:I will say that the Virginia program is noteworthy because it is basically revenue neutral, and so one of the reasons they've been able to get 40,000 people to sign up is because there's no added cost. It's actually slightly less than if folks chose to get you paying the gas tax, and so that we've seen as a very popular approach. They are also open to vehicles that get 26 miles per gallon or more, so that's a lot of vehicles on the road, whereas the Utah model, for example, is primarily focused on electric vehicles, and so there are some different models out there. So I think the takeaway is there's a lot of interesting different state models going on right now, and there's a lot of lessons that Michigan can take away, but I don't think anyone's got the perfect model either, so there's also room for improvement that Michigan might be able to find in the pilot.
Jeff Cranson:So when you talk about the states where it can work and we think about traditional tolling states that we were told in Michigan a long time ago the reason that they abandoned a turnpike commission in the early 50s was because it's a peninsula state and it makes more sense in states like Ohio or Illinois or Pennsylvania. Yet Florida, also a peninsula state, has done very well with tolling. So what's your take on that?
Baruch Feigenbaum:Yeah, you know, as you were saying, that that was exactly my thought is that the Florida Turnpike has been extremely successful and Florida has some other toll roads. I think growth and population play a role, but I also think I-75 could have been built as a toll road in Michigan. It would have been very successful. So I think some of it has to do with at the time the interstate system was being constructed. People didn't know how successful it was going to be. Interstate travel, vehicle miles traveled has been two or three times, I think, easily more than what was projected for the system at that time.
Baruch Feigenbaum:I also think that all electronic tolling has brought down the cost of tolls. Having toll booth operators and toll booths increased collection costs. There's some safety issues as well. There's some skimming off the top with tolling. With all electronic tolling you don't have that, and so I think, looking at portions of I-75, looking at I-94, maybe even some of the US roads like US-23, boy, every time I'm in Michigan I feel like US-23 is pothole after pothole. Trying to use tolling is an alternative option there, and I think where maybe it wasn't feasible at one point in time. If it wasn't feasible, it certainly is now in at least 45 of the 50 states, including Michigan.
Jeff Cranson:Well, some of the reauthorization acts from a few years ago actually allowed for tolling pilots on US routes like 23 or 127 or 131 in Michigan, right?
Baruch Feigenbaum:Right, that's correct. There is a prohibition on interstate tolling, sort of there's no prohibition on US roads. So any of those routes, if Michigan DOT and legislators decided to move forward with rebuilding them through tolling, they could be tolled today. Even for the interstate highways there's exemptions for bridges and tunnels. There's exemptions for value pricing, which is basically in urban areas where there's congestion, I think Metro Detroit using some pricing. So there's also ways to toll existing interstates. It's really a matter of just consensus, getting a consensus in a state to get it done. The federal prohibitions can be overcome in most situations.
Jeff Cranson:Well, I'm really glad you made that point, though, about people didn't know what was going to happen with the interstate system. But there were people, thankfully, who had vision and faith. And, without getting into a whole discussion about Ezra Klein and abundance, I wonder if we could build the Mackinac Bridge now, if there would be enough faith and vision for that, because we live in a different time.
Baruch Feigenbaum:We do and abundance has certainly become a popular topic as of late. And I think it's easy for us now because we have this infrastructure and I don't think it's as good as it could be. I don't think we have as much as we need and I certainly don't think it's in as good a condition as we need it. But because we have bridges and because we have, in some cases, tunnels and because we have a pretty good interstate system if you go to Europe and you see their roads are in better condition but not as wide generally and certainly getting around cities is more challenging by car, easier by other modes we're maybe a little bit spoiled and we take for granted what we have.
Baruch Feigenbaum:I wonder if we didn't have a Golden Gate Bridge now, if we would be able to build it, it would probably be harder. I think some of it is that we just don't have the consensus we once did in terms of the importance of infrastructure. Obviously, environmental laws and sort of nimbiest, which is not really environmental laws, which is, people who don't want things built for whatever the reason, are a problem. And yeah, it would be good if we can get back to the time when infrastructure was a little bit more bipartisan and seen as something that was necessary, as opposed to something that just sort of changed presidential administration by presidential administration for political reasons, not really for good purposes.
Jeff Cranson:Well, I know that fuel taxes aren't the user-free model in Europe, that they are in the United States, but there must be some correlation between how much better the roads are and how much more you pay for fuel there.
Baruch Feigenbaum:Right, yeah, I mean the roads are certainly in much better condition. They build them. I mean the Autobahn. They're talking about six inches of roadbed compared to maybe we're doing two inches. So that starts right there as a way to make them better. But yes, they do certainly spend more on the maintenance of them. I think it just comes back to the fact that they have a whole lot more money for infrastructure, perhaps because they're choosing to spend it on transportation, where we are choosing to spend it on other priorities. We spend a lot of money on a lot of things, infrastructure. We certainly waste some money on infrastructure, to be fair, but we are not spending it at the level that some other places are.
Jeff Cranson:Yeah, I don't know. You seem like you're a little optimistic that discussions might be going in a good direction in Michigan, so that's good. Is there anything you want to kind of leave us with what we should be watching for?
Baruch Feigenbaum:Yeah, I am shockingly optimistic by my standards that things are going to happen, and maybe it's because I see Michigan as a bright spot compared to some other places. But I do think the mileage-based user fee pilot is going to pass this year. The appropriation language in the budget I think it's going to pass. I think it's going to happen. I think there's a lot of support throughout the state the different agencies, legislative, executive branch to get it done and I'm really encouraged by that. I'm also encouraged by this drive to devote the sales tax on gasoline to transportation.
Baruch Feigenbaum:I know that's a discussion that's been going on in the legislature. I was working on a package in Georgia about 10 years ago where that happened. I think that could be a big near-term push. I always like to tell lawmakers that's not a long-term solution, but that is a good short-term solution. And I think there's also some questions about are we doing infrastructure the right way? Should we be making changes to our approach in Michigan? And I think that's always good. So there's a lot of focus on it and I think there's a lot of movement on it, which is really all that I could ask for.
Jeff Cranson:Yeah, well, I think you mentioned earlier Michigan's a term limit state, but they did make some changes to allow for at least some people in each chamber maybe to spend a little more time there, which helps. But that idea that you're always re-educating people, you're always starting from scratch, and the first questions they want to ask is you know, why don't you build them better in the first place? And when you say, well, because we don't have enough money, they think that that's, you know, bureaucratic mumbo jumbo and that there must be something else. So, having studied this as long as you have and watched the other states, and because you understand that there are federal standards, these are federal aid highways and they have a role in monitoring it and making sure that everybody is meeting certain specifications, how do you quickly knock that down when you hear that from people?
Baruch Feigenbaum:Yeah, I guess it comes down to. Some of it comes down to money how we spend our money. Some of it comes down to what we've done historically. Historically, we were focused on building the interstate system quickly. We probably could have used higher standards if we wanted to, but the cost benefit analysis wasn't there. And so, part of it is an education campaign to explain how we build things, why we build things, how expensive things cost, how, you know, representatives can help to lower costs in the cases where they can make a difference. And then the importance of infrastructure. And the term limits, in my view, are unfortunate, because in other states we see the folks who are the biggest infrastructure champions is the ones who have been in office eight years, 10 years, 12 years, who have stayed on a transportation-related committee. In Michigan, s omething like that is not going to happen. So, it's a constant cycle of educating and getting folks up to speed and when, by the time they're up to speed, often their term limit is out, at least of the house. Maybe then they go to the Senate if we're fortunate so.
Jeff Cranson:Yeah, that's right. Well, that's great. All good stuff. I always like talking to you about this and I definitely want to check in every few months because I think it's such an important topic and because you're a font of knowledge, so I appreciate it.
Baruch Feigenbaum:Well, thanks, thanks very much, Jeff. As long as you keep saying those nice things about me, I'll definitely be back.
Jeff Cranson:I'd like to thank you once more for tuning in to Talking Michigan Transportation. You can find show notes and more on Apple Podcasts or Buzzsprout. I also want to acknowledge the talented people who help make this a reality each week, starting with Randy Debler, who skillfully edits the audio, Jesse Ball, who proofs the content, Courtney Bates, who posts the podcast to various platforms, and Jackie Salinas, who transcribes the audio to make it accessible to all.