Going for Broke: Self-Driving Cars Could Decrease City Budgets

By: Bridget Clerkin August 18, 2017
Without a need to always find parking spaces, and without the ability to break traffic laws, self-driving cars could cost municipalities a lot of money in fines.
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Parking tickets are a little like mosquito bites, and just about as well-liked: for victims, they’re an irritating reminder of being stung; for those on the other end, a source of precious lifeblood.

To varying extents, local government budgets are balanced on the backs of those who break minor rules. Fines to pay off parking tickets, DUIs, and speeding violations, among other roadway delinquencies, in many cases go directly into a town’s coffers. 

The funds can be directed into a wide array of programs and services, often acting as fiduciary life rafts during budget season, especially in smaller towns, where an annual assurance of such revenue could make a major difference.

But what happens when no one is left to break the rules of the road?

Self-driving cars are on the way, and while the careful driving of our automated vehicles will increase safety on the streets—and reduce traffic fatalities by up to 90%, according to some estimates—the lack of roadway danger could be risky business for municipal budgets. 

As the technology gets closer to hitting the streets, towns and cities will have to determine how to make up the difference.

Civil Disobedience

The U.S. is comprised of thousands of municipalities—over 39,000 by last official count—all with their own rules on traffic fines and how they can be redistributed in the local budget.

Some earmark their use for roadway safety programs, while many deposit the money into a general fund. Regardless, the citations can be a huge windfall for communities big and small.

“From a funding perspective, municipalities rely on fines and forfeitures as a fairly significant source of revenue,” said Michael Nakamura, chief financial officer of the Utah League of Cities and Towns. “Certainly, self-driving vehicles will most likely result in lower ticket revenue, and thus municipal leaders will need to think through the ramifications of revenue replacement.”

For some, those ramifications could leave huge holes in the budget.

New York City collected $545 million in parking ticket fees alone in fiscal year 2016, according to a report by the city’s comptroller. The figure represented the city’s largest boost in fines year over year, with a $79 million increase since 2015.

So-called “camera fines”—citations issued remotely by devices recording incidents of speeding, running red lights, or parking in bus lanes—were also on the rise in New York last year, generating $96 million for fiscal year 2016.

New York City collected $545 million in parking tickets alone in 2016. That figure could be imperiled by self-driving tech.

During the same time period in San Francisco, parking and transportation fees, including money taken from meters and other transit-based fines, accounted for nearly $300 million of the budget, according to numbers from the city’s Municipal Transportation Agency.

Los Angeles leaders saw their traffic ticket revenue rise from $110 million in 2003 to nearly $161 million in 2014; and in Phoenix, the fines are consistently reliable for delivering about 1% of the city’s annual budget, according to reports.

And while smaller towns may rake in less green from issuing such violations overall, that money often represents a larger portion of their cash on hand, such as in the Colorado municipalities of Campo, Mountain View, Morrison, Nunn, and Manzanola, each of which relied on traffic fines to make up at least 30% of their total revenue, according to a report by the Denver Post.

All told, the nation’s police issue 41 million traffic citations each year, accounting for more than $6.2 billion in fines, according to numbers compiled by the company Statistic Brain.

But despite the veritable bonanza of collective income at stake, many communities are only now starting to think about the potential danger the problem could pose to their budgets—and imagine new ways to cover the gaps. 

Few Solutions

Self-driving cars could save taxpayers about $10 million annually in crash-based costs, according to the National Highway Traffic Safety Administration.

One thing most municipal league members across the country agree upon are the benefits offered by self-driving cars, especially the chance to completely redesign cities—and look for possible new veins of revenue to mine.

The safer streets ushered in by driverless vehicles would likely lead to a boon of their own.

Numbers projected by the National Highway Traffic Safety Administration (NHTSA) in 2010 showed the public shouldered about 7% of all motor vehicle accident-related costs that year—to the tune of $18 billion.

Using similar statistics, the Brookings Institute estimated last year that autonomous cars could save taxpayers about $10 billion annually in crash-based costs.

But when it comes to replacing the money municipalities already have coming in from fine collection, the answers from local leaders were much more sparse.

“The impact will vary tremendously from municipality to municipality,” said Jerry Deschane, executive director of the League of Wisconsin Municipalities. “Each city will have to determine how much revenue is coming in from traffic tickets, how much municipal expense is related to traffic enforcement and what the local impact of self-driving vehicles may have on the balance of those revenues and expenses.”

With fewer roadside incidents to worry about, municipalities could possibly cut down on the number of police officers watching the roads, offered Jim Peck, director of research for the Maryland Municipal League.

Further down the line, that trend could also impact staff numbers at hospitals and first aid squads, with less need for ambulance drivers or other first responders who typically arrive on an accident scene, he added.

Future municipal leaders may also want to look elsewhere in the country for guidance, to places less reliant upon such revenue streams. In Nebraska, financial ties between traffic fines and municipal budgets were never put in place to begin with, while in other states like New Jersey, dependence on the funds is highly discouraged.

“In New Jersey, it has been made clear that driving and parking violations are not intended to be a means of supporting municipal budgets,” said Michael Darcy, Executive Director of the New Jersey League of Municipalities. “While in some cases they can result in substantial streams of revenue, such as at shore towns that see a large influx of cars during the summer months, the main focus is deterrence from the problematic violations and law enforcement. As for how a possible reduction in revenue from moving and parking violations would impact municipal budgets, that is an interesting hypothetical I think we are far from understanding.”

Still, even without knowing exactly how it could be done, Deschane was confident towns in his home state and across the nation would find a way to overcome the problem.

“Most Wisconsin cities were built on a river or Great Lake because that’s how people traveled,” he said. “Cities adapted from water-based transportation to street-based, from horses, wagons, and pedestrians to trolleys and trains, to cars and trucks. Cities will adapt to this change. It’s what cities do.”

Backseat Drivers

But, even as municipalities stand the most to lose from the emerging technology, they have the least to say about its development.

The trend in testing self-driving cars is moving away from local control. In California, a new set of proposals on how the state should handle autonomous vehicles gives auto manufacturers the opportunity to run prototype models wherever they want—provided they simply inform a community they intend on using their roads as testing grounds. And a spate of recently proposed federal policies don’t even go that far, giving car companies cart blanche to experiment on the technology throughout the country—and legally leapfrog any local or state rules that may act to prohibit them.

The idea is by streamlining the process, the cars will come more quickly. And that’s a good thing for auto manufacturers—many of them have promised such models within the next four years. Ride share companies, too, are in a position to benefit immensely from the arrangement, with greater chances to run real-time experiments on what passengers think about summoning self-driving taxis.

When it comes to controlling their budgets or their roads, municipalities seem to be on the losing end of the autonomous divide. But the silver lining is that full implementation of the vehicles is still some time away, which gives the communities a chance to brainstorm more solutions, said Morgan Cullen, policy analyst for the Colorado Municipal League.

“The good thing is, it won’t happen overnight; the bad news is that it will be a major disruption that will fundamentally change the way that cities operate on a day-to-day basis, and that disruption requires substantive planning,” he said. “It’s never too early to start thinking about how these changes in transportation are going to impact communities—largely, they’re for the better, but there is going to be a decrease in the amount of money coming into municipal coffers, and we’re going to have to figure out new ways to bridge that gap to maintain city services and maintain the quality of life that has come to be expected.”

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