1. 1 Idaho Highway Cost Allocation Study (HCAS) Patrick Balducci, Battelle February 8, 2010

2. 2 Battelle Team Prime contractor – Battelle: Patrick Balducci, PM and Co-Principal Investigator Principal subcontractor – Sydec: Joe Stowers, Co- Principal Investigator Other Members of Research Team: –Roger Mingo – pavements, vehicle weights –Harry Cohen – bridges, external costs, revenue attribution –Holly Wolff – model operation, programming

3. 3 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? Are there specific changes in the tax structure or tax rates that will improve equity among highway users?

4. 4 HCASs Conducted in the U.S. In 1937, Oregon conducted the nation’s first HCAS. Over the past 73 years, at least 85 HCASs have been performed in 30 states.

5. 5 Overview of HCAS Process

6. 6 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)

7. 7 Cost Allocation Inputs Expenditures –Construction/capital improvements –Maintenance –Operations –Vehicle registration and related –Highway patrol –Traffic courts and related –State assistance to transit programs VMT broken down by: –Vehicle class –Highway functional class Pavements Bridges Project costs broken down by cost allocation categories

8. 8 Revenue Attribution Inputs Required for Model Receipts for each tax and fee broken down by vehicle class VMT broken down by: –Vehicle class –Fuel type (gasoline, diesel, other?) Fuel economy by vehicle class Vehicle life by vehicle class Vehicle value by vehicle class Number of vehicle registrations by gross vehicle weight

9. 9 Default Data Provided Average annual miles traveled by single unit trucks and combinations by registered weight Average percent of miles traveled by single unit trucks and combinations by registered weight Average miles per gallon (all fuels) by single unit trucks and combinations by registered weight Approximate estimate of trailers by type of configuration

10. 10 Schedule for Completing 2010 Idaho HCAS

11. 11 1994 and 2002 Idaho HCAS Results by Vehicle Class, State Revenues and Expenditures

12. 12 1994 and 2002 Idaho HCAS Results by Vehicle Class, State and Federal Revenues and Expenditures

13. 13 1994 and 2002 Idaho HCAS Results by Registered Weight Group, State Revenues and Expenditures

14. 14 Major Methodology Issues Alternative methodologies and approaches for allocating the load- and non-load related portions of new, replaced, and rehabilitated bridge expenditures Alternative methodologies for the allocation of pavement costs Allocation of costs and attribution of revenues for different levels of government – e.g., federal, state, and local government Treatment of deferred pavement and bridge maintenance costs Treatment of rest area costs Treatment of climbing and passing lane costs Alternative methodologies for the allocation of administrative overhead costs Treatment of external costs (e.g., air pollution, noise pollution, wasted time and fuel)

15. 15 Treatment of Bridge Expenditures New Bridges Bridge Replacement Bridge Rehabilitation

16. 16 Treatment of New Bridge Costs Issue: How to allocate the costs associated with new bridges. Options: –Use the default new bridge shares based on HS-20 as the design loading -- the approach used in the 1994 and 2002 Idaho HCASs –Use the default new bridge shares based on HS-25 as the design loading –Modify the default new bridge shares to reflect the use of load and resistance factor design (LRFD). Recommendation: To be consistent with previous Idaho HCASs, use the default new bridge shares based on HS-20 design loadings

17. 17 Treatment of Bridge Replacement Costs Issue: How to allocate the costs associated with replacement bridges? Options: –Use the same method as for new bridges (incremental construction cost) –Also account for the reason why the bridge was replaced using bridge sufficiency ratings. Recommendation: The second approach was used in the 1994 and 2002 Idaho HCASs and we recommend that it be used in this study

18. 18 Treatment of Bridge Rehabilitation Costs Issue: How to allocate the costs associated with bridge rehabilitation costs. Options: –Treat these costs as non-load-related –Use default load/non-load shares by functional class from the 1997 Federal HCAS –Ask ITD bridge personnel to review the assessment of load/non-load shares for bridge rehabilitation expenditures and, if warranted, come up with different shares Recommendation: If bridge rehabilitation costs account for less than 2 percent of total highway program expenditures, use the second option (default shares). Otherwise, use the third option (ITD bridge personnel review and, if necessary, revise the shares)

19. 19 Treatment of Pavement Costs Issue: How to allocate the costs associated with new pavements and pavement reconstruction, rehabilitation, and maintenance costs Options: –Equivalent single axle loads (ESALs) –Use dated version of National Pavement Cost Mode (NAPCOM) –Use new load equivalency factors (LEFs) with observed Idaho distresses –Use new LEFs with predicted Idaho distresses Recommendation: Use new LEFs to allocate pavement costs in close collaboration with Idaho pavement engineers; use the same pavement allocation factors for all pavement costs – e.g., new, rehabilitation, and maintenance

20. 20 Levels of Government Examined in Idaho HCAS Issue: What levels of government should be examined in the HCAS? Options: –State revenues and expenditures only –Federal + state revenues and expenditures –State + local revenues and expenditures –Federal + state + local revenues and expenditures Recommendation: Federal + state + local revenues and expenditures separately, federal + state combined in separate scenario

21. 21 Treatment of Deferred Pavement and Bridge Maintenance Costs Issue: Whether and how to allocate the costs associated with deferred pavement and bridge maintenance costs. Options: –Do not allocate these costs –Allocate costs to vehicle classes by simply adding these cost estimates to the costs of the programmed projects of the same type –Allocate the costs of short-term deferrals that can still be corrected through preventive maintenance work, and estimate costs of longer- term deferrals that will have to be corrected through more costly rehabilitation projects –Conduct a thorough analysis of the full costs of deferred maintenance using the same cost estimating procedures that engineers normally use in preparing cost estimates for each future programmed project Recommendation: We recommend option (3) if the work has already been completed by ITD staff; option (2) if estimate have yet to be completed

22. 22 Treatment of Rest Area Costs Issue: How to allocate the costs associated with rest areas in the HCAS. Options: –Allocate costs based on VMT shares by vehicle classes –Allocate costs based on PCE miles –Allocate costs based on an analysis of rest area cost elements – e.g., pavement rehabilitation and rest area maintenance occasioned by each vehicle class Recommendation: Allocate costs using PCE miles if rest area costs are a small proportion of Idaho’s highway costs (e.g., less than 2 percent); allocate costs using option (3) if rest area costs are a significant cost element and data are available to support a more refined approach

23. 23 Treatment of Climbing and Passing Lane Costs Issue: How to allocate the costs associated with climbing and passing lanes in the HCAS Options: –Allocate costs entirely to heavy vehicles –Allocate costs based on PCE miles –Allocate based on power-to-weight ratios and miles of travel by vehicle class Recommendation: Use combined approach allocating climbing lanes based on power-to-weight ratios and miles of travel by vehicle class and passing lanes on non- climbing sections of roadway based on PCE miles

24. 24 Treatment of Administrative, Overhead Costs Issue: There are elements of any transportation agency budget (e.g., planning, human resources) that have less obvious relationships to specific vehicle characteristics. How should these costs be allocated? Options: –Allocate all administrative costs as common costs – by allocating them in proportion to the VMT of each vehicle class. –Combined approach -Allocate all administrative costs that are directly associated with highway construction, maintenance, operations, and other expenditure categories as overhead costs on the costs of those highway program categories -Allocate other administrative functions that do not directly serve specific highway program functions (e.g., finance, human resources, accounting, executive offices, and legislative liaison) as common costs Recommendation: Use combined approach to allocate administrative costs as overhead on relevant programs as appropriate

25. 25 Treatment of External Costs Issue: How are the external costs of motor transport (e.g., emissions, noise, waster time and fuel, traffic accidents treated in the HCAS? Options: –Monetize external costs and allocate them to highway users –Due to the complexity and uncertainty surrounding estimation of these costs and the absence of fees targeting externalities, do not allocate these costs Recommendation: Do not allocate the external costs associated with congestion, air pollution, noise, and vehicle crashes to highway users

26. 26 Estimated External Costs for Motor Vehicle Use in U.S. ($Millions) Source: United States Department of Transportation, Federal Highway Administration, Addendum to the 1997 Federal Highway Cost Allocation Study Final Report, Washington D.C., May 2000.

27. 27 Major Policy Choices in Applying the HCAS Model Tax and fee options to be evaluated (e.g., just changes in tax rates or fees vs. new types of taxes or fees) Is overall revenue neutrality to be taken as a given in considering any changes in taxes and fees? Are “costs” to be defined just as “expenditures”? Or are costs such as deferred maintenance or external costs to be included? What time period is included in the HCAS?

28. 28 Policy Options Examined in 2008 Nevada HCAS (i) Policy Option 1: Increase the diesel tax by 12 cents per gallon Policy Option 2: Increase the diesel and gas tax rates by 6 cents per gallon Policy Option 3: Increase heavy truck registration fees by 50 percent, and increase gasoline taxes by 6 cents per gallon and diesel taxes by 12 cents per gallon. Policy Option 4: Implement a 12-cents-per-mile registration fee on all vehicles registered in excess of 55,000 pounds.

29. 29 Policy Options Examined in 2008 Nevada HCAS (ii) Policy Option 5: Three-step progression towards a more equitable highway tax system: –Bring the heavy truck class equity ratio to 1.0 by increasing the diesel fuel tax –Fixed registration fees kept at current levels, sales and ad- valorem taxes eliminated, motor fuel taxes retained, and a weight-distance tax added for heavy vehicles registered in excess of 62,000 pounds –Fixed registration fees are maintained while the ad- valorem, vehicle sales, and motor fuels taxes are eliminated and a VMT fee is implemented to bring heavy vehicle equity ratio to 1.0

30. 30 Policy Alternative Evaluation Criteria Revenue adequacy Administrative efficiency Economic efficiency Evasion and avoidance Feasibility Equity

31. 31 Conclusions (i) HCASs are data intensive –Pavements –Vehicle Miles of Travel –Bridge –Maintenance Timeline for the 2010 Idaho HCAS is extremely condensed 2010 HCAS will require close and timely coordination between research team and Idaho Transportation Department staff to be successful

32. 32 Conclusions (ii) The research team proposes to use the FHWA State HCAS Model with modifications to address Idaho-specific issue There are a number of policy and methodology choices that must be made early in the study process –Costs versus expenditures –Levels of government –Study time period We welcome input from the sub-committee in defining policy alternatives for analysis