Albert Einstein defined insanity as “doing the same thing over and over again, and expecting different results.” Such is transportation funding. The federal gas tax is broken, and it isn’t going to be a viable option anytime soon. Communities need to look for different ways to fund their ever-increasing transportation issues in smarter and more targeted ways. This essay aims to show that by using technology in a more refined and unusual manner, cities, counties, and states can achieve this, while also getting public buy-in.
What are the issues with current transportation funding?
The process usually taken to get Federal funds down to the owners and operators of the roadway system (e.g., State and Local Municipalities) is very bureaucratic and laborious. It is long, slow, and full of potential pitfalls. The ten-step process is below:
- Congress is lobbied
- House/Senate make separate bills
- Bills get rewritten
- President signs
- Money is apportioned
- Money is appropriated
- Funds are distributed
- Obligations are given
- Money is spent on projects
- Funds are reimbursed
This has been no more evident than in the past decade, where more than thirty-two patches (or continuing resolutions) have been passed, essentially kicking the can down the road.
State and municipal governments face this complicated and laborious process, while also having to deal with the local politics. Fortunately, at least 21 states have increased their funding for their statewide programs; however, these funds usually go towards large roadway widenings or alignments, maintenance projects, and other car-centric projects. Most of these projects improve capacity, which, has been shown to not reduce congestion, but most times to induce it.
Private funding has therefore been used as an interim tool. There are two major methods for privately funding transportation today: Public-Private Partnerships (P3) or purely private methods (toll roads). These two methods are based on the same principle: a private investor buys transportation as an investment asset, hoping to generate a return on the asset. This return is funded by those driving on the road, or using the transportation mechanism (bike share, transit, etc.).
This was a workable solution pre-Internet of Things; however with the advent of WiMax, 5G, inductive charging, and all other technologies, these private business models are inefficient and costly. Toll equipment needs to be maintained and upgraded. Toll enforcement needs to be administered. These administrative, maintenance, enforcement, operating, and capital costs erode at the investment potential of these transportation dollars.
Not only is it costly now to build these facilities with private money, but it is more costly for a public agency to borrow money through private investors. This is due to the fact that private investors have a much higher tax burden than their public counterparts, who usually borrow via municipal bonds. Private investors also have to pay taxes on assets, and request a rate of return. All of these add costs and erode at the buying potential.
Therefore, the project has to be very large to offset the cost, or provide a dedicated revenue stream for the private sector. This does not bode well for smaller, efficiency project. Furthermore, the money is not new or free. It is essentially “a financing solution chasing a funding problem.”1
What is the idea?
With the issues of political stalemates, expensive capital, and inefficient processes, it only seems logical that a new method should be undertaken. With the boom in the tech world, it is only a matter of time before someone figures out a solution. Our idea is called “TripOut,” which is short for My Trip Outsourced. It is a crowdfunding, location-based web & mobile application that allows users to apply small amounts of funds to improve their trip. The application will be on smartphones, connected cars, and wearables. The user has the application running in the background, and provides a set amount that they would like to donate.
The concept of crowdfunding is not a new phenomenon. Crowdfunding has everyday people (i.e., project backers) place their money into a certain cause or project, started by a project sponsor. These are usually small amounts that add up over time and with a volume of donations. The project sponsor then receives the funds only after the goal has been reached.
TripOut aims to capitalize on this idea, as a successful crowdfunding campaign relies heavily on the interpersonal connection between the backer and the sponsor. Crowdfunding allows the sponsor and backer to have a continuous dialog about the project, which gives a sense of ownership and community to the backers.2 This is something that is sorely needed in the transportation realm.
A similar concept has been tested twice in the Pacific Northwest: the VMT-fee pilot in Oregon and the funding of the SR 520 bridge in Seattle, WA.
The Road Usage Charge Program, called OReGO, has been implemented with some success. The recent signing of Senate Bill 810 allows Oregon DOT to continue to test out the concept, with almost 1,000 Oregonians opting-in as of October 2015.
In Seattle, WA, WSDOT did not have the funds for the $1.2B expansion of SR520 from a 4-lane cross-section to a 6-lane cross-section. Therefore, they placed toll equipment on both sides of the bridge, which has met a bit of resistance, given that there is no opt-in option. The only other option is to change modes in order to avoid the toll, which could add significant travel time to commutes.
Why local agencies want to partner?
Beyond the obvious financial benefit, it provides local agencies a direct link to their citizens. Whether good or bad, citizens now have a voice. Smaller projects, which have generally been underfunded and do not get much political traction, will be able to have funding set-aside for them.
Another benefit is that commuter-heavy routes, which is where a bulk of the transportation funds usually go, will be able to be supplemented with this new funding process. The agencies can then use their funds to possibly fund under-served populations, other equitable projects, or maintenance of rural, less travelled roads.
A third incentive is this approach bypass the fan-fare that usually mires transportation projects. The most-common issues are the political ribbon cuttings and pet-projects that get funded. Ribbon cutting project usually take up a lot of resources, as these are mostly highway widenings and new highway construction. Pet-projects are usually set by the elected officials and may not have a high cost, but are sometimes not the best solution.
How does the TripOut App work?
Once the user passes over a designated route (or at the selected destination), the funds are automatically transferred to an account set-up for improvements on that facility. Once enough funds have been raised, then the funds are either directly transferred over to the municipality or state, or municipal bonds are bought.
The selling points for this idea are two-prong: the first is the ease of use. By having this on a mobile device running in the background, users will be tracked and able to contribute in the most efficient method possible.
The second major tenant of the idea is connecting people to their transportation. By providing an avenue in which people can contribute, and subsequently announce their contribution, they will feel more connected. This contribution process makes people feel ownership and involvement, which is something that is unprecedented in transportation.
Could you give me some more information?
The TripOut App, while very simple in theory, has a number of complexities stemming from the technology, regulation, and basic transportation planning.
Marketing and outreach
In order to get a massive user base, there are two methods generally used for marketing: a grassroots campaign or a top-down sponsorship. In order for this app to work, a large base of users needs to be established. Therefore, our method is two-fold: the first is to market the traditional way (social media, media interviews, etc.), and the second is a partnership with local agencies. This partnership would mainly focus on sponsorships in the ROW (under FHWA Order 5160.1). Unlike the typical applications of 511 sponsorship and roadside cleanup, the TripOut sponsorship signs would be placed at:
- Signalized intersections
- Bicycle routes/lanes
- Transit wraps
By providing sponsorship signs at these locations, TripOut can portray to the driver that they are affecting their transportation options. Drivers will associate that their contributions are needed in order to provide these various options. The goal is to increase app downloads and awareness of the brand.
Installation and use
A typical installation is recommended, with social media integration for simple log-in. The major concern is consistent, safe use. Consistent use is a major problem for most mobile applications, as close to 90% are downloaded once and never used again.3 The user could opt-in for continual funding (via an on-off switch within the app), or would receive push notifications.
By providing these push notifications, the mobile application will send personalized, direct messages to them. These are recommended to include the following information for consistent use:
- Funding status towards their projects
- Their contribution versus others’ contribution
- Special incentives (e.g., dollar-for-dollar matching, promotions)
These notifications, along with an en-route smartphone application add to the safety risks that come with smartphone usage while driving. Therefore, TripOut should be integrated into the vehicle’s application system. By utilizing Google’s Android Auto, Apple’s CarPlay, or a third-party developer system (Verizon’s Hum), the danger of distracted driving is deterred. The driver should not be utilizing the application en-route, as the passive tracking system (with machine learning algorithms) will be utilized.
Funding and tiers
Assuming that TripOut achieves consistent growth and continued user engagement, the next issue is where the funding will go, what will be funded, and how the funds will be distributed.
The funding will go to projects based on a tier-system as shown below. It should have at least four tiers in descending order of complexity and cost. The goal here is to implicitly steer project backers towards the low-cost, highly effective projects that have traditionally been underfunded.
The users can vote on which project they want throughout the funding lifespan. This will be done via social media and within the app itself. By allowing users to vote not only with their funds, but also through discussion forums, comments, social media posts, etc., the project becomes a living entity.
In order to create this community, we would want verifiable people (via a governmental Id process) to showcase their support (or disapproval). This not only keeps out “trolls,” which is a term for anonymous internet users who attack ideas and hide behind their anonymity, but also allow the long-term relationship to take place.
After the funds and votes have reached a certain critical mass, then the actual allocation of funds can commence. The users have the ability to either fund the project, or opt to buy municipal bonds for increased leverage. The choice then becomes whether or not the users want to pay more (i.e., using tolls) for an expedited service.
It is a well-known fact that transportation funds are a scarcity. While the current funding is enough to keep the infrastructure from falling apart everywhere, new methods and funds will need to be employed in order to fulfill the gap. The TripOut App concept allows transportation agencies to fill some of the funding issues via a crowd-funding application. This solves two problems that have systemically plagued these agencies: low public engagement and minimal funding for effective, but less politically palatable projects. Although traditional public and private funding will still be needed to fund major projects, it is insane not to try something new. Agencies should look to TripOut.
1Reinhardt, William. “The Role of Private Investment in Meeting U.S. Transportation Infrastructure Needs. Transportation Development Foundation. May 2011.
2Gerber, Hui, Kuo “Crowdfunding: Why People are Motivated to Post and Fund Projects on Crowdfunding Platforms”, Orange County Register, October 22, 2012.
3Pramis, Joshua. “Are you a Rarity? Only 16 Percent of People Will Try Out an App More Than Twice.” Digitaltrends.com. March 12, 2013.
So what do you think? Would people use this app and opt-in to fund transportation, or are people inherently self-interested?
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