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Funding of Highways: Crisis and Solutions

Funding of Highways: Crisis and Solutions. presented by David M. Laney September 2005. Presentation. Current Revenue Sources Projection of Highway Revenues 2000 - 2025 The Revenue Gap 2000 - 2025 Strategies for Closing the Gap – Mid-Term, Long Term The Texas Case - Acute.

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Funding of Highways: Crisis and Solutions

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  1. Funding of Highways:Crisis and Solutions presented byDavid M. Laney September 2005

  2. Presentation • Current Revenue Sources • Projection of Highway Revenues 2000 - 2025 • The Revenue Gap 2000 - 2025 • Strategies for Closing the Gap – Mid-Term, Long Term • The Texas Case - Acute

  3. Structure of Transportation FundingFour Categories of Revenue Sources Indirect User Fees Motor fuel tax (MFT) Vehicle registration and excise tax Replacement parts tax (tires) Vehicle Vehicle Owner Operator or Carrier Shipper Receiver Funding Sources Type Tax or Fee Applied To Payer Direct User Fees Transit fares, tolls, PFC Trip Maker or Buyer Drivers & PassengersSOV and carpools Specialized Taxes Local sales taxes Leases Improvement 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

  4. 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** $11.7 Specialized Taxes $24.8 General Taxes * Public sector only ** Less revenue allocated to transit and rail

  5. Relative Funding by Mode Indirect User Fees (Highway Motor Fuel Taxes) Are the Major Source of Transportation Funding AllOther Revenue Sources Indirect User Fees (MFT) Highway motor fuel taxes dedicated to transit Highways $117 billion Passenger Rail $2 billion Freight Rail $0.2 billion Transit $34 billion

  6. 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 Total Revenues - Fuel Efficiency Effect

  8. 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

  9. 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) AASHTO “Need to Improve” FHWA C&P “Need to Improve" AASHTO “Need to Maintain" FHWA C&P “Need to Maintain" $220 $200 $180 $160 Billions, 2000 dollars $140 $120 $100 2000 2005 2010 2015 2020 2025 FHWA C&P Maintain FHWA C&P Improve AASHTO Maintain AASHTO Improve

  11. Cumulative Needs and Revenues, 2005 to 2025(billions 2000 constant dollars) AASHTO Improve $5.1 trillion C&P Improve $4.6 trillion AASHTO Maintain $4.2 trillion C&P Maintain $3.8 trillion $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 C&P “Need to Improve" Billions, 2000 dollars AASHTO “Need to Maintain" $140 FHWA C&P “Need to Maintain" $120 $100 2000 2005 2010 2015 2020 2025 FHWA C&P Maintain FHWA C&P Improve Total Revenues AASHTO Maintain AASHTO Improve

  13. Cumulative Needs and Revenues, 2005 to 2025(billions 2000 constant dollars) AASHTO Improve $5.1 trillion C&P Improve $4.6 trillion AASHTO Maintain $4.2 trillion C&P Maintain $3.8 trillion $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

  14. VMT Index/Lane-Mile IndexCurrent Revenues Will Not Improve Travel Performance VMT Lane Miles 190 180 170 160 150 VMT Index/Lane-mile Index (1980 = 100) 140 130 120 110 100 90 1980 1985 1990 1995 2000

  15. Annual Congestion CostsCongestion Costs Have Been Increasing Dramatically Small Urban Areas Medium Urban Areas Large Urban Areas $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)

  16. Congested Highways, 2000 Source: FHWA HPMS data

  17. Congested Highways, 2020 Source: FHWA HPMS data

  18. Index Federal Motor Fuel TaxAverage Annual Revenues (billions 2000 constant dollars) $220 $200 $180 AASHTO “Need to Improve” $160 FHWA C&P “Need to Improve" Billions, 2000 dollars AASHTO “Need to Maintain" $140 FHWA C&P “Need to Maintain" $120 $100 2000 2005 2010 2015 2020 2025 Total Revenues FHWA C&P Maintain FHWA C&P Improve AASHTO Maintain AASHTO Improve Index MFT

  19. Indexing MFTCumulative Needs & Revenues 2005 to 2025(billions 2000 constant dollars) AASHTO Improve $5.1 trillion C&P Improve $4.6 trillion AASHTO Maintain $4.2 trillion C&P Maintain $3.8 trillion $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

  20. Increase TollingAverage Annual Revenues (billions 2000 constant dollars) $220 $200 $180 AASHTO “Need to Improve” $160 FHWA C&P “Need to Improve" Billions, 2000 dollars AASHTO “Need to Maintain" $140 FHWA C&P “Need to Maintain" $120 $100 2000 2005 2010 2015 2020 2025 Total Revenues FHWA C&P Maintain FHWA C&P Improve Increased Tolling & HOV AASHTO Maintain AASHTO Improve

  21. Expand Tolling and HOT LanesCumulative Needs & Revenues 2005 to 2025(billions 2000 constant dollars) $6,000 $5,000 AASHTO Improve $5.1 trillion C&P Improve $4.6 trillion AASHTO Maintain $4.2 trillion $4,000 $3.7 trillion $3.5 trillion C&P 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

  22. High and Low Yields from Mid-Term CorrectionsAverage Annual Highway Needs & Revenues (billions 2000 constant dollars) $220 $200 $180 AASHTO “Need to Improve” $160 FHWA C&P “Need to Improve" Billions, 2000 dollars AASHTO “Need to Maintain" $140 FHWA C&P “Need to Maintain" $120 $100 2000 2005 2010 2015 2020 2025 High Revenue Estimate FHWA C&P Maintain FHWA C&P Improve Low Revenue Estimate AASHTO Maintain AASHTO Improve

  23. 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 C&P “Need to Improve" Billions, 2000 dollars AASHTO “Need to Maintain" $140 FHWA C&P “Need to Maintain" $120 $100 2000 2005 2010 2015 2020 2025 Total Revenues FHWA C&P Maintain FHWA C&P Improve AASHTO Maintain AASHTO Improve Base VMT Fee

  24. VMT Base Fee Cumulative Needs & Revenues 2005 to 2025(billions 2000 constant dollars) $6,000 AASHTO Improve $5.3 trillion $5,000 C&P Improve $4.8 trillion AASHTO Maintain $4.4 trillion $3.9 trillion $3.8 trillion $4,000 C&P 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

  25. Gross State MFT Deposits (Unadj.) +46%

  26. Gross State MFT DepositsPurchasing Power of State MFT Deposits +46% +8%

  27. Texas Motor Fuel Tax Motor Fuel Tax (CPI Adjusted)

  28. Texas Motor Fuel Tax per 100 VMT MFT (Adj.) per 100 VMT -26%

  29. Funding of Highways:Crisis and Solutions presented byDavid M. Laney September 2005

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