helpful to keep in mind a definition of a generic, comprehensive reform package. Such a package would have five components:

  • Defined goals: The proposal should define what the finance scheme is intended to accomplish, with reference to overall transportation policy goals. Finance system goals should not only refer to revenue adequacy but also acknowledge that finance provisions influence transportation program outcomes, including operating efficiency and the quality of investment decision making.

  • Assignment of responsibilities among the federal, state, and local government and the private sector: The appropriate assignment of responsibility will depend in large part on revenue sources, so if new revenue sources are contemplated, it will be necessary to think through the implications for spheres of responsibility. For example, to the extent that local and state governments have mechanisms to charge all users of roads within their jurisdictions rather than just residents, the need for involvement of higher levels of government is lessened. Changes in the control of revenue will translate into changes in control of spending and operating decisions.

  • User fee and pricing rules: The proposal should identify sources of funds and, assuming user fees are employed, should specify how rates would be set. Today, federal and state elected officials directly decide the distribution of the burden of taxes and fees supporting transportation among categories of users (e.g., between light vehicles and large trucks) and the public. These decisions are influenced to an extent by transportation agencies’ needs studies and cost allocation studies. In a finance scheme that relied heavily on revenue from tolls or mileage fees, success or failure would depend on the rules determining the levels of tolls and fees and the fee differentials corresponding to characteristics of users, traffic, and the facility. Revenue and demand management are not necessarily incompatible pricing objectives; however, both consequences of pricing decisions would have to be taken into account.

  • Rules on disposition of revenues and on budget and project selection decision making:Today, as a consequence of the mechanisms of dedicated taxes and trust funds in federal and state transportation programs, transportation program spending is constrained by revenues during the intervals between legislative rate adjustments. Individual project selection is also influenced through the details of federal-aid program rules, such as matching share and project design requirements. A new finance scheme could involve different forms of connections between revenue and spending, or it could suppress any direct linkage. For example, if tolls or mileage charges become important sources of revenue, the revenue-raising potential of new road projects is likely to become a factor in project selection decisions, and components



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