The Impacts of Autonomous Vehicles and E-Commerce on Local Government Budgeting and Finance

Autonomous vehicles (AVs) are already being used and their proliferation is inevitable. AVs have the potential to fundamentally alter transportation systems by averting deadly crashes, providing critical mobility to the elderly and disabled, increasing road capacity, saving fuel, and lowering emissions (Fagnant and Kockelman 2015). Eighteen states and the District of Columbia have enacted legislation regarding AVs1, and the governors of four other states have signed executive orders about AVs2 (National Conference of State Legislatures 2017). In 2017 there were 33 states that had introduced AV legislation, up from 20 in 2016 (National Conference of State Legislatures 2017). As of June 2, 2017, there were 31 companies that had received permits from the California DMV to test autonomous vehicles, and the list is getting longer each month (California Department of Motor Vehicles 2017). In Berlin, Deutsche Bahn, Germany’s largest train and bus operator, is testing a driverless twelve-passenger shuttle bus (Scott 2017). Over 20 pilot or existing AV public transport programs have taken place in Europe. And the most recent AV testing permit recipient in California is a private shuttle bus operator — Bauer’s Intelligent Transportation (California Department of Motor Vehicles 2017). Much has been written about the technical challenges of integrating autonomous vehicles into traffic patterns, but to date, there has been little consideration of the significant secondary impacts that AVs present. This project aims to fill that gap. AVs have the potential to transform cities — but whether the impact is positive or not depends on how the AVs are used. If AVs use clean fuels, are used for shared rides, and become an on-demand service rather than an owned product, cities and society may benefit. Consumer-owned cars are inefficient and underused assets — most are used for less than one hour per day (OECD 2015), sitting idle for about 95 of their life, and about 10 percent of the average American’s budget goes to the cost of purchasing and fueling private vehicles (Bureau of Labor Statistics 2016). AVs will impact land use planning, transit use, government revenues, and may exacerbate societal inequality by reducing the viability of existing public transportation services. The goal of this white paper is to consider the impact of AVs on municipal budgets. AVs create a “potential rat’s nest of a budgeting challenge” (Fung 2016). This paper seeks to begin the process of untangling that rat’s nest, and provide the foundation for future phases of the project that will consider potential additional revenue sources to fund the infrastructure changes that may come from the integration of AVs as well as land use planning implications.