The Fuel Tax and Alternatives for Transportation Funding Special Report 285 (2006) / Chapter Skim
Currently Skimming:
1 Introduction
1 Introduction
Pages 9-22
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From page 9... ...
The federal surface transportation aid program was debated for 2 years after its expiration in 2003 before reauthorization in 2005, as proposals to increase spend ing clashed with opposition to any increase in highway user tax rates to fund the expansion. Recent circumstances have heightened long-standing worries of transporta tion officials that funding sources, particularly fuel taxes, that provided stable and growing revenue for transportation programs for 40 years are going to become unreliable in the future.
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From page 10... ...
Toll roads featuring automatic toll collection and charges that can be varied to optimize traffic flow, systems to meter vehicle use over an extensive network of roads and assess charges proportional to mileage, and roads developed and operated by private firms receiving revenue from road user fees are in operation in the United States or in other countries. However, before these arrangements can become major components of the transportation finance sys tem, their effectiveness must be demonstrated to the public's satisfaction and the institutional capabilities needed to manage them on a large scale must be devel oped.
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From page 11... ...
STUDY ORIGIN: TRANSPORTATION FINANCE PROBLEMS Several states have undertaken high-level reviews of transportation finance and tax issues in recent years (Reno and Stowers 1995, Appendix B; CTI 1996; CRC 1996; CRC 1997; CRC 1998; Road User Fee Task Force 2003)
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From page 12... ...
. The task force defines the state highway finance problem in nearly the same terms as California's Commission on Transportation Investment (Road User Fee Task Force 2001, 1)
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From page 13... ...
Three distinct justifications for considering an overhaul of transportation finance and highway user fees emerge from these state analyses: a potentially diminishing tax base, erosion of the user fee finance principle, and the opportu nity to improve efficiency. In summary, proponents of changing transportation funding arrangements have claimed that developments in motor vehicle tech nology will threaten the revenue capacity of existing fees, that the finance system has diverged from its founding principles with harmful consequences, and that reform in the direction of pricing would increase the public benefits of govern ment transportation expenditures.
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From page 14... ...
Erosion of the User Fee Finance Principle One characterization of the finance scheme of the federal-aid highway program (whose centerpiece is a trust fund receiving revenues from user fees) , and of the similar highway finance schemes of many states, is that of a compact between highway users and the government highway agency.
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From page 15... ...
Opportunity to Improve Efficiency In political discussions, the transportation finance problem traditionally has been defined as primarily a problem of revenue adequacy: how to raise revenues sufficient to maintain a desired level of spending or serve defined transportation needs in a manner that is perceived as fair by the public and highway users. This definition of the problem is incomplete because it does not take into account the connection between finance arrangements and the performance of the highway system.
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From page 16... ...
· Identify institutional and technical obstacles that may hinder needed finance reforms and recommend a transition strategy to new finance arrangements if reform appears necessary. is used here, a viable funding arrangement is one that will retain the capacity to fund transportation programs at an inflation-adjusted rate comparable with that of the past 20 years.
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From page 17... ...
The impetus for this study was concern for the viability of present highway user fees as a revenue source; there fore, the committee has considered transit finance primarily insofar as it is linked to highway user fees. A prominent feature of the present finance system is the ded ication of portions of federal and state highway user fee revenues to transit.
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From page 18... ...
Information on the benefits and costs of high way investments and other transportation programs is fragmentary because agen cies do not routinely conduct rigorous economic evaluations of their projects. Because of this information gap and lack of experience with some of the reform measures that have been most prominently proposed, any specific and detailed recommendation for a new transportation finance system would be pre mature.
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From page 19... ...
Pricing means a system of imposing charges on users in which each user recognizes a connection between decisions to use the trans portation system and the charges incurred and the operating agency sets the charges on the basis of the cost of providing service to the user. The present highway user fee scheme of fuel taxes, registration fees, and licens ing fees is an imperfect form of pricing.
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From page 20... ...
In most public discussions of transportation finance, the desire to increase revenue in order to serve defined needs is identified as the primary motivation for searching for finance alternatives. The state transportation finance studies sum marized in the first section of this chapter are examples: the studies project that existing sources will not yield sufficient revenue to maintain desired levels of spending.
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From page 21... ...
The benefits of reform depend on how well pres ent arrangements are working. Chapter 4 reviews projections of energy prices, motor vehicle technology, and fuel economy and considers the likelihood of future government interventions to regulate fuel consumption or pollutant emis sions that could affect transportation revenue sources.
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From page 22... ...
Transportation Research Board, National Research Council, Washington, D.C. Road User Fee Task Force.
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