AVs, e-commerce will disrupt municipal budgets

By Eric Sundquist

The coming of autonomous vehicles and the related increase in e-commerce deliveries promise to change many things: infrastructure, access and mobility, land consumption, emissions, retailing, urban form, and many more. It’s not clear that we will have policy in place to maximize the upsides and manage the downsides of these trends.

A new report, from the University of Oregon’s Sustainable Cities Initiative, aims to prepare policy makers in one area that is sure to be affected—municipal budgets and finance. “Autonomous vehicles, E-commerce, and the sharing economy will have profound effects on municipal budgets,” the report concludes. “The changes in the departmental distribution of revenue and expenditures, not to mention changes in overall budget numbers, will affect the ease of service provision and will require a re-balancing of budgets and priorities.

“Cities must begin to incorporate these changes in their budgeting, capital improvement plans, and organizational structure to both protect themselves against detrimental effects and to be able to effectively leverage these emerging technologies to further community goals.”

For example, if AVs increase vehicle sharing, parking can be reclaimed for higher and better uses, raising property tax revenues—but maybe only in some places, as the additional available land in sought-after areas depresses values elsewhere.

And even though parking revenues are a small part of municipal revenues, reductions could have a major impact. “[A] good number of parking structures are backed by revenue bonds, which are dependent on those revenues to pay back bondholders. Without parking revenue, a local government could be in danger of going into default if parking garages are no longer necessary.”

Of course the effects cited in the report are highly contingent on a number of uncertain factors, such as the degree to which AVs are privately owned rather than shared. Still, it provides a contribution simply by organizing an account of so many possible effects. There are too many effects to summarize here, so for more detail, go read the report here.

Eric Sundquist is Director of SSTI.