Association for Public Policy Analysis & Management

The promise of autonomous vehicles has conjured consumer fantasies of a future where the decision-making necessary to operate a vehicle is outsourced to an algorithm. The foundational research for such a technology has been under development for the last 60 years, yet the recent commercial availability of vehicles able to perform tasks at higher levels of automation (e.g. Tesla’s autopilot feature) has highlighted potential economic, social, and policy impacts. Hypothetically, vehicle automation can address existing negative externalities of driving such as accidents, lack of mobility for individuals with disabilities, usage of fossil fuel, among others. Nonetheless, its prevalence may catalyze unforeseen consequences. The objective of this paper is to analyze one of these consequences. Specifically, it examines the effect that changes in commuting times caused by autonomous vehicles may have on property taxes, which represent an important proportion of local and regional government revenue.

In a world where all vehicles efficiently coordinate speed, distance to other vehicles, and route management, society is likely to evince a reduction in the commuting time required for individuals to travel from one point to another. Considering such a scenario, trips to and from a workplace will likely require less of a driver’s time. If these gains are experienced in bordering counties, states (provinces), or countries with competitive household prices, commuters may trade their time gains in exchange for more affordable housing alternatives. In effect, a multiplication of this cross-border migration behavior may have a serious impact in the policies and programs placed by governments to secure what in many cases is the largest source of taxes, property taxes. For example, in many counties in the United States (U.S.), property taxes can represent between 30 to 70% of local government revenue.

History has witnessed patterns analogous to the migration scenario prompted by autonomous vehicles. The introduction and affordability of vehicles in the 20^th century incentivized a geographic and economic transformation of metropolitan areas, whereby the density of cities was diluted due to the availability of housing alternatives outside of the city center, now known as suburban or peri-urban areas. This phenomenon was termed urban sprawl and it is responsible not only for progressively increasing the footprint of cities, but also for connecting bordering jurisdictions economically.

Using the precedent of the 20^th century urban sprawl, this article draws upon history to understand the decision-making of bordering local authorities (regardless of their level of government) in the procurement of residents to maximize their property tax revenue. These lessons are then extrapolated to two case studies (Los Angeles and its surrounding counties, and Strasbourg-Ortenau Eurodistrict, between France and Germany) where borders may eventually influence the decision of individuals to relocate and affect the actions taken by authorities to secure revenue that funds operations, social programs, education, and other government priorities.