This report lays out principles to help California policymakers identify an optimal rate structure for a road-user charge (RUC). The rate structure is different from the rate itself. The rate is the price a driver pays, while the structure is the set of principles that govern how that price is set. We drew on existing research on rate setting in transportation, public utilities, and behavioral economics to develop a set of conceptual principles that can be used to evaluate rate structures, and then applied these principles to a set of mileage fee rate structure options. Key findings include that transportation system users already pay for driving using a wide array of rate structures, including some that charge rate structured based on vehicle characteristics, user characteristics, and time or location of driving. We also conclude that the principal advantage of RUCs is not their ability to raise revenue but rather to variably allocate charges among various types of users and travelers. To obtain those benefits, policymakers need to proactively design rate structures to advance important state policy goals and/or improve administrative and political feasibility.

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Transportation Finance

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MTI Project



road-user charge, transportation funding


Economic Policy | Policy Design, Analysis, and Evaluation | Transportation