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Highway Cost Allocation (HCA) Study and Determination of Heavy Freight Truck Permit Fees

Diwakar Gupta Hao-Wei Chen. Highway Cost Allocation (HCA) Study and Determination of Heavy Freight Truck Permit Fees. MnDOT Contract # 89261 Work Order # 136. Progress Update. Task 1: HCAS for Minnesota using FHWA tool Task 2: How to achieve efficiency & equity? Task 3: Today ’ s Agenda

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Highway Cost Allocation (HCA) Study and Determination of Heavy Freight Truck Permit Fees

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  1. Diwakar Gupta Hao-Wei Chen Highway Cost Allocation (HCA) Study andDetermination of Heavy Freight Truck Permit Fees MnDOT Contract # 89261 Work Order # 136

  2. Progress Update • Task 1: HCAS for Minnesota using FHWA tool • Task 2: How to achieve efficiency & equity? • Task 3: Today’s Agenda • Part 1: Improve Tax Equity (Mileage based options) • Part 2: Auction-Based Permit System (ABPS)

  3. Task 3.1 Statement • The objective of this task is to calculate per mile tax rate for each particular vehicle configuration such that cost and revenue are matched. It will entail development of a Minnesota-centric HCAS spread sheet. • Note weight-mileage taxes are charged based only on a vehicle’s registration weight, distance traveled, and axle configuration. They do not depend on route chosen or time of travel and are applied to commercial vehicles only. Therefore, weight-distance taxes are easier to implement as compared to an ERPS.

  4. Task 3.2 Statement • Develop a framework for an ABPS • Estimate demand. • Estimate reserve Price. • Set Parameters and evaluate/design a permit auction mechanism. Note that each permit may be potentially sold at a different price depending on how truck companies value such permits.

  5. Today’s Goals • Demonstrate MHCAT • Obtain feedback • Submit completed Task 3.1 shortly after today’s meeting • Request contract modifications • Task 3 delivery to occur in two parts • No-cost extension of approx. 8 months

  6. Motivating Examples - 1 Minnesota Statutes 169.865 SPECIAL FARM PRODUCTS PERMITS. Subdivision 1.Six-axle vehicles.(a) A road authority may issue an annual permit authorizing a vehicle or combination of vehicles with a total of six or more axles to haul raw or unprocessed agricultural products and be operated with a gross vehicle weight of up to: (1) 90,000 pounds; and (2) 99,000 pounds during the period set by the commissioner under section 169.826, subdivision 1. (b) Notwithstanding subdivision 3, paragraph (a), clause (4), a vehicle or combination of vehicles operated under this subdivision and transporting only sealed intermodal containers may be operated on an interstate highway if allowed by the United States Department of Transportation. (c) The fee for a permit issued under this subdivision is $300.

  7. Motivating Examples - 2 • “Ohio seeks heavier freight trucks to spur exports” (http://www.thetrucker.com/News/Stories/2010/8/20/Ohioseeksheavierfreighttruckstospurexports.aspx) Plan calls for raising weight limit from 80,000 pounds to 94,000 pounds. • FL, IL, IA, ME, VT are considering (involved in pilot studies) to raise weight limits • MN’s border states ND and SD allow vehicles with weights up to 105.5k and 129k, respectively • Canadian provinces allow heavier freight vehicles

  8. Minnesota Highway Cost Allocation Tool (MHCAT)

  9. Background Information

  10. Highway Cost Allocation (HCA) • Key Concept • Tax Revenue-to-Expenditure Responsibility Ratio (RC ratio) • Adjusted Revenue-to-Expenditure Ratio • Main Goal • To determine the fair share for each class of road users not efficient efficient 0 revenue<cost >1 revenue=cost Revenue=users’ WTP 1 equity inequity inequity 0 Pay too little >1 Pay too much 1

  11. Revenue Data • State Revenue • Fuel Taxes • Weight Fees • Registration Fees • Vehicle Sales Taxes • Special Permit Fees • Federal Revenue • Fuel Taxes • Heavy Vehicle Use Taxes • Vehicle Sales Taxes • Tire Taxes • HCA Spreadsheet • MPG, annual miles per vehicle per class • fuel distributions, weight distributions • Other Data • Tax Rates • VMT Revenue Attributed to Each Vehicle Class

  12. Expenditure Data • Expenditure Data • Construction Costs • Maintenance Costs • Operational Costs Federal-Aid State Level • HCA Spreadsheet • Annual miles per vehicle per class • Weight distributions • Pavement parameters • Bridge Parameters • Other Data • VMT • Pavement Thickness • Highway Miles Cost Responsibility for each Vehicle class

  13. Why MHCAT? • Bugs in FWHA tool • VMT cannot be zero (the user must enter a number, which may affect calculations) • Revenues do not add up correctly • Traffic management cost is not allocated • Vehicle classification issues • FWHA tool uses HCA 20-vehicle classification. • Minnesota data are based on FWHA 12-vehicle classification • FHWA tool does not allow new vehicle classes to be created

  14. MN Vehicle classification

  15. What is new in MHCAT? • Flexibility: It allows the user to create up to 8 customized vehicle classes • User Friendliness: The spreadsheets are packed in a single file. Cost allocation requires a single step.

  16. Revenue and Cost Allocations

  17. Revenue Attributions • Gasoline / Diesel Tax • Based on VMT and fuel consumption data for each vehicle class • Registration Fees / Weight Fees / Heavy Vehicle Use Tax • Based on RGW distribution, VMT, and average travel distance for each vehicle • Sales Tax • The average value of each vehicle class is based on its RGW distribution • Federal Tire Tax • Based on RGW distribution and VMT for each vehicle class • Permit Fee • Same as weight fee • Weight-Mileage Fee • Based on VMT by each vehicle and each weight category

  18. Cost Allocation for Non-Load-Related Expenditures • Non-load-related costs include • General construction, transit, truck-related construction, travel-related maintenance, truck-mile related maintenance, light-vehicle-related maintenance, multi-system travel-related, truck related, large truck related, and fuel consumption • These costs are allocated based on either VMT ,or PCE weighted VMT, or both. • PCE weighted VMT – PCE value × VMT

  19. Cost Allocation for Other Special Categories • Rest Area Maintenance • Based on weighted VMT (i.e., trucks VMT × 1.3 ) • Police Traffic Management • Based on either VMT, or PCE weighted VMT, or fatality involvement • Vehicle Registration • Based on either VMT, or Fee collected, or number of vehicles

  20. Pavement Repair Cost • Pavement distresses includes • Flexible Pavement • PSR loss, fatigue cracking, rutting, loss of skid resistance, expansive-clay-related PSR loss, and thermal cracking • Rigid Pavement • PSR loss, faulting, loss of skid resistance, fatigue cracking, spalling, and swelling • Non-load-related pavement costs (distresses in red) are allocated based on VMT or PCE weighted VMT • Load-related pavement costs are allocated based on regression models established from National Pavement Cost Model (NAPCOM)

  21. NAPCOM – National Pavement Cost Model • Developed and first applied in 1997 Federal HCAS • It estimates how much pavement deterioration in a given state results from each type and weight of axle for each type of pavement • It charges heavy axle loads less than if Equivalent Single Axle Loads (ESALs) had been used.

  22. New Pavement Costs • A formula extracted from FHWA tool is used to determine the required thickness of the pavement • Non-load-related costs are calculated as the relative proportion of the minimum (zero-traffic) thickness of the pavement over the required thickness of the pavement. • Example: If required thickness is 20 inches and zero-traffic thickness is 7 inches, Then 35% (7/20) of new pavement costs are non-load-related. • Non-load-related pavement costs are allocated based on VMT or PCE weighted VMT • Load-related pavement costs are allocated based on regression models established from National Pavement Cost Model (NAPCOM)

  23. Grading Costs • Allocations are based on VMT and operational gross weights of the vehicles • Example (Expenditure on Grading is $100) • $87.5 will be shared by all vehicles • $3.5 will be shared by vehicle above 25000 lbs

  24. Bridge Costs • Bridge costs are allocated based on PCE weighted VMT and live load of each vehicle

  25. Summary of Data sources(7/1/2003-6/30/2007)

  26. MHCAT Demonstration

  27. Results

  28. Results –Avg. Revenue and Expenditure by Vehicle Class ($000)

  29. Results – Unadjusted/Adjusted R-C Ratios

  30. Analysis • Three Scenarios • Using weight-mileage fee instead of weight fee • Adding a new customized vehicle class • Removing existing vehicle class

  31. The Effect of Weight Mileage Fees – cont. • Scenario: use weight distance fees instead of weight fees • Assume total revenue does not change • Assume VMT does not change

  32. The Effect of Weight Mileage Fees

  33. Scenario:Add a New Vehicle Class • Assume total revenue does not change • Assume tax structure does not change • Add a new vehicle class • RGW is 100,000 lbs • VMT is identical to CB6+ • OGW is higher than CB6+ by 10,000 lbs • Each vehicle pays $300 additional permit fee • CB6+ remains in the system

  34. Scenario:Add a New Vehicle Class – cont. VC1 needs to pay $800 (resp. $1600) to achieve the same state (resp. Federal+State) equity ratio as CB6

  35. Scenario: Remove BUS No significant changes

  36. Questions and Comments

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