March 18, 1990

Akos Szoboszlay, President

Modern Transit Society of San Jose

P.O. Box 5582

San Jose, California 95150

Re: "Free Market For Transportation Plan"

Dear Akos:

Thank you for the copy of your very thorough and very wise proposal. The "free market" approach is an idea whose time has come! As the Bay Area Economic Forum (BAEF) has pointed out in their similar proposal, letting people make their own decisions is extremely important to the success of any plan, and far superior to government regulation. On the whole, I thoroughly agree with you. However, I would like to suggest some refinements.

If our primary goal is the reduction of air pollution, which I would hope it is, then the priorities, from most important to least important, are as follows:

1. Reduction of vehicle ownership (since owning a vehicle provides a huge incentive to use it, and since the mere presence of an automobile has large environmental effects, due to parking needs, air conditioner CFCs, tire disposal, etc.);

2. Reduction of vehicle trips (since the "cold start" and "hot soak" dominate most trips, just turning on the engine causes most of the pollution);

3. Reduction of VMT (beyond approximately 10 miles, trip length begins to be more important than the cold start and hot soak).

The implications for your plan are: there should be trip charges (based on a count of the number of times the engine is started); and congestion reduction is an inadequate indicator -- there must be reductions of the above three items. Charges should be proportional to emissions, as in the Bay Area Economic Forum's proposal (ideally, this would include CO2). Charges should be applied to all travel, not just peak hour travel or just commute travel -- 65% of VMT is due to non-work travel. Since optimum fuel efficiency is reached at about 35 MPH, there should be added costs for travel above that speed.

Perhaps there could even be a charge for how much you accelerate and decelerate, since smoothly flowing traffic produces less pollution. A simple on-board computer could measure that, as well as give instant feedback in dollars and cents. Some buses (e.g. Contra Costa's County Connection) already carry sensitive motion indicators (to detect bad drivers). Psychologically, it is extremely important to give instant feedback. A "taxi meter" type of feedback could show the driver exactly what he/she is being charged, as the charges are incurred! This would have a powerful effect on driving habits.

The AVI method of charging is extremely expensive. It requires a $31 "tag" in every vehicle, which alone makes it prohibitively expensive in relation to other available alternatives. In addition, it requires $1200 readers in all locations to be measured. Then there must be computers to tally the charges together into a single monthly bill, and people and rules to govern when to charge and how much. That would be a bureaucratic nightmare. Unless you also have an on-board computer to give instant feedback, the monthly bill would not give quick enough feedback to change behavior effectively.

I recommend the following taxes: a large vehicle tax (10-20%, rising in significant increments until it is effective in significantly decreasing vehicle purchases; it should be larger for older (more polluting) vehicles); a large tax on engine starts; and a large fuel tax. The vehicle and gas taxes are easy to administer: the facilities are already in place and in use. Administrative costs would be next to nothing. The engine starts tax would require an on-board counter. It could be collected by the smog-inspection stations at the (hopefully) yearly inspection and maintenance. An instant-feedback readout device on the dashboard would make this one more effective.

Besides the huge cost savings, my plan has the advantage of charging for all vehicle use, not just selected roadways and times. (Can you imagine the political battles over which roadways etc. will be taxed?! The administrative decisions would also require us activists to monitor them. We don't have enough time and energy to monitor the relatively few hearings that already exist, much less any more!) It therefore also has the advantage of attacking all urban sprawl: by making all driving expensive, it greatly reduces the attractiveness of suburban living. Taxing only congested roadways would allow, and even favor, suburban sprawl.

While I'm on the subject of land use, I would like to point out that the above taxes practically eliminate the need for land use regulations (which nobody wants, anyway)! If automobile ownership and driving become expensive enough, people will make their own "land use" decisions! They will automatically arrange their lives so as to minimize auto travel and auto ownership. That will automatically cause pressures that increase density, especially around transit facilities. The alternative -- land use regulation -- would require another bureaucratic nightmare. All over the country governmental bodies would have to spend huge amounts of time and energy fighting over what regulations to create and how to administer them in each and every case. Already environmentalists aren't able to keep up with all the important hearings and decisions. Land use regulations would multiply this problem by some large number. Taxing fuel would, with one fell swoop, solve most land use problems. Cheaply! As BAEF also pointed out, regulations don't pay for themselves, but taxes do.

Much as we might love to tax only certain roads and certain circumstances, the decision-making would kill us. And therefore it would probably also not solve the air pollution problem, which solution is long overdue. The gas tax could be instituted almost overnight, and would save us all a lot of money. (Of course, as you point out, it must be spent toward some environmentally and economically sound purpose, not for more expensive, smog-inducing freeways!)

Sincerely yours,

Michael J. Vandeman, Ph.D.