Autonomous Vehicles will disrupt City Budgets

The oos Base presents The Car of the Future weekly feature:

In the many scenarios of the car of the future, parking, as we know it, will likely be non-existent since commuters will either be subscribed to a ridesharing service or autonomous vehicle (AVs) owners will allow their vehicles to work for others while they are at work.

Whether we own our autonomous vehicle or not, we will likely no longer receive any sort of traffic ticket either by cameras or by local law enforcement. AVs will be programmed to follow the letter of the law whatever that law might be. No more taxation by citation.

Probably no more gas tax either since most AVs are headed toward an electric future.

AVs will create a revenue problem for cities unless new funding mechanisms can catch up in time.

released this week a national analysis of how city revenues might be affected by autonomous vehicles (AVs). They asked and received information on parking collections, parking fines, traffic citations, automatic traffic enforcement fines, gas taxes, vehicle registration fees, licensing and select other fees from 25 of the largest cities in the United States. In fiscal year 2016, collectively these 25 cities netted nearly $5 billion in auto-related revenue which averages out to $129 per capita. With the coming of AVs, some cities will be more affected than others.  New York City for example generated $1.2 billion in fees.

Of course, many cost savings will be on the table for cities as well as jobs: parking meter readers and traffic police are two segments that come to mind. A former chief financial officer for the city of Chicago Lois Scott believes that cities will lose an average of 10 to 15 percent of operating revenues.  She says, “The combination of an electric vehicle world and the sharing economy will have a powerful impact.”

According to the Governing Magazine study, cities that will have the steepest revenue losses are cities with a dense population where parking comes at a premium. Those cities with the highest related per capita include:

San Francisco                      $512 per capita

Washington, D.C.                 $502 per capita

Chicago                                 $248 per capita

Totals were much larger for cities with high concentrations of automatic traffic cameras, special taxes levied against parking system operators and any shared revenue from states for vehicle registration fees and gas taxes. Texas cities such as Houston and Dallas fared well largely because the state distributes no vehicle revenues.

Smaller jurisdictions were also analyzed through the U.S. Census Bureau. The sample determined that all parking revenues, fines and court fees totaled more than 10 percent of general revenue. Resort towns seemed to be the hardest hit since much of their revenue is tied up in parking fees.

Gasoline taxes account for a large revenue for a number of cities such as Chicago and Columbus. Phoenix received $116.7 million in gas taxes last year.

Convention centers and municipal airports generate much of their revenue from parking.  For example, last year, Phoenix’s airport generated $75 million in parking fees.

There is another area that the Car of the Future might have an impact. If cities no longer need to require parking minimums for new housing or business developments, then housing could be cheaper which might affect local property taxes.

In the recent CurbedLA article , the writer discussed how parking minimums for residential living and businesses hurt the chances for the city to work with developers on building much needed low income housing. Many cities in the US and across the world, have this same problem. But will getting rid of parking minimums solve this particular problem when developers’ main goal is to make money? Will there be enough incentive to build housing for low and middle income residents?

If these funding revenues go away for cities, what are some alternatives and how will this affect the common person? More taxes on mobility seem to dominate the agenda:

  • Vehicle Miles Traveled Tax on every vehicle
  • Reconsideration of how property tax is evaluated and utilized
  • Taxes on ridesharing and carsharing services
  • Critical use tolling based on time of day
  • Special sales taxes

When AVs come into play, cities will lose revenue but they also will be able to curb expenses based on the gathering of those revenues.

The best part for travelers however—no more traffic citations.

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One Response to “Autonomous Vehicles will disrupt City Budgets”

  1. Richard Boyd says:

    Thanks, Sheila Dunn, for the forecast.
    What is the financial literacy message?
    Do cities collect enough from motorists to pay for the services rendered to motorists?
    Is the money collected from motorists dedicated to serving motorists?
    Or is the money spent on political whim?
    What is the opportunity cost of dedicating real estate to parking as compared to office or retail or food service?
    Should we concentrate on how much money is collected from motorists?
    Or should we concentrate on how the money collected from motorists is spent or misspent?
    Concentrate on the doughnut or the hole?