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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 presented byDavid 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
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
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
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
Annual Highway Revenues(billions 2000 constant dollars) $160 $140 Billions, 2000 Dollars $120 $100 2000 2005 2010 2015 2020 2025
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
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
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
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
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
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
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
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
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)
Congested Highways, 2000 Source: FHWA HPMS data
Congested Highways, 2020 Source: FHWA HPMS data
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
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
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
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
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
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
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
Gross State MFT DepositsPurchasing Power of State MFT Deposits +46% +8%
Texas Motor Fuel Tax Motor Fuel Tax (CPI Adjusted)
Texas Motor Fuel Tax per 100 VMT MFT (Adj.) per 100 VMT -26%
Funding of Highways:Crisis and Solutions presented byDavid M. Laney September 2005