How Will Local Governments Adjust to Self-Driving Cars?

The economic impact of autonomous vehicles could force city and state governments to look for alternate funding sources.

March 16, 2017

3 Min Read

By IOT Content Manager

If you run a red light in California, be prepared to fork over hundreds of dollars—whether you raced through the intersection, or whether you made a right on red without coming to a complete stop. In a lawsuit against the state, the retiree Howard Herships argues that the high cost of traffic tickets “are not geared toward public safety but rather toward raising revenue.” He continues: “The exorbitant fines and fees [are for] one purpose, and one purpose only, to fund the day-to-day operations of the courts in California.”

Herships may not be the most objective authority on the subject, but let’s assume that his assessment is fundamentally correct: Traffic and parking tickets help the state of California—and other local governments—pay their bills.

But what happens if that funding began to dry up? That seems poised to happen as autonomous cars start to take to the road. The reduction in speeding tickets alone could be noteworthy. The National Motorist Association estimates that U.S. speeding tickets generate $10 billion annually. Just slashing that figure could have a significant impact on budgets for everything from state treasuries, counties, and courts. Each state in the country allocates the money differently, but traffic tickets help fund everything from law libraries to research on traumatic brain injury, support for victims of domestic violence, and environmental conservation initiatives.

But what if, on top of that, drunk driving gradually became a thing of the past? That would not only save lives and prevent injuries, but also cut into the funding generated by fines—which easily cost drunk drivers several thousands of dollars per offense. In 2014, more than 1.1 million drivers were arrested for driving under the influence of alcohol or narcotics, according to CDC. 

And then, what if it cities across the country gave up on charging drivers for parking—or enforcing parking? New York City alone makes more than half a trillion dollars each year from parking tickets each year.

Another consideration is that McKinsey expects there to be billions of square meters fewer parking spaces decades from now as self-driving cars become mainstream. Cities such as San Francisco have already hinted at plans of converting such parking spaces to parks and low-income housing. Finding the funding for such a transformation, however, is another matter.

In the long run, self-driving cars could force even greater shifts. States could be forced to come up with new forms of identification for its citizens as the driver's license gradually loses relevance. And cities and states could be required to replace or upgrade their street signs and traffic lights.

For the foreseeable future, however, local governments will be forced to worry about seemingly prosaic-seeming worries such as clearly striping roads. Several makers of semi-autonomous cars have struggled to have their vehicles cope with roads with faded markings. As Volvo's North American CEO, Lex Kerssemakers, stated last year: “You need to paint the bloody roads here!” Roughly two-thirds of U.S. roads are in poor condition, according to data from the U.S. Department of Transportation.

In the nearer term, however, cities may have to figure out whom to collect money from when a self-driving car runs a red light. The New York Times recently reported that Uber cars blazed through at least six traffic lights in the San Francisco area, before the company pulled the cars from the city’s roads after the California DMV called the vehicles “illegal.”

For now, big tech corporations and automakers alike seem to be fully committed to pushing self-driving car technology forward. “There’s an urgency to our mission about being part of the future,” Travis Kalanick, Uber’s chief executive, told the New York Times last year. “This is not a side project. This is existential for us.”

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