Funding of Highways: Crisis and Solutions

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Funding of HighwaysCrisis and Solutions
presented byDavid M. Laney September 2005
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Presentation

1. Current Revenue Sources
2. Projection of Highway Revenues 2000 - 2025
3. The Revenue Gap 2000 - 2025
4. Strategies for Closing the Gap Mid-Term, Long
   Term
5. The Texas Case - Acute

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Structure of Transportation FundingFour
Categories of Revenue Sources
Funding Sources
Type Tax or Fee
Applied To
Payer
Direct User Fees Transit fares, tolls, PFC
Trip Maker or Buyer
Drivers Passengers SOV and carpools
Specialized Taxes Local sales taxes Leases Improve
ment district levy
Property Infrastructure
Property Owner Land owners Developers Businesses
General Taxes Income Property Sales and ad
valorum taxes
Individuals Businesses
Tax Payers Households Businesses Consumers
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Current Annual Revenues Indirect User Fees
Dominate Revenues (billions 2000 constant
dollars)
Funding Sources
Highway
Direct User Fees
5.4
Indirect User Fees
75.6
Specialized Taxes
11.7
General Taxes
24.8
Public sector only Less revenue allocated
to transit and rail
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Relative Funding by Mode Indirect User Fees
(Highway Motor Fuel Taxes) Are the Major Source
of Transportation Funding
Highway motor fuel taxes dedicated to transit
Highways 117 billion
Passenger Rail 2 billion
Freight Rail 0.2 billion
Transit 34 billion
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Annual Highway Revenues(billions 2000 constant
dollars)
160
140
Billions, 2000 Dollars
120
100
2000
2005
2010
2015
2020
2025
7
Uncertainty in Annual Highway Revenue(billions
2000 constant dollars)
160
Range of Motor Fuel Tax Yield
140
Billions, 2000 Dollars
120
100
2000
2005
2010
2015
2020
2025
Total Revenues - Fuel Efficiency Effect
Total Revenues
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Cumulative Revenues, 2005 to 2025(billions 2000
constant dollars)
6,000
5,000
4,000
3.4 trillion
3,000
Billions, 2000 Dollars
2,000
1,000
0
Existing Sources of Revenues
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Cumulative Needs and Revenues, 2005 to 2025
(billions 2000 constant dollars)
6,000
5,000
100 billion uncertainty in MFT yield
4,000
3.3 trillion
3,000
Billions, 2000 Dollars
2,000
1,000
0
Existing Sources of Revenues
10
Annual Highway Needs Capital, Operations
Maintenance (billions 2000 constant dollars)
220
200
180
160
Billions, 2000 dollars
140
120
100
2000
2005
2010
2015
2020
2025
FHWA CP Maintain
FHWA CP Improve
AASHTO Improve
AASHTO Maintain
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Cumulative Needs and Revenues, 2005 to
2025(billions 2000 constant dollars)
6,000
5,000
4,000
3,000
Billions, 2000 Dollars
2,000
1,000
0
Cumulative Needs
12
Annual Highway Needs Revenues(billions 2000
constant dollars)
220
200
180
AASHTO Need to Improve
160
FHWA CP Need to Improve"
Billions, 2000 dollars
AASHTO Need to Maintain"
140
FHWA CP Need to Maintain"
120
100
2000
2005
2010
2015
2020
2025
FHWA CP Maintain
FHWA CP Improve
Total Revenues
AASHTO Improve
AASHTO Maintain
13
Cumulative Needs and Revenues, 2005 to
2025(billions 2000 constant dollars)
6,000
5,000
4,000
3.4 trillion
3,000
Billions, 2000 Dollars
2,000
1,000
0
Existing Sources of Revenues
Cumulative Needs
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VMT Index/Lane-Mile IndexCurrent Revenues Will
Not Improve Travel Performance
190
180
170
160
150
VMT Index/Lane-mile Index (1980 100)
140
130
120
110
100
90
1980
1985
1990
1995
2000
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Annual Congestion CostsCongestion Costs Have
Been Increasing Dramatically
80
70
60
50
Annual Cost (Billions of 2001 )
40
30
20
10
0
1982
1985
1988
1991
1994
1997
2001
Source Texas Transportation Institute (TTI)
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Congested Highways, 2000
Source FHWA HPMS data
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Congested Highways, 2020
Source FHWA HPMS data
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Index Federal Motor Fuel TaxAverage Annual
Revenues (billions 2000 constant dollars)
220
200
180
AASHTO Need to Improve
160
FHWA CP Need to Improve"
Billions, 2000 dollars
AASHTO Need to Maintain"
140
FHWA CP Need to Maintain"
120
100
2000
2005
2010
2015
2020
2025
FHWA CP Maintain
FHWA CP Improve
Total Revenues
AASHTO Improve
AASHTO Maintain
Index MFT
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Indexing MFTCumulative Needs Revenues 2005 to
2025(billions 2000 constant dollars)
6,000
5,000
4,000
3.7 trillion
301 billion
3.4 trillion
3.4 trillion
3,000
Billions, 2000 Dollars
2,000
1,000
0
Needs
Existing Revenues
Existing Revenues Plus Indexed MFT
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Increase Tolling Average Annual Revenues
(billions 2000 constant dollars)
220
200
180
AASHTO Need to Improve
160
FHWA CP Need to Improve"
Billions, 2000 dollars
AASHTO Need to Maintain"
140
FHWA CP Need to Maintain"
120
100
2000
2005
2010
2015
2020
2025
FHWA CP Maintain
FHWA CP Improve
Total Revenues
Increased Tolling HOV
AASHTO Improve
AASHTO Maintain
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Expand Tolling and HOT LanesCumulative Needs
Revenues 2005 to 2025(billions 2000 constant
dollars)
6,000
5,000
AASHTO Improve 5.1 trillion
CP Improve 4.6 trillion
AASHTO Maintain 4.2 trillion
4,000
3.7 trillion
3.5 trillion
CP Maintain 3.8 trillion
301 billion
3.4 trillion
67 billion
3.4 trillion
3,000
Billions, 2000 Dollars
2,000
1,000
0
Needs
Option A Existing Revenues Plus Indexed MFT
Option B Indexed MFT Revenues Plus Increased
Tolling
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High and Low Yields from Mid-Term Corrections
Average Annual Highway Needs Revenues
(billions 2000 constant dollars)
220
200
180
AASHTO Need to Improve
160
FHWA CP Need to Improve"
Billions, 2000 dollars
AASHTO Need to Maintain"
140
FHWA CP Need to Maintain"
120
100
2000
2005
2010
2015
2020
2025
High Revenue Estimate
FHWA CP Maintain
FHWA CP Improve
AASHTO Improve
Low Revenue Estimate
AASHTO Maintain
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VMT Base Fee Revenue Neutral Switch from MFT to
VMT Fee Average Annual Revenues (billions 2000
constant dollars)
220
200
180
AASHTO Need to Improve
160
FHWA CP Need to Improve"
Billions, 2000 dollars
AASHTO Need to Maintain"
140
FHWA CP Need to Maintain"
120
100
2000
2005
2010
2015
2020
2025
FHWA CP Maintain
FHWA CP Improve
Total Revenues
AASHTO Improve
AASHTO Maintain
Base VMT Fee
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VMT Base Fee Cumulative Needs Revenues 2005 to
2025(billions 2000 constant dollars)
6,000
AASHTO Improve 5.3 trillion
5,000
CP Improve 4.8 trillion
AASHTO Maintain 4.4 trillion
3.9 trillion
3.8 trillion
4,000
CP Maintain 4.0 trillion
3.8 trillion.
67 billion
3.4 trillion
3,000
Billions, 2000 Dollars
2,000
1,000
0
Needs
All Mid-Term Fixes
Option D Base VMT Fee
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Gross State MFT Deposits (Unadj.)
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Gross State MFT DepositsPurchasing Power of
State MFT Deposits
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Texas Motor Fuel Tax
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Texas Motor Fuel Tax per 100 VMT
-26
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Funding of HighwaysCrisis and Solutions
presented byDavid M. Laney September 2005