DALLAS – As the state with the most highway miles and the fastest-growing population, Texas has a lot of ground to cover before self-driving cars and trucks become ubiquitous, but a road map of the future is beginning to emerge.

From a public finance perspective, autonomous vehicles pose a major challenge to the status quo. Offering more efficiency per gallon of fuel, the new transportation system would lower fuel-tax revenues per vehicle along with registration fees, sales taxes and parking fees. At the same time, new roadway designs could redefine the term “information superhighway.”

The Milo autonomous vehicle shuttles visitors to professional sports stadiums in Arlington, Texas, as part of a test.
The Milo autonomous vehicle shuttles visitors to professional sports stadiums in Arlington, Texas, as part of a test. City of Arlington, Texas

“For Texas’ rapidly growing areas, it costs about $4 million per mile to expand an interstate highway from four to six lanes,” Texas Department of Transportation spokesman Mark Cross said. “Automated vehicles that communicate with each other and the infrastructure offer an opportunity to increase operational efficiency of our existing roadways as an alternative to building additional capacity in a time when resources are limited.”

S&P Global Ratings estimates that the U.S. public sector eventually might have to replace $251 billion in annual gas taxes, transit fares, tolls, vehicle sales taxes, municipal parking, and registration and licensing fees linked directly to the current model of personal car ownership.

At the federal level, motor fuel and related taxes produced $41 billion in 2017. As a funding source for the Highway Trust Fund, that income stream is losing ground to improving vehicle fuel economy standards and the incremental rise in electric cars.

Inflation has reduced the value of the 18.4-cent per gallon federal tax on gasoline enacted in 1993 to about 11.5 cents today, S&P says, and at the current rate of outlays the fund will require another bailout by Congress by 2022.

“Governments and taxing authorities will need to find new revenue, with fees based on VMT [vehicle miles traveled], or with dynamic tolling,” S&P said in a May 14 report. “We also have to consider that a portion of transportation-related revenue often supports the general fund of state and local governments, and the loss of transportation-related revenue could hurt state and local services. How changes to travel and commuting patterns will affect urban property values and ad valorem tax revenues is also a significant unknown.”

Texas is one of 20 states that have enacted autonomous vehicle legislation, with most bills supported by automotive manufacturers, including General Motors and Toyota, which now has its U.S. headquarters in Plano, north of Dallas.

Dallas Area Rapid Transit teamed with the Toyota headquarters recently to test its own ride-hailing app called “GoLink,” which could be applied to its established transportation network.

“Since many riders do not live or work within walking distance of a bus stop or train station, the agency is testing new transit services to solve that ‘first-mile/last-mile’ challenge,” officials said. “DART also is watching progress on emerging technologies like autonomous vehicles and new models of ride-sharing/ride-sourcing services.”

At the Texas A&M Transportation Institute, a demonstration of “truck platooning” in February drew a visit from Energy Secretary Rick Perry, an A&M grad and former Texas governor. Perry took a ride in a semi rig that was electronically attached to another. With truck platooning, a human driver of one truck can navigate a highway with one or more driverless trucks electronically linked.

As governor, Perry championed a concept called the Trans-Texas Corridor, envisioned as a mile-wide superhighway with rail and utility lines that would carry the heavy truck traffic from Mexico under the North American Free Trade Agreement. Ultimately, the concept was shot down by opposition from landowners in the highway’s path.

TTI’s truck-platooning project is sponsored by TxDOT, which is serving a network of research around the state that includes universities and local governments.

“Ultimately, successful and safe research and products will need to be tested in real-world environments,” Cross said. “However, to demonstrate ‘successful and safe’ we see the initial testing to take place on closed research proving grounds.”

The Southwest Research Institute in San Antonio joined with A&M’s TTI and the University of Texas’ Center for Transportation Research in testing an autonomous truck that could be used at the state’s ports of entry.

With a $2.9 million federal grant, SwRI is developing connected and automated vehicle technologies aimed at improving fuel economy by more than 20%. The three-year project calls for the team to develop optimal control algorithms that leverage vehicle-to-vehicle, vehicle-to-infrastructure, and other technologies using a plug-in hybrid vehicle from Toyota.

“This is an important research step in furthering the development of powertrains for connected and automated vehicles,” said Scott Hotz, an assistant director in SwRI’s Engine, Emissions and Vehicle Research Division. “Our team’s collective expertise in vehicle powertrain development and connected and automated vehicle technologies will help optimize vehicle efficiency.”

In Arlington, the city is providing visitors a free ride on an autonomous shuttle as part of the nation’s first such program open to the public. The Arlington City Council approved a one-year lease with EasyMile of Toulouse, France, for the use of two low-speed, battery-powered, autonomous shuttles.

Arlington named its shuttles Milo, representing mile zero, the point at which guests arrive at their event destination in the city’s entertainment district that includes two professional sports stadiums.

The Milo shuttle pilot program is expected to run through the middle of the year. Bill Verkest, chair of the city’s Transportation Advisory Committee, said part of the purpose of the pilot program is to familiarize the public with driverless vehicle technology.

“Autonomous vehicles are going to be a mindset for people. Is it something we really want to trust ourselves with?” Verkest said. “It’s kind of like an airplane. At one time we didn’t know if you could put a plane on automatic pilot and it would fly itself. Well, this is new technology and as technology improves, people accept it.”

In predicting the shift to autonomous vehicles, S&P used multiple scenarios that would be disruptive to the status quo, citing complex technology and cost factors.

“Growth of fully autonomous vehicles will be influenced by and significantly lag the market growth of electric vehicles, which could approach a 10% share of U.S. light vehicle sales by 2025 (compared to 1.1% today), behind our forecast 25% share in Europe and 20% share in China,” analysts said.

“Under our low disruption scenario advanced autonomous vehicles requiring minimal to no driver intervention could reach a 2% share of light vehicle sales by 2030 rising to 10% by 2040,” they predicted.

Gradual growth in the systems would pose the fewest credit implications for public finance, the analysts said.

“However, newer entrants into mobility technology could disrupt a gradual, evolutionary scenario and negatively affect credit quality across various sectors involving transportation infrastructure and supporting funding mechanisms,” they said.

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