STUMP » Articles » Self-Driving Cars: Won't Anybody Think of the Poor Revenue-Hungry Governments? » 11 January 2017, 05:06

I’ve been following the self-driving car developments for a while, partly because it impinges on my day job, which has to do with the insurance industry. My fellow denizens at the Actuarial Outpost started discussing insurance effects in 2013, and the discussion is still going strong 4 years and 1200 posts later. A lot of the focus in these discussions has been on accident rates coming down (they’re already extremely low, btw), but also the obliteration of one of the most common jobs in the country – truck driver.

The prospect of self-driving cars impinges in my day job in another way, because I live in New York (Westchester County), and I work 70 miles away in Hartford. Every weekday, I get in my car, listen to my audiobooks and swear at slow drivers in the left lane (60 mph in 65 mph zone is WAY TOO SLOW DAMMIT MOVE ASIDE), I have to deal with the crap that is passing through Waterbury and then negotiating the awful Hartford streets (but they’re getting better), and then I park in a parking deck that I pay a fairly hefty monthly charge for, and I go into my building. Sometimes at lunch I need to drive somewhere to do an errand or eat somewhere other than what downtown Hartford offers, and where I go has parking lots.

But what if that all went away?

PARKING DECKS TO DIE; GOOD RIDDANCE

The Self-Driving Car Will Kill the Parking Garage Dead
:

Detroit Mayor Mike Duggan says he can see three parking garages along the riverfront from his office window. Like any mayor, he’s optimistic about his city’s future — despite Detroit’s well-known problems — and he sees growth in terms of more apartment and office buildings. But the capital of the American car has already reached peak parking garage.

…..
Office parking garages that fill up during the workday are often different from garages that are built for entertainment; those only fill up concerts, conventions, and professional sports. (An interesting side-effect of less-busy garages is that beer sales shoot up as more use Uber).

With self-driving cars in our short-term future, the long-term forecast doesn’t look good for objectively ugly, concrete garages that fill American cities.

“If a parking structure has a 50-year life expectancy” Duggan said, we should think about building smaller ones, at the very least.

Duggan was joined by Atlanta Mayor Kasim Reed, Chicago Mayor Rahm Emanuel, and Columbus, Ohio, Mayor Andrew Ginther. Each of the four said they expect autonomous cars in their cities within five to seven years.

In Atlanta — a city with a well-documented “parking addiction” — leaders agreed last year to a $6 billion expansion of Hartsfield-Jackson International Airport, and yes, a parking garage was involved. The deal was crucial because it included a 20-year lease with Delta that kept the airline’s headquarters (and jobs) there. Reed said that in the original proposal was a $1.5 billion parking deck. The Atlanta mayor said the city chose a smaller parking structure after discussing autonomous cars.

“We trimmed the cost of the parking deck from $1.5 billion to about $800 million, and it helped us get a $6 billion deal done,” Reed said.

Reed sees self-driving vehicles as a five to seven-year issue, not a ten to fifteen-year one.

“I don’t buy this ten-year, fifteen-year stuff,” he said, noting that the industry is going over the regulatory and liability hurdles now. (In September, the Department of Transportation issued its Federal policy for automated vehicles.)

I looked carefully in the article, and I’m listening to the hour-long panel discussion which I’ll embed below:

Mark Thompson, CEO of The New York Times, moderates a discussion with city mayors on the front lines of the mobility future. Hear new ideas to address congestion, update infrastructure, drive economic growth and create sustainable communities.

Note, it doesn’t start until 10 minutes in, about after a little slideshow and a promo for Ford. The four mayors are from Columbus, Chicago, Detroit, and Atlanta.

Oh, Chicago… this should be interesting.

So, they are talking about “the mobility agenda”, so various blather about mass transit, etc. A lot of ass-kissing going on, blech. The self-driving car discussion doesn’t start til 38 minutes in when the mayor of Detroit mentions the parking deck planning. They barely talk about self-driving cars at all.

Indeed, the whole discussion is a snooze fest. I’m sorry I imposed upon you. Watch it if you need an afternoon nap.

What I didn’t hear: the effect of self-driving cars on the revenue streams of their governments

THINK ABOUT THE CASH-STRAPPED GOVERNMENTS

One of the things I didn’t mention in my intro of my car use was my costs. Obviously, I have to maintain the car, etc., and that wouldn’t change much (the insurance costs would be different.)

But I’ve gotten parking tickets and a couple moving violations in my driving career (one was a straightforward speeding ticket, and the other was driving a commercial vehicle on a parkway (which is a long story)). And I think of the various small town speed traps I used to deal with down in the South (I NEVER sped in those small towns, even if the speed limit was 15 mph.)

In this age where governments have signaled their desperation to find new revenue sources, losing a reliable revenue source — parking meters, parking deck fees, parking tickets, speeding (and other traffic violation) tickets — would be pretty devastating.

If you’ve followed the debate over Red light cameras, you’ll know the lengths to which municipalities have gone to try to goose traffic violation revenue (such as reducing yellow light timing to catch more red light runners, etc.) and the increased collissions associated with these systems.

But what if the vehicles can’t violate traffic laws?

(Ignore the red-light-running self-driving Uber car…still working out the bugs)

If the cars can’t speed, if the commercial vehicles automatically never get on the parkways, if the cars don’t need to be parked in high-cost areas where there are now parking decks…. what happens to the entities dependent on that revenue?

(won’t anybody cry for the poor red light camera companies?!)

What about all those cops working traffic detail? What about the highway patrol?

I saw eight CT highway patrol cars out on I-84 last night – these were the ones I saw… and in two cases while I was driving, it caused me trouble, as the idiot in front of me braked HARD when they saw the cops. WE WEREN’T EVEN SPEEDING. DUDE, THE SPEED LIMIT WAS 65 MPH, NOT 55!

Ugh, Yankees.

WHAT AMOUNT OF GOVERNMENT REVENUE COMES FROM CAR-RELATED FINES AND FEES?

So let’s see if we can figure out how much money comes from traffice violations, parking tickets, etc.

This piece is from ten years ago, and I imagine it’s even more true now:

Traffic tickets are a multi-billion industry. They have virtually nothing to do with highway safety, but they have everything to do with money.

When you begin to grasp the full magnitude of the public and private interests that depend on ripping off motorists through traffic tickets, you begin to understand why this unethical system continues to expand every year.

No one knows how many traffic tickets are actually issued. Many local units of government deliberately hide this information so they don’t have to split their traffic ticket revenue with the state. Not including parking tickets, we can estimate that somewhere between 25 and 50 million traffic tickets are issued each year. Assuming an average ticket cost of $150.00, the total up front profit from tickets ranges from 3.75 to 7.5 billion dollars.

If just half of these tickets result in insurance surcharges (typically at least $300 over a period of three years), you can add another 3.75 to 7.5 billion dollars in profit for insurance companies. This is why insurance companies “care” so much traffic “safety” programs and are willing to donate millions of dollars worth of radar and laser guns to the police. For them, it’s simple: more tickets equal more money!

Realistically, there is no connection between receiving an occasional traffic ticket and the likelihood of being in an accident. So, there is no justification for charging a person more for auto insurance because they were convicted for a random traffic violation. The purpose of insurance is to cover unusual risk. The act of exceeding an unreasonably low limit is hardly an “unusual risk.” That means speeding ticket surcharges are pure profit for the insurance industry.

In total, we’re talking about 7.5 to 15 billion dollars annually from tickets for government agencies and insurance companies. That’s more money than several states take in from all taxes! Worse still, that total doesn’t even include the money that “traffic schools,” attorneys, radar-detector manufacturers, and scanner producers make.

But let’s get something a bit more concrete.

New York City receives almost $2 Billion in traffic fines and fees:

MIDTOWN — The city collected a record $1.9 billion in fees and fines during the 2015 fiscal year, driven by an increase in motor vehicle violations connected to Mayor Bill de Blasio’s Vision Zero initiative and a jump in fines for things such as littering and noise pollution, according to a report from Comptroller Scott Stringer.

That’s an increase of 5.5 percent over the $1.8 billion collected the year before and 13 percent increase from 2012 when the city collected $1.7 billion.

The city collected $957 million in fines in fiscal year 2015, an increase of 7.5 percent from the previous year and a 12 percent increase since 2012. Another $974 million was collected in fees, a 2 percent increase. Fines grew three times faster than fees from fiscal year 2014 to 2015.

But the largest jump in fines and fees came from red light, bus lane and speed cameras near schools.

So I could have tried to do a net profit calculation with respect to having to hire cops to write tickets, but if the increase is mainly being driven by technology involving marginal costs…

….again, think of that going away.

Red light camera revenue, which has been on the decline since 2012, jumped $1 million to $29 million in fiscal year 2015. Meanwhile, bus lane camera revenue increased to $17 million from $12 million the year before and speed camera violations increased to $31 million from $2 million.

And camera revenues are expected to continue to grow.

Hmmm. That’s quite the increase.

But again, think of all that revenue going away. $2 billion ain’t chump change.

CHICAGO: THE PARKING METER DEAL

We’ve seen a negative effect before from traffic-related revenue with Chicago before. State of Chicago: Deep in the Suck:

I thought I’d throw in some lower-level chicanery. Toward the end of the Daley years, a lease deal was made on the city’s parking meters. Supposedly this was a win-win, but when the city had to pay when parking meter take was too low, just how “good” this deal was became known.

Rahm supposedly fixed the deal:

‘Throughout his reelection campaign Mayor Rahm Emanuel has boasted that he reworked the infamous parking meter deal and saved the city $1 billion.

….
‘It’s an audacious statement, especially since Emanuel actually strengthened and expanded the meter deal. Records show that his 2013 “reform” gave the company control of additional parking spaces worth millions of dollars.’

I assume he had to do that, because it’s not like he had lots of leverage.

The 2015 article on this:

Mayor Emanuel says he ‘reformed’ the parking meter deal, but he actually sold off more of the city streets

…..
The saga started in 2008, when Emanuel’s predecessor and ally Richard M. Daley convinced the City Council to lease the street parking system to private investors for 75 years. In return, the city would get $1 billion upfront.

Most aldermen never read the agreement, but that didn’t stop them from approving it anyway by a 40-5 vote.

It turned out that the metered spaces were probably worth billions more than the city received. In addition, the city has to return some of the money to the private company, Chicago Parking Meters, every time officials take a metered spot out of commission for street repairs, festivals, traffic control, or any other reason.

Emanuel entered office in 2011 promising to look into retooling or even revoking the agreement. “The parking meter deal is particularly wrong,” he said.

Instead he ordered city attorneys to join CPM in fighting a lawsuit that challenged the agreement—a move that ended up killing the suit.

The mayor also received donations from attorneys at Winston & Strawn, the powerful law firm representing CPM, at the same time his aides were negotiating with the company over disputed meter bills.

Still, in 2013 the mayor announced that his tough stance with CPM had yielded a new agreement that would save taxpayers big money. In exchange for longer meter hours, the company agreed to drop millions of dollars in claims. Emanuel declared that this would add up to as much as $1 billion in taxpayer savings over the next seven decades.

So.

What happens when those meters are worthless? And that will come far sooner than seven decades.

I hope the agreement is now written so that CPM merely goes bankrupt itself, as opposed to more money taken out of Chicago.

OTHER THOUGHTS ON SELF-DRIVING CAR EFFECTS

This is me spittballing other effects — while I’ve seen scifi/fantasy author Sarah Hoyt discussing self-driving cars in a variety of scenarios: here’s one she spins out:

So, say your concept is: flying cars that are easily controllable/avoid accidents are invented, and the roads turn back to nature, and people can leave much further away and isn’t it great?

A beginner will start by showing us the roads going back to nature or something.

The story, if you can call it that will die.

So.

Start with the person this hurts most. No, seriously, nine times out of ten going “to the pain” will find you the story.

So flying cars are all the thing. Whom does this hurt most? I assume the car plants are now turning out flyers. The long distance truckers have retrained. Oooh. Road workers. Sure there’s other stuff they can do, like maybe gardeners and stuff. But this guy is a romantic, who loves the smell of freshly poured asphalt. Most of his friends were in the road crew and they’re now dispersed. He really loved his job, and it’s now gone.

Open with him getting a call from a friend who wants him to come and work in some public garden thing where a major interstate used to be. He doesn’t want to. He hates the idea of never again doing road work and they’re breaking up HIS road to make it a garden. Meanwhile it’s snowing softly, so he wouldn’t be able to start till next month, anyway. And his wife is pregnant.

His wife goes into labor. He can’t take her to the hospital, even though his road is still okay, because his car spins out. He can’t do anything, it’s all going wrong. A Flying ambulance arrives, with a doctor, etc.

Hoyt is writing about how you write compelling stories coming out of a concept of some technological change, and the focus is on conflict, tension, etc. You don’t want to bore the reader.

I wouldn’t go to scifi authors for thinking every little thing through, because most of what is going to fall out from self-driving cars is going to be really really boring. And once you explain, most people will say “Of course” and “who cares”?

Example: Fifth Element, one of my & Stu’s favorite movies – what about poor taxi driver Dallas Corbin?!

That’s a good story. But it’s not a realistic view of any future (and it never was meant to be. It’s fun.) One thing I do is think through business/revenue effects of various changes, so I’m trying to think of supply/demand issues.

- no more valet parking
- only hobbyists will get to drive sports cars, out in closed tracks elsewhere
- short flights (such as under one hour) will no longer make sense — for the time it takes to drive to the airport, go through security, etc. — you may as well take your self-driving car. Especially given how often flights are delayed/cancelled.
- will small regional airports make sense? Connecting flights?
- Maybe all flights become huge hub to huge hub as a result – faster to take the last 100 mile leg in a car
- More income inequality? People like me spending the brain time doing work, making revenue — and thus peeling farther apart
- More in person meetings? Can get work done between physical locations in the self-driving car
- Speed limits increased on highways when all cars are self-driving, so everything above accelerates
- Acceleration to development of rural areas, as there’s so much empty land out in the U.S., but they were really inconvenient
- People who have anxiety over not being able to control the vehicles… I can imagine new psychiatric practices around this

I’m just doing free association here, but I think there’s a lot of collateral impacts people aren’t thinking about. Yet. But you better believe somebody is going to jump on this.

But back to the government issue: What about people like Officer Arnous Morin who is a champion traffic ticket writer?

South Brooklyn’s orange tsunami, Arnous Morin, 53, wrote nearly 19,000 parking tickets in fiscal year 2015, an average of 76 per day he worked, city rec­ords analyzed by The Post and AAA Northeast show.

The one-man ticket blitz dished out 4,000 more summonses than the city’s No. 2 traffic cop.

And Morin’s base pay of $36,000 was eclipsed 33 times over by the amount of fines he generated for city coffers — $1.2 million.

Morin, who was a Catholic-school principal in his native Haiti, is unapologetic about his lack of mercy for motorists.

“Never, never. It’s never OK to break the law,” he told The Post at his Canarsie home. “The law is hard, but it’s the law. You can’t break the law for any reason.”

Morin relentlessly scans for alternate-side scofflaws from his white NYPD Toyota Prius. In fact, 54 percent of the 18,953 violations he wrote were for drivers not moving their cars during street-cleaning hours.

……
A friend suggested he apply to be a traffic agent. He passed the exam in 2009.

Morin joined a foot-patrol unit in Brooklyn South. His first year was so grueling that he sometimes had to soak his swollen feet ­after a shift. He vowed to work hard enough to get promoted — and be given a car.

When his first full year as a traffic cop ended, Morin’s supervisor told him he was the “No. 1 foot [agent] in the city.”

While Officer Arnous is 53, and thus near traditional retirement age for NYC cops, he’s not been in the force all that long. Hang in there — maybe you’ll be retired before self-driving cars obliterate your job. I see on Glassdoor that traffic agents don’t make a lot of money, and truck drivers are a little better, but people forget there are so many jobs other than just drivers who will be affected.

I’ve only got a taste of the impact here, so will likely circle back later when I can get better numbers — this is my first time dipping into thinking about this particular angle. A lot of the data sets I’m coming across are really old – traffic stop data from 2011, for example – come on, give me something newer! I need red light/speed camera data more recent than 2014.

But I can see that Chicago aldermen wanting to ban self-driving cars may have had something other than passenger safety in mind.

I am not going to pity the poor governments, because I assume there is going to be more automatic tolls set up, even easier with self-driving cars, with congestion-based charges in order to replace the lost parking/traffic violation revenue. I’m also not worried about the red camera light companies – though their creditors might want to be a little cautious in the terms they extend. Heck, the red light camera guys might also be the automatic usage toll companies (actually, maybe they already are. I’ll check later.)

Congestion/demand pricing has its own controversies….

But that’s for another time.