Action Committee for Transit of Maryland * American Council for an Energy-Efficient Economy * Bicycle Transportation Alliance* Center for a New American Dream * Clean Air Council * Commuter Check Services Corporation * Conservation Law Foundation * Ecumenical Ministries of Oregon, Interfaith Network for Earth Concerns * Environmental Defense * Flexcar Portland * King County Metro * Metropolitan Atlanta Transportation Equity Coalition * National Transit Benefit Association* National Trust for Historic Preservation * Natural Resources Defense Council * Northwest Environment Watch* Oregon Environmental Council * Rails-to-Trails Conservancy * Sierra Club * Southern Environmental Law Center * Surface Transportation Policy Project * Washington Regional Network for Livable Communities May 14, 2003 Separate letters to: Members of Senate Environment and Public Works Committee Members of House T&I Committee Members of House Science Committee Members of Joint Economic Committee RE: Voluntary Transportation Incentives to Save Consumers Money While Reducing Congestion and Pollution Dear _____________, As you work to reauthorize the Transportation Equity Act for the 21st Century (TEA-21), we urge you to include measures to advance promising voluntary market-based strategies that can reduce traffic and air pollution, including Pay- As-You-Drive (PAYD) insurance and cash-in-lieu-ofparking incentives, as well as time-of-day electronic road pricing and equal tax treatment for commuters, regardless of how they get to work. These strategies are not new concepts. They are simply extensions of strategies promoted under existing federal programs, such as the Value Pricing Pilot Program. Recent research suggests that PAYD insurance is likely to save consumers money while cutting air pollution and traffic congestion by 10% or more and accidents by up to 15%. A recent study by the Federal Highway Administration showed that by converting fixed motorist costs of car insurance, taxes, and fees to variable costs that allow motorists to save money if they drive less, consumers would save billions of dollars a year and experience substantially less traffic delay. Research shows that when employers offer a $2-3 a day cash incentive in lieu of free parking at work, 1 out of 8 solo automobile commuters finds another way to get to work, in a carpool, by transit, telecommuting, walking, or biking. With time of day electronic road pricing, experience has shown that when revenues are reinvested to improve mass transit, they can increase travel choices and eliminate inequities while relieving congestion. However, such market incentives face significant state and local regulatory and institutional costs and barriers. Local codes often mandate construction of excessive parking, saddling developers and tenants with extra costs. Insurers express a strong desire for additional actuarial data to support PAYD policies. Government support is needed to foster public-private partnerships, share risks,
collect and evaluate data, educate and inform consumers and service providers, and incubate and demonstrate alternative marketing, pricing, and business models. An important source of funding for experimental market-incentive transportation pricing research and pilot projects is the Value Pricing Pilot Program. We urge you to reauthorize this program at $25 million per year and to encourage use of these funds for cash-in-lieu-of-parking and PAYD insurance pilot projects, promotion activities, and evaluation activities. Initially, an important potential source of funding for developing, evaluating, and mainstreaming these activities is the Congestion Mitigation and Air Quality Improvement (CMAQ) Program where the benefits of such strategies could enhance local clean air compliance efforts. CMAQ is a critical funding source for a much wider range of environmentally beneficial projects as well. We urge you to reauthorize this program at twice its current funding level to account for anticipated growth in non-attainment areas and for an expanded program targeted to deal with air toxics problems. Sub-allocating CMAQ funds to local areas and assuring air agencies a greater role in project selection will foster fuller and more effective use of these funds. We urge you to explicitly authorize use of CMAQ funds for promotion and demonstration of PAYD insurance, permitting use of funds for pilot-project start-up, marketing, risk-sharing, mileage-based rebates, other related incentives, and evaluation activities serving both attainment and non-attainment area motorists, provided that pilot projects focus on producing substantial emissions reduction benefits in air quality non-attainment or maintenance areas. We urge your encouragement of the use of CMAQ funds for ‘parking cash-out’ pilot programs as well, including start-up program incentive payments to commuters and risk guarantees for developers who reduce parking and instead establish dedicated transportation incentive programs for site access. We also urge you to create a new PAYDAYS (Pay-As-You-Drive-And-You-Save) Grant Program, at 15 million dollars annually, to allow a designated university or non-profit entity to act as a research clearinghouse, capacity-building center, and catalyst for public-private partnerships, supporting efforts by governments, non-profit entities, and companies to design, test, and evaluate innovative mileage and parking pricing strategies. We support initiatives to expand the use of automated time-of-day road pricing on existing tolled facilities and when such systems are managed to reduce the need for added roads to direct new revenues substantially to support expanded means of access to jobs and public facilities for people without cars. Accountability for environmental, community, and equity impacts must not be weakened through increased reliance on bond and private road financing. Finally, we urge equal tax treatment of all commuter benefits, regardless of how people get to work. S. 661, the Commuter Benefits Equity Act of 2003, would equalize at $190 a month the income tax exclusion of transit and highway commuter benefits, which are currently are limited to $100 a month for transit and $175 a month for parking. This should be combined with H.R. 1052, the Bike Commuter Act, as part of TEA-21 reauthorization.
The transportation bill offers a valuable opportunity to advance market reforms that benefit consumers, transportation efficiency, and environmental performance. We thank you for your consideration to include in the bill these modest voluntary measures that can deliver big benefits. Sincerely, Michael Replogle Transportation Director Environmental Defense Martha Broad Director, Environmental Insurance Agency Conservation Law Foundation Neha Bhatt National Conservation Organizer Sierra Club Chris Hagerbaumer Program Director Oregon Environmental Council Alan Durning Executive Director Northwest Environment Watch Catherine Ciarlo Executive Director Bicycle Transportation Alliance Keith Laughlin President Rails-to-Trails Conservancy Bill Roach TDM Manager King County Metro. Trip Pollard Land and Community Project Leader Southern Environmental Law Center Anne Canby President Surface Transportation Policy Project Deron Lovaas Deputy Director, Smart Growth and Transportation Program Natural Resources Defense Council Katherine Higgins, Vice President for Public Policy National Trust for Historic Preservation Richard Oram President Commuter Check Services Corp Cynthia Capelli Executive Director National Transit Benefit Association Jim Clarke Vice President for Legislative Affairs Action Committee for Transit of Maryland Seán Sheehan National Outreach Director Center for a New American Dream Therese Langer Transportation Program Director American Council for an Energy-Efficient Economy Joseph Otis Minott, Esq Executive Director Clean Air Council
Jenny Holmes Ecumenical Ministries of Oregon, Interfaith Network for Earth Concerns David Brook Flexcar, Portland
Cheryl Cort Executive Director Washington Regional Network for Livable Communities Sherrill Marcus Coordinator Metropolitan Atlanta Transportation Equity Coalition
Attachment: Pay-As-You-Drive-And-You-Save (PAYDAYS) Grant Program Descriptio
“Pay-As-You-Drive-And-You-Save” (PAYDAYS1) Grant Program
Objective: To allow consumers to save money and to provide substantial congestion-reduction, air and water pollution reduction, and safety benefits by supporting pilot and related activities that convert some of the 80% of driving and parking costs that are fixed and some of the general taxes that are used to support transportation to vehicle use charges. Program Description: The “Pay-As-You-Drive-And-You-Save” (PAYDAYS) Grant Program would provide $15 million annually to a university or designated non-profit entity established to solicit funding applications from government and non-profit entities, and public-private partnerships, to design, test, and evaluate innovative mileage and parking pricing strategies that are untested or variants of previously tested strategies. From the funding provided, the designated non-profit entity would also be permitted to conduct or support research and outreach, and to forge partnerships between private sector entities and consumers to offer new, innovative mileage and variable parking pricing products. A study by the Federal Highway Administration showed that converting fixed costs of car insurance, taxes, and fees to charges of $0.10 per mile could provide at least $4.4 billion in annual nationwide benefits on congested freeways, and substantially more overall since pricing applies to all roadways instead 2 of just to freeway segments. Studies that have looked specifically at converting automotive insurance from annual or semi-annual to mileage premiums project mileage reductions of 10 to 20%. This modest effort could be funded as a takedown off the top of all highway programs, similar to certain research and other programs, in recognition of its potential contribution to air pollution and congestion reduction nationwide. A research paper presented at the January 2003 Transportation Research Board annual meeting showed that a hypothetical Federal policy incentive to promote vehicle use pricing would be many times more cost effective in pollution-reduction than the typical expenditure of funds by the states in reducing transportation emissions. Pre-implementation studies, pilot activities, and state and local public policy changes supporting the following concepts, among others, would be eligible for grant funding: • Vehicle related taxes assessed on a per mile basis; • Mileage-based car insurance; • Parking cash-out and other commuter choice financial benefits; and • Mileage-based vehicle lease fees combined with reduced fixed lease costs, car sharing, and other mileage-based vehicle pricing alternatives. The PAYDAYS Grant Program would function similarly to but better than a Federal discretionary program. Discretionary programs in general have been adversely affected by Congressional appropriations earmarkings and even funding rescissions. The authorizing bill might avoid such problems by providing contract authority funds not subject to obligation limitations.
The program acronym correctly suggests that individuals would experience an effective “pay raise” if their fixed driving costs were reduced. They would likely spend some of this raise to cover new variable driving costs, but they could keep as much of it as they choose to by managing their level of driving. 2 In New Jersey, as an example, 87% and 90% of severely congested morning and evening peak travel time, respectively, is spent on arterial roadways (with freeways accounting for the remainder).
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