The National Academies

NCHRP 08-36/Task 23 [Completed]

Review of the Potential Feasibility of Using Alternative Revenue Sources to Fund Future State Transportation Needs
[ NCHRP 08-36 (Research for the AASHTO Standing Committee on Planning) ]

  Project Data
Funds: 50000
Research Agency: Cambridge Systematics
Principal Investigator: Arlee Reno
Effective Date: 4/18/2001
Completion Date: 7/31/2002
Comments: Completed---Final report sent to AASHTO

Currently, fuel taxes provide approximately ninety percent of the revenues deposited into the Federal Highway Trust Fund and are the primary revenue source for transportation financing in many states. There are three concerns about continued reliance on fuel as a primary transportation revenue source: 1) the supply of fuel will be exhausted in 20 to 30 years, based on current demand of fuels; 2) technological advances to improve vehicle fuel mileage, vehicle design, and develop alternative fuel types will reduce reliance on petrol based fuels; and 3) fuel taxes provide a very narrow tax base for transportation, which means the same group of tax payers keep paying more and more while the benefits are distributed more broadly. Consequently, there is a need to research and assess proposed alternative revenue sources and determine their effective use at the national level and by the states in maintaining an adequate and stable revenue sources. This is an appropriate time to research this issue since the issue is an improvement issue that will be considered in the reauthorization of TEA 21.

The objective of this research is twofold: 1) to analyze alternative and innovative sources of transportation revenue and 2) to evaluate alternative methods to broaden the transportation tax burden. The first step in this twofold effort should be to identify existing and potential alternative revenue sources including the innovative alternatives currently being utilized at both the federal and state level. Existing research and conference results are available to assist in this effort. However, only a minimum of the research time should be spent on identifying these existing and potential sources.

The majority of the time should be spent on analyzing only the most significant revenue sources and developing additional innovative sources that have not been completely explored yet. The research should take a proactive approach to developing new revenue sources, especially those sources that incorporate innovative technology components. This effort should identify those sources that states would be willing to cooperatively develop and that could be implemented across the nation. In evaluating these new revenue sources, the research should utilize performance measures such as inflation proof, revenues generated, administrative costs, etc. In so far as identified revenue sources may require long lead times, major legislative changes, or significant interstate or federal/state coordination, a set of potential actions should be developed that AASHTO could take to a) increase public discussion of the problem definition, b) better identify implementation barriers, and c) initiate institutional coordination activities.

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