Literature Reviews

Research is sparse regarding the effects of heavy duty applications of C(AV)s on municipal budgets. However, a research project at the University of Oregon studied how autonomous vehicles will change local government finances, using waste collection as a case study [1]. The case study analyzed costs in Asheville and Chapel Hill and found that in the long term moving solid waste refuse collection to automated vehicles and more highly automated systems could create large cost savings [1].

Budgetary impacts from micromobility include costs of permits, operating licenses and fines for risky behavior. The rise of shared dockless micromobility led to reactive policy making and regulations that largely constrained operations [1]. The use of such regulation has been motivated by the desire to control the presence of shared micromobility devices in cities, rather than viewing them as a promising line of municipal revenue. In fact, in many cases, municipalities are addressing the need to subsidize riders, especially when it comes to low-income users [2]. A 2024 study by the Transportation Research and Education Center assessed taxes and fees on micromobility, and found that they vary dramatically by city and are typically higher than taxes and fees on ride-hailing and private vehicles [3].

In general, the literature suggests that while micromobility has the potential to enhance quality of life and access to mobility [4], there are also externalities of social harm such as (mis)parking [5]. There is little available research related to how micromobility could influence the tax burden or base of a locality.

While delivery service may impact wages and establishment creation, a review of the literature found no studies that considered impacts to municipal revenue through effects on municipal expenses, tax revenue, or nearby businesses.

Universal Basic Mobility (UBM) programs, to the extent they have been piloted in the United States, have been funded largely through grants. These grants may be from municipal transit organizations, such as the Alameda County Transportation Commission’s funding of Oakland’s UBM pilot [1], state programs in conjunction with municipalities, such as the California Air Resource Board’s funding of the Los Angeles Department of Transportation UBM pilot [2], or a mix of grants and corporate giving, such as Pittsburgh/Move PGH’s collaboration with SPIN [3], which offered unlimited access to the company’s micromobility vehicles for qualified residents. As of this writing, no municipality has launched a dedicated fund for Universal Basic Mobility programs.

The costs of UBM pilots vary widely, depending on both the generosity of the subsidy and the number of participants. This variability has implications for the sustainability of such programs once grant funding expires. Oakland Department of Transportation’s UBM pilot grant is $243,000 for 500 residents [1], whereas the Los Angeles Department of Transportation’s UBM pilot is currently estimated at roughly $18,000,000 - a combination of city funded transit subsidies, corporate giving, and state funding of transportation infrastructure and mobility vouchers [2]. Municipalities are weighing permanent UBM funding pending evaluation of several UBM pilots, with the first evaluations coming this year; more research will be needed to evaluate the long-term implications of UBM programs on municipal budgets and transit organization financial sustainability.

The limited research on carsharing and municipal budgets largely focuses on the tax burden of services in a community. High sales taxes on carshare program might, in the short term, bolster city budgets, but may in the longer run limit the financial sustainability of carshare programs. In a cost-benefits analysis of carshare sales taxes, one study found that sales tax revenue for carshare reservations typically exceeded the nominal sales tax rate [1]. An update to this study found that in keeping with this trend, as retail taxes increased, base price rates for carsharing dropped between 2021-2016, and, as a result, limited the long term sustainability and growth of the carshare sector [2]. Research is significantly lacking in understanding the benefits or costs to city governments and municipal budgets from such services, and how to balance municipal interests with long term sustainability and profitability of services.

Demand-responsive transit/microtransit services can prove a cost-effective alternative to fixed-route services in rural and outlying areas where people and destinations are spread across large geographies, and the great majority of residents drive [1]. In those cases, a tailored, small scale on-demand service can flexibly meet the needs of a small group of riders better than a larger bus service that operates on a fixed schedule can. For rural transit agencies with a small budget, a microtransit pilot program offers an opportunity to lease vehicles and pay a third-party service provider to operate the program without spending the capital costs, liability and long-term labor costs associated with a permanent in-house microtransit operation. In contrast, in urban regions where densely clustered populations can more efficiently use fixed-route services, a microtransit program can bloat a transit agency’s budget. Traditionally, on-demand transit services have mostly been limited to paratransit rides, which due to low ridership rates (vehicles are often largely empty) and labor costs, are some of the most expensive services to provide per passenger [2].

There is still disagreement regarding what defines Mobility-as-a-Service (MaaS) as a business model, and research on how the implementation of MaaS would affect municipal budgets is limited. Many argue that to be successful, MaaS will have to develop a model that will be able to balance public and private providers in a sustainable manner [1], [2], but currently no such path exists. Doubts around the implementation of MaaS have been exacerbated by the recent failure of MaaS global [3]. The limited existing research on the budgetary impact from MaaS is based on revenue allocation models of economic spillovers from the deployment of such systems globally, rather than the direct impact of the presence of a MaaS system in a specific municipality [4].

Increasing adoption of automated vehicles (AVs) is likely to impact municipal budgets through reduced revenues, increased expenditures, and possible reduction in operating expenditures by adopting automated vehicles for municipal services.

Revenue reductions are likely to be caused by reduced parking revenues and traffic fines. A discussion of the potential impact of autonomous vehicle adoption on government finances for eight Canadian governments suggests a reduction in municipal parking revenues [1]. A combination of accelerated adoption of electric vehicles through a transition to automated vehicles would reduce tax receipts from gasoline and diesel fuels as well as parking, traffic violations, and other revenues by a range of 3 - 51 percent across 7 combinations of AV/EV/Shared scenarios in five Oregon Cities [2].

Increases in expenditures may come due to a decision to subsidize mobility and from infrastructure improvements. A survey of US officials' perspectives and preparations for automated vehicles suggests that cities and transportation agencies may seek to subsidize automated mobility for low-income individuals [3]. An Australian study found that some investment in infrastructure will be needed to accommodate AVs, but there is still uncertainty about needed expenditures [4].

However, cities may also reduce operating costs by performing municipal services with automated vehicles. One study estimates that using automated vehicles for trash collection could reduce operating costs by 32 - 63 percent [5].

States, rather than local governments, have largely assumed responsibility for regulating ride-hail companies. Many states regulate how ride-hail companies can be taxed, and limit cities’ abilities to enact taxes and add fees to ride-hailing operations. Municipalities are thus constrained in their ability to leverage ride-hail services to generate revenues [1]. States vary in the extent to which they limit local control over ride-hail fees and taxes; Lehe et al. [2] examined the U.S. market and created a taxation taxonomy of five regimes: the first was a “hands-off” approach, the second, a tax-free regime to enact prohibit local and state taxes, the third, a state tax only system, fourth, a revenue sharing agreement based on state tax distributed to local jurisdictions, and lastly, a local options where local governments may levy a tax regulated by the state.

Clark and Brown found that repurposed parking spaces to accommodate ride-hail pickup and dropoff and falling parking occupancy reduce on-street and off-street parking occupancy revenues, which are often municipally-owned [3]. A study of New York City area airports found single-digit percentage reduction in parking demand attributable to the introduction of ride-hailing services [4].

The rollout of connected vehicles (CVs), connected autonomous vehicles (CAVs), and vehicle-to-everything (V2X) technology will likely create new infrastructure and maintenance costs for cities, particularly in the short term. A discussion of the potential impact of autonomous vehicle adoption on government finances for eight Canadian governments suggests an increase in expenses for conduits and signals needed for connected infrastructure systems [1]. Additionally, platooning behavior may increase vehicle density, increasing the mass of vehicles on bridges and requiring additional inspection and possible retrofit, or new design approaches to accommodate increased weight [2].

However, connected vehicles will also bring new revenue opportunities, such as a VMT fee based on vehicle class enabled by vehicle-to-infrastructure (V2I) data transmission [2].