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Idaho Highway Cost Allocation Study

Patrick Balducci, Battelle

Joe Stowers, Sydec

July 27, 2010

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Battelle – Sydec Team

• Prime Contractor – Battelle: Patrick Balducci, Project Manager & Co-Principal Investigator

• Principal Subcontractor – Sydec: Joe Stowers, Co-Principal Investigator

• Other Members of Research Team:– Roger Mingo – pavements, vehicle weights, travel data

– Harry Cohen – bridges, revenue attribution

– Holly Wolff – model operation, programming

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Study Overview

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Key Questions Addressed by the 2010 Idaho HCAS

• Do highway users as a whole pay the full cost of highways or are they subsidized by non-users? Or do they subsidize non-users and if so, how much subsidy occurs?

• How do broad classes of highway users compare with each other in terms of paying their estimated shares of highway costs? Are some classes of users overpaying or underpaying and if so, by how much?

• How would specific changes in the tax structure or tax rates impact equity among highway users?

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HCASs Conducted in the U.S.

•In 1937, Oregon conducted the nation’s first HCAS.

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•Over the past 73 years, at least 84 HCASs have been performed in 30 states.

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Overview of HCAS Process

Expenditures ReceiptsVMT VMTPavement data Fuel economyBridge data Vehicle lifeOther data Vehicle valueProject data Other data

Cost Responsibility Tax and Fee Paymentsby Vehicle Class by Vehicle Class

EquityUser Fees paid/cost responsibility

Adjustments requiredfor equity in tax structure

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Key Study Parameters

• Idaho HCAS analysis time period – state fiscal years (SFYs) 2007-2012

• Equity examined at the federal, state, and local levels of government

• Idaho HCAS uses 20 vehicle classes – automobiles, LT4s (pickups and SUVs), single unit trucks (3 classes), combination trucks (14 classes), and buses

• Expenditures and travel data broken down by 11 road classes (6 rural and 5 urban classes)

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FHWA’s State HCAS Model

• Idaho is one of at least 6 states to use the model

• Developed by members of 2010 Idaho HCAS team

• Previous users: Oregon, Texas, Vermont, Idaho, Minnesota, Nevada, others?

• Components of model:– CostAlloc.xls – performs allocation of all costs

– Rev&Tables.xls – performs revenue attribution and creation of summary tables of results

– DefaultData.xls – default data which can be used for any state for much of the model’s required inputs

– SpecialVehicleAnalysis.xls – can be used as a follow-up to a state HCAS to evaluate equity for any selected vehicle (e.g., overweight permit vehicles)

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Major Expenditures Included for State Highway Cost Allocation

• Construction and other capital costs

• Maintenance and related costs

• Highway operations

• Administration and other overhead costs

• Division of Motor Vehicles

• Idaho State Police (Highway Patrol Budget)

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Major Cost Allocation Procedures (i)

• Pavement costs allocated with national pavement cost model (NAPCOM) using 2007 highway section data reported by ITD

• New bridge costs allocated based on an incremental analysis of the costs of constructing bridges using different design loadings

• Replacement bridge costs allocated based on estimates of the percentage of these costs that are incurred because the load-bearing capacity of existing bridges are deficient

• Bridge rehabilitation costs allocated based on fraction of costs associated with different types of bridge rehabilitation projects and extent to which expenditures for each type of project are load-related

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Major Cost Allocation Procedures (ii)

Cost Element Method of Allocation

DMV

DMV programs divided between passenger vehicles and heavy trucks; allocated based on vehicle miles of travel (VMT) shares

Administration (e.g., Director’s Office, Legal) VMT shares

Planning Overhead on construction activities

Construction Activities under Highway Operations and Maintenance (O&M) Budget Overhead on construction activities

Design Activities under Highway O&M Overhead on construction activities

Lab Testing Activities under Highway O&M Overhead on construction activities

Equipment Expenditures under Highway O&M VMT shares

General Activities under Highway O&M Overhead on highway O&M activities

Safety Expenditures under Highway O&M Passenger car equivalent (PCE) – miles

Traffic Control Activities under Highway O&M PCE-miles

Maintenance Activities under Highway O&M

Variable (VMT, axle-miles of travel, PCE-miles, or overhead on all maintenance activities)

Highway Patrol Portion of Idaho State Police Budget VMT shares

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Revenue Attribution Inputs Used in HCAS Model

• Receipts for each tax and fee broken down by vehicle class

• VMT broken down by:– Vehicle class

– Fuel type

• Fuel economy by vehicle class

• Number of vehicle registrations by gross vehicle weight

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Idaho Highway User Revenues by Source and Level of Government (Annual Average – SFY 2007-2012)

User Fee Federal State Local

Gasoline Tax $110,513,290 $160,136,408  

Special Fuels Tax $62,868,557 $65,898,469  

Passenger Vehicle Registration Fees   $51,750,702 $6,304,362

Truck and Bus Registration Fees   $53,993,433  

96-Hour, Single Trip, and Oversize Permits   $5,935,462  

Driver’s License Fees   $7,496,147  

Title Fees   $4,731,849  

Misc. Plate Fees and Penalties   $9,966,388  

Heavy Vehicle Use Tax $7,230,191    

Trucks and Trailers Tax $12,667,236    

Tire Tax $2,776,322    

Total Federal $196,055,596 $359,908,858 $6,304,362

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Findings

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1994, 2002, and 2010 Idaho HCAS Results by Vehicle Class, State and Federal Revenues and Expenditures

1994 2002Vehicle Class Study Study Full GARVEE Red. GARVEE

Autos 0.84 0.94 1.47 1.38Pickups 1.19 1.11 1.18 1.13Buses 1.08 0.77 1.06 1.05Single Units 1.20 1.17 0.98 0.95Combinations 0.99 0.95 0.67 0.72

2010 Study Adjusted Ratio

Definitions

An unadjusted equity ratio is calculated by dividing attributed revenue by cost responsibility for each vehicle class. Example: $1.5 million in payments / $1 million in cost responsibility = 1.5 unadjusted equity ratio.

An adjusted equity ratio is constructed by expressing each ratio as the percent of total highway user revenue paid by the percent of total cost responsibility. Example: 1.5% of total payments / 1.5% of total cost responsibility = 1.0 adjusted equity ratio.

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1994, 2002, and 2010 Idaho HCAS Results by Vehicle Class, State Revenues and Expenditures

1994 2002Vehicle Class Study Study Full GARVEE Red. GARVEE

Autos 0.76 0.88 1.26 1.08Pickups 1.03 1.01 1.05 0.95Buses 0.79 0.86 1.39 1.53Single Units 1.27 1.18 1.36 1.43Combinations 1.41 1.10 0.73 0.86

Adjusted Ratio 2010 Study

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Revenues and Cost Responsibilities by Vehicle Class, State and Federal Combined Programs (Full GARVEE)

Equity Ratios

Vehicle Class Vehicle Miles

(Millions)

Federal + State User Revenue (Thousands)

Federal + State Cost

Responsibilities (Thousands)

Unadjusted Adjusted

Auto 7,416 183,045 155,628 1.18 1.47

LT4 5,708 143,283 152,330 0.94 1.18

SU2 718 41,004 50,665 0.81 1.01

SU3 174 20,600 28,283 0.73 0.91

SU4+ 8 1,255 1,611 0.78 0.97

CS3 82 5,666 7,431 0.76 0.95

CS4 104 8,581 11,755 0.73 0.91

CS5T 714 87,146 152,265 0.57 0.72

CS5S 70 8,561 17,908 0.48 0.60

CS6 112 14,997 23,560 0.64 0.80

CS7+ 75 10,301 24,372 0.42 0.53

CT34 6 476 671 0.71 0.89

CT5 4 507 538 0.94 1.18

CT6+ 2 231 812 0.28 0.36

DS5 11 1,310 1,513 0.87 1.08

DS6 18 2,294 2,544 0.90 1.13

DS7 118 16,174 46,222 0.35 0.44

DS8+ 22 3,144 7,967 0.39 0.49

TRPL 27 3,661 5,010 0.73 0.91

Bus 45 3,727 4,401 0.85 1.06

Total 15,430 555,964 695,486 0.80 1.00

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Equity Ratios by Registered Gross Weight Class – State and Federal (Full GARVEE)

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Equity Ratios by Registered Gross Weight Class – State and Federal (Full GARVEE vs. Reduced GARVEE)

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Full GARVEE

Reduced GARVEE

80,000 RGW Adjusted Equity Ratio Shifts from 0.72 to 0.77

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Repeal of the Weight Distance Tax

Truck Registration fees and Weight Distance Tax Revenue in Idaho

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y = 1.8676x + 26.731

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FY 91 FY 92 FY 93 FY 94 FY 95 FY 96 FY 97 FY 98 FY 99 FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09

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Commercial Truck Revenue Commercial Truck Revenue post Weight distance Linear (Commercial Truck Revenue)

Forecast break even point $41.2 million in FY 1997

FY 2001 is the last year of w/d collections and

first year of new registraiton fees

Trend Line Truck Reg &

W/D = $60.35 in FY 2008

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Key Findings (i)

• Idaho HCAS findings by vehicle class– Highway user payments fall short of expenditures by 21 percent

($139.5 million annually) for state and federal programs because Idaho is a donee state and also due to GARVEE bond program

– At state level, automobiles overpaying by 26% (8% reduced GARVEE), federal and state combined 47% (38% reduced GARVEE)

– Adjusted equity ratios for combination trucks is .73 state and .67 state and federal combined (full GARVEE) and .86 and .72 state and state and federal combined, respectively (reduced GARVEE)

– Equity ratios fall as low as 0.36 among heavy vehicle classes (0.39 reduced GARVEE)

• Idaho HCAS findings by RGW class– Adjusted equity ratio for 80,000 pound trucks is .77 (.72 reduced

GARVEE) for federal and state combined

– Adjusted equity ratio for vehicles weighing less than 8,000 pounds is 1.32 (1.25 reduced GARVEE) for federal and state combined

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Key Findings (ii)

• GARVEE bond program influences results due to emphasis on construction and pavement expenditures

– Majority of pavement costs are due to impacts of heavy axle loads

– Large bond program increases responsibility of heavy trucks

• Repeal of weight-mile tax reduced revenues attributed to heavy trucks

– Weight-mile tax repealed in 2000 and replaced in 2001 with a mileage-based registration fee system

– ITD estimates impact of weight-mile tax repeal at $11.6 million annually

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Policy Analysis

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Policy Options Examined in 2010 Idaho HCAS

• Tax and fee options tied to existing system:1. Increase both gasoline and special fuel tax rates by 5 cents per gallon

2. Increase gasoline tax rate by 5 cents per gallon; increase special fuel tax rate to achieve equity

3. Increase special fuel tax rate by 5 cents per gallon; increase gasoline tax rate to achieve equity

4. Increase all vehicle registration fees by 10 percent

5. Increase passenger vehicle registration fees by 10 percent; adjust heavy truck registration fees to achieve equity

6. Increase heavy truck registration fees by 10 percent; adjust passenger vehicle registration fees to achieve equity

• Implementation of a new fee7. Institute a VMT tax for all vehicles with RGWs in excess of 26,000

pounds

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Revenue Impact of Policy Options ($Millions in Annual Revenue)

Policy Option Full GARVEE Reduced GARVEE1 $46.2 $46.22 $307.6 $253.53 ($147.0) ($129.1)4 $11.6 $11.65 $165.8 $135.46 ($47.7) ($47.7)7 $81.9 $70.7

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Impact on Equity of Policy Options (Full GARVEE Bond Scenario)

Vehicle Class Current PO1 PO2 PO3 PO4 PO5 PO6 PO7

Auto 1.47 1.49 1.06 1.10 1.46 1.15 1.38 1.28

LT4 1.18 1.19 0.87 0.89 1.17 0.92 1.11 1.03

SU 0.98 0.98 1.20 1.12 0.98 0.99 0.97 0.88

Combination 0.67 0.66 0.98 0.97 0.68 0.97 0.76 0.86

Bus 1.06 1.06 1.32 1.22 1.06 0.95 0.99 0.95

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Impact on Equity of Policy Options (Reduced GARVEE Bond Scenario)

Vehicle Class Current PO1 PO2 PO3 PO4 PO5 PO6 PO7

Auto 1.38 1.40 1.06 1.08 1.38 1.13 1.30 1.23

Pickups 1.13 1.14 0.88 0.89 1.13 0.92 1.06 1.01

Single Unit 0.95 0.95 1.13 1.07 0.95 0.96 0.94 0.86

Combinations 0.72 0.70 0.99 0.99 0.72 0.98 0.81 0.90

Bus 1.05 1.05 1.27 1.19 1.05 0.96 0.98 0.96