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3In 1937, Oregon conducted the nationâs first highway cost allocation study (HCAS). Since that first HCAS, at least 84 studies have been performed in 30 states. An HCAS is a study that is designed to determine the fair share that each class of road user should pay for the construction, mainte- nance, operation, improvement, and related costs of state highways, roads, and streets. Through a comparison of user fees paid and cost responsibilities estimated within the HCAS, these studies assess equity, usually for a projected period, and may provide recommended adjustments to ex- isting user fees and tax rates to bring about a closer match between payments and cost responsibilities for each vehicle class. Ultimately, an HCAS is an analysis of the equity of highway-user tax systems. Thus, it seeks to answer such questions as: ⢠Do highway users as a whole pay the full cost of highways or are they subsidized by non-users? 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? In addition to assessing equity in the current tax structure, HCASs can be useful in addressing a number of other tax issues. For example, HCASs can be used to develop special permit fee schedules for overweight vehicles or implement marginal cost pricing through toll- or mileage-based fee schedules for specific vehicle classes, differentiated by weight and configuration. Ideally, HCASs are conducted within the framework of specific policies and procedures that are agreed on by both the legislative and executive branches of government. Broad-based agreement on the principles underlying the HCAS is important because the results of the study are intended to lead to the modification of tax and fee schedules in a manner that most effectively achieves equity and/or efficiency in the tax structure. Only rarely, however, have states achieved this ideal framework. Movement toward this goal has been achieved in some states through legislation authorizing an HCAS or a statement of intent to reach this ideal framework. HCASs are often conducted: (1) because of the neces- sity to routinely (e.g., every 2 to 5 years) monitor the need for adjustments in tax rates, (2) because of the perceived need for changes in tax and fee schedules, (3) because of perceived problems in the inequity of the current tax structure, or (4) because of basic changes in the highway program that raise questions about who should be paying for the program. Historically, HCASs have generally been conducted on an infrequent basis without any clearly defined prior com- mitment to follow up with legislative or executive action. Legislative recommendations often follow the completion of an HCAS, with mixed results, ranging from adoption of study recommendations to ignoring or openly rejecting them. With that noted, HCAS results generally influence policy makers as they consider making changes to existing trans- portation tax structures, although in many cases actions are taken after some period of debate and deferral. Further, HCASs are also valuable because they can be used to inform responses to legislative bodies regarding a wide variety of tax-related issues. PROJECT GOALS AND SCOPE The overall goal of this project is to assist states in perform- ing comprehensive HCASs. At least 30 state governments have at some time conducted these studies to evaluate their systems of state road user charges, fees, and taxes. Studies vary in depth and scope. To date, results have been mixed. This synthesis compares and contrasts what has been com- pleted by various states and seeks to provide guidance for future studies based on this experience. To assist states in performing comprehensive HCASs, this project provides practitioners with information to improve their process of evaluating cost responsibilities, attributing revenue, and implementing study results. Both federal and state highway agencies utilize HCASs to evalu- ate their revenue systems and to maintain a cost-based user system. CHAPTER ONE INTRODUCTION
States have adapted a wide variety of techniques and con- ventions to estimate highway use and the payment of user fees by vehicle classes. This study examines the HCAS state of the practice by addressing numerous questions and issues, including: ⢠States that have completed cost allocation studies; ⢠Software used in the cost allocation study; ⢠Vehicle classes and how they are differentiated; ⢠Functional class of the road systems considered in HCASs; ⢠Conceptual basis of HCAS methods; ⢠Methods used (e.g., cost-occasioned, marginal costing, and benefits analysis); ⢠Selecting appropriate cost allocators; ⢠Methodologies for revenue allocation [e.g., vehicle miles of travel (VMT), number of vehicles, roads used, and over-the-road weights]; ⢠Treatment of diversions of highway-user revenues to other uses (e.g., law enforcement and education); ⢠Implementing cost responsibility in the presence of tolling and other facility-specific fees; ⢠Relationships between vehicle characteristics and road- way usage and capacity demands; ⢠Relationships between vehicle characteristics and pave- ment damage; ⢠Methodologies for allocation of load- and non-load- related pavement and bridge costs; and ⢠Emerging issues (e.g., allocating costs associated with congestion, air pollution, noise, human health, and prop- erty damage). STUDY APPROACH To address the issues listed previously in this section, the re- search team conducted an extensive literature review and implemented a survey that was distributed to all 50 state de- partments of transportation (DOTs). The research team used available in-house resources and facilities to identify relevant literature. The research team reviewed a broad spectrum of technical material, ranging from industry trade journals to university databases. The following sources of information and literature were reviewed: ⢠Proceedings of TRB annual meetings; ⢠Transportation Research Records; ⢠Transportation Research Information Services (TRIS) bibliographic database; ⢠National Transportation Library; ⢠U.S.DOT, FHWA; ⢠State DOTs; ⢠Web of Science and National Technical Information Service (NTIS) website; ⢠Industry representatives. 4 A highway cost allocation study bibliography is presented at the conclusion of this report. The research team, working with TRB staff, also con- ducted a survey of all 50 state DOTs. The survey question- naire is presented in Appendix A. Before sending the questionnaire to state DOTs, a test survey was completed by representatives of the Arizona DOT and Vermont Agency of Transportation (VTrans). Based on comments received from these reviews, a revised questionnaire was sent to all mem- bers of the AASHTO Standing Committee on Highways, which is comprised primarily of directors of highway agen- cies. Copies were also sent to all of the other members of the Standing Committee on Highways, and all members of AASHTOâs Committee of Planning Directors for their infor- mation and advance notice that the state HCAS questionnaire might be forwarded to them by their state DOT or highway director. Appendix B contains a detailed report on the results of the survey. A good representation of state experience has been reported, with 33 of the 50 states responding. States that responded included nearly all that are known to have com- pleted HCASs since 1982, the year of the federal study that made the most ambitious improvements in research and study methodology. The 33 reporting states also include a good representation of states that have not completed HCASs since 1982, thus providing a good indication of why many states do not perform these studies. This report is comprised of six chapters, including this in- troduction. Chapter two documents the history and evolution of state HCASs in the United States from 1982 to the present. In chapter three, there is an examination of the state of the practice regarding numerous key methodological issues dealt with in state HCASs. Why state HCASs are performed and what impact they have is discussed in chapter four. Chapter five includes an extensive set of guidelines for analyzing state data in a comprehensive HCAS and for responding to a wide variety of other opportunities and challenges relating to the equity of tax structures, emerging issues, problems in implementing HCAS findings, dealing with the roles of dif- ferent levels of government, and others. In chapter six, there are study conclusions and recommendations including an evaluation of options to improve the prospects for the future of state HCASs in response to recent challenges. The report also includes references, an HCAS bibliogra- phy, a list of acronyms, and a glossary. In addition, the report contains three appendices. Appendix A is the state HCAS survey questionnaire that was distributed to state DOTs. Appendix B summarizes the results of the survey. Appendix C contains a letter from the Vermont Agency of Transporta- tion detailing problems with the FHWA State HCAS Model.
