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From page 549... ... Appendix J Additional Detail on Funding and Financing Options This appendix provides additional detail on options for funding the needed investments in the Interstate Highway System to supplement the discussion of funding options in Chapter 6. The appendix first elaborates in turn on mileage-based user fees and the use of revenues from carbon pricing and cap-and-trade programs, including pilot programs testing these approaches. Read the entire page →
From page 550... ... 550 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM ADDITIONAL FUNDING OPTIONS Mileage-Based User Fee (MBUF) for All Roads2 Both of the national commissions the Congress established in SAFETEA-LU recommend evaluating and moving toward vehicle-miles traveled (VMT) Read the entire page →
From page 551... ... APPENDIX J 551 for the Washington State and Oregon MBUF pilot projects support this finding (Oregon: Oregon DOT 2017; Washington State Transportation Commission and Washington State DOT 2017) Read the entire page →
From page 552... ... 552 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM What to Charge for and How Oregon's evaluation of the initial phase of its pilot program pointed to limitations in all the technology options explored, reporting that imbedded devices did not work in all vehicles, fuel consumption could not be accurately estimated in all vehicles, and devices could be removed from vehicles for periods of time and thereby avoid paying the MBUF (Oregon DOT 2017) Read the entire page →
From page 554... ... 554 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM taxing diesel fuel for farm vehicles. A mileage-based fee has been assessed to New Zealand diesel-powered personal vehicles (based on odometer readings) Read the entire page →
From page 555... ... APPENDIX J 555 As concluded by the Policy Commission, given the growing limitations of the fuel tax, the need to find a replacement or supplement to it, and widespread experimentation with MBUFs, it appears that workable solutions for at least a simple MBUF could be found. It may, however, take considerable time for the public to understand and accept this approach (and it may not) Read the entire page →
From page 556... ... 556 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM FINANCE OPTIONS Financing those projects that have sufficient traffic to pay for themselves could serve as a useful supplement to funding. Financing implies that projects that have sufficient demand could be funded by borrowing with the repayment based on revenues charged to users. Read the entire page →
From page 557... ... APPENDIX J 557 late 1980s through mid-2015, a total of 21 P3 projects worth $24.6 billion were under way compared to nearly $250 billion in total highway spending by all levels of government in 2014 alone (FHWA 2016, 4, Appendix C) .8 Furthermore, some would argue that such projects merely represent a form of federal borrowing and doing so at a higher effective rate than that at which the government can itself borrow. Read the entire page →
From page 558... ... 558 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM states and 9.5 percent of such spending by local governments (Mallett and Driessen 2016, Table 2) Read the entire page →
From page 559... ... APPENDIX J 559 Con -- Tax exemption and tax credits reduce funding to the U.S. Department of the Treasury and thereby require additional borrowing, which increases the federal deficit. Read the entire page →
From page 560... ... 560 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM Pro -- Direct loans and loan guarantees from the federal government can reduce borrowing costs to the issuer and risks for private and other investors and therefore expand the total investment available to transportation infrastructure. Con -- Although TIFIA loans must be investment-grade rated, they do increase the risk of (a) Read the entire page →
From page 561... ... APPENDIX J 561 rated as strong or moderate and provides a brief overview of the other taxes and fees considered, but largely dismissed, in the Commission's report. Strong Options Existing Federal Taxes Dedicated to Highway Trust Fund (HTF) Read the entire page →
From page 562... ... 562 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM of motor fuels. Finally, the gasoline tax is a regressive tax -- lower-income individuals spend a larger share of income on motor fuels taxes than other income groups. Read the entire page →
From page 563... ... APPENDIX J 563 long been dedicated to the HTF; is viewed as cost-effective to administer; has a reasonable degree of political acceptance; and a federal tax provides an equal rate across state borders. The main disadvantages are that a large increase would be required to raise significant new revenues (a 10 percent increase in revenues from the tax would raise only $4 million in its first year) Read the entire page →
From page 564... ... 564 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM existing trade agreements, thus the duty would fall on certain shippers and not others. Vehicle Registration Fee16 -- A federal fee of $3 to $5 per car or truck could yield about $1 billion annually, and such a fee would be small relative to the average $185 annual fee currently imposed by the states. Read the entire page →
From page 565... ... APPENDIX J 565 include the fact that imported petroleum is also used for home heating, most heavily in the northern states, and a tariff dedicated to highways would be taxing homeowners (disproportionately northern homeowners) for transportation. Read the entire page →
From page 566... ... 566 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM network like the Interstates. The Commission does, however, encourage giving congested metropolitan areas the option of tolling urban Interstates with congestion fees, both on new and existing lanes. Read the entire page →
From page 567... ... APPENDIX J 567 equity concerns that would need to be addressed. Concerns about privacy are also present, including the importance of developing designs that mitigate privacy invasion. Read the entire page →
From page 568... ... 568 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM highway consumption. It also excludes exports, which would raise issues about fairness. Read the entire page →
From page 569... ... APPENDIX J 569 mechanism to a specific use or set of uses, whether surface transportation generally or discrete subsets of surface transportation investment. Public Acceptance and Legal/Political Viability -- the relative feasibility of gaining public and political acceptance of the mechanism compared with other mechanisms. Read the entire page →
From page 570... ... 570 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM Exhibit J-2 Matrix of Illustrative Surface Transportation Revenue Options Existing Highway Trust Fund Revenue Mechanisms Illustrative Rate or Percentage Increase Definition of Mechanism/ Increase Assumed 2014 Yield ($ billions) Forecast Yield (2015– 2200) Read the entire page →
From page 571... ... APPENDIX J 571 Potential Highway Trust Fund Revenue Mechanisms Illustrative Rate or Percentage Increase Definition of Mechanism/ Increase Assumed 2014 Yield ($ billions) a Total Escalated Yield 2015–2020a Income tax -- business 1% Increase/reallocate existing revenues/structure not defined $2.79 $18.06 Income tax -- personal 0.5% Increase/reallocate existing revenues/structure not defined $6.70 $43.36 Diesel motor fuel tax indexed to CPI -- Cent/gallon excise tax -- $5.22 Gasoline motor fuel tax indexed to CPI -- Cent/gallon excise tax -- $10.87 Oil, gas, and minerals receipts 25% Increase/reallocate existing revenues/structure not defined $2.20 $14.25 Registration fee -- Electric light duty vehicles (LDVs) Read the entire page →
From page 572... ... 572 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM AN INTERNATIONAL OVERVIEW OF MOTORWAY FUNDING AND FINANCE IN INDUSTRIALIZED DEMOCRACIES Different models exist internationally for paying for intercity highways: government funding from user taxes; government funding from general revenues; and financing using borrowed funds that are repaid by either tolls, distance-based fees, or from general revenues. The United States uses the first approach, which is increasingly rare around the world, perhaps because of its governance structure. Read the entire page →
From page 573... ... APPENDIX J 573 National Role In terms of governance, the United States is most similar to Australia and Canada. All three nations have a central government that helps fund motorways, but depend on states or provinces to make decisions about, plan for, build, own, and maintain highways. Read the entire page →
From page 574... ... 574 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM such as the Netherlands, New Zealand, and Switzerland, that rely on trust funds for highways at the national level that are funded through road user charges. Direct User Charges Tolls -- About 40 percent of western European motorways26 are tolled for cars and trucks (see Table J-1) Read the entire page →
From page 575... ... APPENDIX J 575 TABLE J-1 Motorways and Tolled Roads in Selected Nations Country Motorwaysa (km) Tolled Main Roadsb (km) Read the entire page →
From page 576... ... 576 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM bought and combined by investors.27 As noted in the section that follows on individual countries, the financial crisis of the late 2000s has complicated the financial viability of some toll roads in Spain and Portugal. Japan also financed its expressways through public toll corporations, which it subsequently re-organized into more commercialized, but still publicly owned, enterprises when some of the corporations were unable to collect sufficient tolls to repay their debts. Read the entire page →
From page 577... ... APPENDIX J 577 trucks to purchase vignettes29 to operate on their motorways (Gomez and Vassallo 2014) Read the entire page →
From page 578... ... 578 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM few kilometers were constructed after World War II. The Austrian system consists of a time-related vignette (10 days, 1 month, or annual stickers only) Read the entire page →
From page 579... ... APPENDIX J 579 Canada Canada's constitution places responsibility for highways with its provinces and territories (The Law Library of Congress 2014) Read the entire page →
From page 580... ... 580 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM assets and regulatory control over their operations (Bonnafous 2015) Read the entire page →
From page 581... ... APPENDIX J 581 Italy Italy began its motorways development with toll roads in the 1920s, but these failed.37 When motorway development began anew in the 1950s, Italy again relied on government-owned concessionaires. By 1970, Italy had almost 4,000 kilometers under concession. Read the entire page →
From page 582... ... 582 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM Japanese roads and highways. Dedication of user fees for highways at the national level ended in 2009. Read the entire page →
From page 583... ... APPENDIX J 583 readings by police, but they have no way of knowing whether the odometer is operating properly. Commercial vehicles, in contrast, must use a specified technology to ensure accuracy.41 GAO's (2012) Read the entire page →
From page 584... ... 584 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM on tolling for many projects, but unlike some southern European nations, Norway expects toll projects to be self-funded by tolls (without public subsidy) Read the entire page →
From page 585... ... APPENDIX J 585 tolls with a system comparable to, but with higher tolls than, Austria's and Germany's. A recent paper finds a modest decline in heavy truck traffic and reductions in vehicle emissions (Luechinger and Roth 2016) Read the entire page →
From page 586... ... 586 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM TABLE J-2 Current Funding Mechanism for Motorways in Selected Nations Country Motorways, mi. Read the entire page →
From page 587... ... APPENDIX J 587 Country Motorways, mi. Read the entire page →
From page 588... ... 588 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM for LDVs and trucks on VMT, fuel economy,50 and number of registered vehicles (FHWA 2017, Table VM-1) .51 Mileage-Based User Fee Revenues The amount of revenue to be raised from a mileage-based fee begins with the amounts being paid through motor fuels taxes, as calculated above, but is limited to VMT on the Interstates. Read the entire page →
From page 589... ... APPENDIX J 589 Burke and Zhao's (2017) paper, the average annual percentage changes in MPG from their simulations were applied to straight truck and combination truck fleet MPG beginning in 2016 from FHWA (2017, Table VM-1) Read the entire page →
From page 590... ... 590 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM Rate Increases Required Motor Fuels Rates As an illustration, this analysis estimated the motor fuels tax rate increases needed for raising an additional $20 billion per year. For the calculation, MPG and VMT were first projected for each class of vehicle for 0.75 percent, 1.5 percent, and 2.0 percent annual VMT growth rates. Read the entire page →
From page 591... ... APPENDIX J 591 If this option were pursued, the amount of funds to be raised would have to be increased to account for the cost of converting the Interstates to an all-electronic tolling system (AET) ; this cost would be about $55.5 billion, as estimated in Chapter 6. Read the entire page →
From page 592... ... 592 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM REFERENCES Abbreviations AASHTO American Association of State Highway and Transportation Officials ASECAP European Association of Operators of Toll Road Infrastructures CTS Centre for Transport Studies DOT Department of Transportation EIA U.S. Energy Information Administration FDIC Federal Deposit Insurance Corporation FHWA Federal Highway Administration GAO U.S. Read the entire page →
From page 593... ... APPENDIX J 593 Austin, D Read the entire page →
From page 594... ... 594 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM European Investment Bank. Read the entire page →
From page 595... ... APPENDIX J 595 Mackie, P., and N Smith. Read the entire page →
From page 596... ... 596 NATIONAL COMMITMENT TO THE INTERSTATE HIGHWAY SYSTEM Todd, S Read the entire page →

From page 549...

... Appendix J Additional Detail on Funding and Financing Options This appendix provides additional detail on options for funding the needed investments in the Interstate Highway System to supplement the discussion of funding options in Chapter 6. The appendix first elaborates in turn on mileage-based user fees and the use of revenues from carbon pricing and cap-and-trade programs, including pilot programs testing these approaches.