1. Presented by presented by David M. Laney September 2005 Funding of Highways: Crisis and Solutions

2. Presented by Presentation 1.Current Revenue Sources 2.Projection of Highway Revenues 2000 - 2025 3.The Revenue Gap 2000 - 2025 4.Strategies for Closing the Gap – Mid-Term, Long Term 5.The Texas Case - Acute

3. Presented by Structure of Transportation Funding Four Categories of Revenue Sources Funding Sources Type Tax or FeeApplied ToPayer Indirect User Fees Motor fuel tax (MFT) Vehicle registration and excise tax Replacement parts tax (tires) Vehicle Vehicle Owner Operator or Carrier Shipper Receiver General Taxes Income Property Sales and ad valorum taxes Individuals & Businesses Tax Payers Households Businesses Consumers Direct User Fees Transit fares, tolls, PFC Trip Maker or Buyer Drivers & Passengers SOV and carpools Specialized Taxes Local sales taxes Leases Improvement district levy Property & Infrastructure Property Owner Land owners Developers Businesses

4. Presented by Current Annual Revenues Indirect User Fees Dominate Revenues (billions 2000 constant dollars) Funding Sources Direct User Fees Indirect User Fees Specialized Taxes General Taxes Highway $5.4 $24.8 $11.7 * Public sector only ** Less revenue allocated to transit and rail $75.6**

5. Presented by Relative Funding by Mode Indirect User Fees (Highway Motor Fuel Taxes) Are the Major Source of Transportation Funding Highways $117 billion Transit $34 billion Passenger Rail $2 billion Freight Rail $0.2 billion Indirect User Fees (MFT) All Other Revenue Sources Highway motor fuel taxes dedicated to transit

6. Presented by Annual Highway Revenues (billions 2000 constant dollars) 200020052010201520202025 Billions, 2000 Dollars $100 $120 $140 $160

7. Presented by Uncertainty in Annual Highway Revenue (billions 2000 constant dollars) 200020052010201520202025 Billions, 2000 Dollars Total Revenues - Fuel Efficiency Effect Total Revenues $100 $120 $140 $160 Range of Motor Fuel Tax Yield

8. Presented by $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Billions, 2000 Dollars $3.4 trillion Existing Sources of Revenues Cumulative Revenues, 2005 to 2025 (billions 2000 constant dollars)

9. Presented by $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Billions, 2000 Dollars $3.3 trillion Existing Sources of Revenues $100 billion uncertainty in MFT yield Cumulative Needs and Revenues, 2005 to 2025 (billions 2000 constant dollars)

10. Presented by AASHTO “Need to Improve” Annual Highway Needs Capital, Operations & Maintenance (billions 2000 constant dollars) $100 $120 $140 $160 $180 $200 $220 200020052010201520202025 Billions, 2000 dollars FHWA C&P MaintainFHWA C&P Improve AASHTO ImproveAASHTO Maintain FHWA C&P “Need to Improve" AASHTO “Need to Maintain" FHWA C&P “Need to Maintain"

11. Presented by $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Cumulative Needs Billions, 2000 Dollars Cumulative Needs and Revenues, 2005 to 2025 (billions 2000 constant dollars) AASHTO Maintain $4.2 trillion AASHTO Improve$5.1 trillion C&P Maintain $3.8 trillion C&P Improve $4.6 trillion

12. Presented by Annual Highway Needs & Revenues (billions 2000 constant dollars) $100 $120 $140 $160 $180 $200 $220 200020052010201520202025 Billions, 2000 dollars FHWA C&P MaintainFHWA C&P Improve AASHTO ImproveAASHTO Maintain Total Revenues AASHTO “Need to Improve” FHWA C&P “Need to Improve" FHWA C&P “Need to Maintain" AASHTO “Need to Maintain"

13. Presented by $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Cumulative Needs Billions, 2000 Dollars $3.4 trillion Existing Sources of Revenues Cumulative Needs and Revenues, 2005 to 2025 (billions 2000 constant dollars) AASHTO Maintain $4.2 trillion AASHTO Improve$5.1 trillion C&P Maintain $3.8 trillion C&P Improve $4.6 trillion

14. Presented by VMT Index/Lane-Mile Index Current Revenues Will Not Improve Travel Performance 90 100 110 120 130 140 150 160 170 180 190 19801985199019952000 VMT Index/Lane-mile Index (1980 = 100) Lane Miles VMT

15. Presented by Large Urban Areas Medium Urban Areas Small Urban Areas Annual Congestion Costs Congestion Costs Have Been Increasing Dramatically Annual Cost (Billions of 2001 $) Source: Texas Transportation Institute (TTI) $0 $10 $20 $30 $40 $50 $60 $70 $80 1982198519881991199419972001

16. Presented by Source: FHWA HPMS data Congested Highways, 2000

17. Presented by Congested Highways, 2020 Source: FHWA HPMS data

18. Presented by Index Federal Motor Fuel Tax Average Annual Revenues (billions 2000 constant dollars) $100 $120 $140 $160 $180 $200 $220 200020052010201520202025 Billions, 2000 dollars FHWA C&P MaintainFHWA C&P Improve AASHTO ImproveAASHTO Maintain Total Revenues AASHTO “Need to Improve” FHWA C&P “Need to Improve" FHWA C&P “Need to Maintain" AASHTO “Need to Maintain" Index MFT

19. Presented by $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Needs Billions, 2000 Dollars Existing Revenues $3.4 trillion Existing Revenues Plus Indexed MFT $301 billion Indexing MFT Cumulative Needs & Revenues 2005 to 2025 (billions 2000 constant dollars) AASHTO Maintain $4.2 trillion AASHTO Improve$5.1 trillion C&P Maintain $3.8 trillion C&P Improve $4.6 trillion $3.7 trillion $3.4 trillion

20. Presented by AASHTO “Need to Improve” FHWA C&P “Need to Improve" FHWA C&P “Need to Maintain" AASHTO “Need to Maintain" Increase Tolling Average Annual Revenues (billions 2000 constant dollars) $100 $120 $140 $160 $180 $200 $220 200020052010201520202025 Billions, 2000 dollars FHWA C&P MaintainFHWA C&P Improve AASHTO ImproveAASHTO Maintain Total Revenues Increased Tolling & HOV

21. Presented by $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Needs Billions, 2000 Dollars Expand Tolling and HOT Lanes Cumulative Needs & Revenues 2005 to 2025 (billions 2000 constant dollars) $3.4 trillion Option A Existing Revenues Plus Indexed MFT $301 billion $3.7 trillion $3.4 trillion Option B Indexed MFT Revenues Plus Increased Tolling $3.5 trillion AASHTO Maintain $4.2 trillion AASHTO Improve$5.1 trillion C&P Maintain $3.8 trillion C&P Improve $4.6 trillion $67 billion

22. Presented by AASHTO “Need to Improve” FHWA C&P “Need to Improve" FHWA C&P “Need to Maintain" AASHTO “Need to Maintain" High and Low Yields from Mid-Term Corrections Average Annual Highway Needs & Revenues (billions 2000 constant dollars) $100 $120 $140 $160 $180 $200 $220 200020052010201520202025 Billions, 2000 dollars FHWA C&P MaintainFHWA C&P Improve AASHTO ImproveLow Revenue EstimateAASHTO Maintain High Revenue Estimate

23. Presented by AASHTO “Need to Improve” FHWA C&P “Need to Improve" FHWA C&P “Need to Maintain" AASHTO “Need to Maintain" VMT Base Fee Revenue Neutral Switch from MFT to VMT Fee Average Annual Revenues (billions 2000 constant dollars) $100 $120 $140 $160 $180 $200 $220 200020052010201520202025 Billions, 2000 dollars FHWA C&P MaintainFHWA C&P Improve AASHTO ImproveAASHTO Maintain Total Revenues Base VMT Fee

24. Presented by $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Needs Billions, 2000 Dollars $3.4 trillion All Mid-Term Fixes C&P Improve $4.8 trillion AASHTO Maintain $4.4 trillion AASHTO Improve$5.3 trillion C&P Maintain $4.0 trillion Option D Base VMT Fee VMT Base Fee Cumulative Needs & Revenues 2005 to 2025 (billions 2000 constant dollars) $3.9 trillion $67 billion $3.8 trillion $3.8 trillion.

25. Presented by Gross State MFT Deposits (Unadj.)+46%

26. Presented by Gross State MFT Deposits Purchasing Power of State MFT Deposits+46% +8%

27. Presented by Texas Motor Fuel Tax Motor Fuel Tax (CPI Adjusted)

28. Presented by Texas Motor Fuel Tax per 100 VMT MFT (Adj.) per 100 VMT -26%

29. Presented by presented by David M. Laney September 2005 Funding of Highways: Crisis and Solutions