EVENTUALLY THEY'LL FIGURE IT OUT.

Earlier this year, I let loose with a Tax Day rant.

Sometimes, the only possible response is See, I told you so.  "In the case of the roads, though, well, the purpose of transportation is to move resources toward places that are productive in some way, and that makes the roads assets, if only somebody would think about pricing the use of them."  That post concluded with a question, "Is it so difficult for the highway departments to think more like investors and look for rates of return on investment?"

Lo, the sun comes up over Lake Michigan, and reality dawns.

In order to ease congestion and create revenue for infrastructure improvements, the Chicago Metropolitan Agency for Planning has some new proposals laid out in its ‘On to 2050‘ plan update released this week.

“We’ve talked to a lot of people experiencing extreme congestion. Managed lanes are a way to think about how do you get to a free-flow traffic lane? Part of that has to do with pricing the lane,” said Erin Aleman, the executive director of the Chicago Metropolitan Agency for Planning.

CMAP is suggesting adding what are known as “managed lanes” to several expressways. It would be a tolled express lane, where drivers would have to pay more to use it.

There is still a lot of work to do.  The story opens with an Oak Park commuter who drives on the Congress Eisenhower Expressway and has to pay to park downtown near the Monadnock Building, a vintage office tower.  There's a rapid transit line in the median of the expressway, and an L subway stop near the Monadnock.  But we're not going to gripe about crime on the L.  The story also includes the usual political economy stuff about making government services that used to be "free" now paid, but on the other hand, the Oak Park resident gets consumer surplus.  “There are times when, yes, I wouldn’t mind paying a toll to get through traffic out of the Loop this time of day.”

The positive economics of congestion pricing features promising new developments.  That's an academic problem that I once grappled with, only to be stymied by some extremely nasty Lagrangians in the relevant self-selection constraints.

Oliver Williamson's 1966 peak load pricing article (JSTOR) lays out the argument with some glorious Lagrangians and some intuitive diagrams. The high-occupancy toll problem (and the related problem of selling cuts in the roller-coaster line) is one in which the provider is simultaneously providing a premium service at a higher price and a congested service at a lower cash outlay, but with the people who choose the cheaper congested service incurring disutility. As a modeling exercise, the marginal commuter is indifferent between the marginal utility adjusted by the higher price of the premium service and the marginal utility adjusted by the lower price of the congested service (there are some additional subtleties involved in avoiding division by zero.)

Maybe the best thing to do is to forget about analytic precision and Lyapounov stability and let an algorithm figure it out.

A new set of express lanes on Virginia’s Interstate 66 with dynamic pricing are getting their first test after two weeks of toll-free driving, reports Neal Augenstein for WTOP. Drivers can see pricing, which can change every 30 minutes, about two miles before deciding whether to enter the express lanes. “The tolling system changes the price, in an attempt to ensure vehicles can maintain an average speed of 55 mph.”

“During the first Monday morning commute, the average cost was $6.10, for the entire western section, from the entrance over Route 29 in Gainesville to Route 28 in Centreville.” During the off-peak midday period, average tolls in both directions were $2.75. According to the article, the tolls will fluctuate more over time as the system ‘learns’ to become responsive to live traffic flows.

Express lanes are one example of congestion pricing, which adjusts the cost of driving by controlling traffic through a variety of mechanisms aimed at reducing congestion and encouraging off-peak travel.

The Williamson model imposes an additional constraint, which is that the pricing cover the incremental cost of capacity over the demand cycles. That's something the operator of an amusement park worries about. The highway commissioners, not yet, but let's take our small victories where we can.

If time-of-day pricing arrives, it will first be implemented on to be built, high-occupancy toll lanes on the Chicago expressways, plus the reversible express lanes on the Northwest Kennedy Expressway.

It's Illinois, though, which means there are still things for the motor vehicle department and the highway department to figure out.

Electric vehicle (EV) license plate renewal fees for owners in Illinois cost $251 a year, $100 more than a standard internal combustion engine (ICE) vehicle.

In 2019, the state legislature approved a $45 billion transportation bill that doubled the state gas tax to help pay for improvements to infrastructure.

But since electric vehicle owners don’t visit the gas pump, the state passed a law to put a $100 yearly tax on EVs, added on to the annual license plate renewal fee. That went into effect on July 1st, 2019.

The fee came as an alternative after Rep. Martin Sandoval’s (D-Chicago) proposed a $1,000-a-year tax on electric cars.

Yes, we had some fun with that at the time.

The latest foolishness, raising the registration fee on electric and hybrid cars and trucks to collect in one lump sum what they're not collecting at the pump.  Kea Wilson for Strong Towns goes after Missouri, but the same foolishness is infecting Wisconsin lawmakers.  I can't make this stuff up.  "If what we want are safe roads that we can afford to repair, why on earth would we incentivize drivers to buy gas guzzling vehicles—which skew towards the heaviest vehicles most capable of causing extensive road damage—rather than light, fuel efficient vehicles that might help keep that pavement intact for longer?"

The reality:  registration fees and excise taxes don't even come close to covering the full cost of roads, and a reality-based accounting might lead to the highway commissioners choosing to close some roads, or let them revert to cattle paths.

There, dear reader, is the tension. The electric car, even with the higher first cost, might still be a bargain when it comes to paying energy taxes.

MyEv reported that the owner of an ICE vehicle that gets 24 mpg and drives 15,000 annual miles would pay around $237 a year in fuel taxes at the pump.

Electrek also calculated that the average vehicle miles traveled per year by the average Illinois driver were around 8,000.

As the automotive industry makes a shift toward electric vehicles, the Illinois Department of Transportation says it is considering taxing EV charging stations in an effort to offset the projected revenue loss from fuel sales.

According to IDOT Transportation Secretary Omer Osman, the department is looking at several ways to tax EV drivers to make up for a projected shortfall, once more EVs go on the roads.

It's probably too much to ask for carbon taxes on the motor fuel, or on the juice used at the charging station, to price the environmental effects, and to have congestion pricing on the expressways and arterial streets, but at least the road authorities are thinking about the right things.  "There's a lot more the highway departments could do to treat the roads they build as productive assets, rather than liabilities held forth as begging bowls for the next infrastructure boondoggle."

Even with the tolling and the environmental pricing, those electric cars don't look like a bargain.  "That registration fee, though, is way larger than what I pay in annual gasoline taxes, and for registration. That's even with the bigger Cold Spring Shops staff car that went into the garage last year."  Yes, and even in the depths of the corona tyranny that staff car travelled more than eight thousand miles in a year.