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FORECASTING TRANSPORTATION REVENUE SOURCES: SURVEY OF STATE PRACTICES States, and the federal government, face a serious transportation funding and revenue crisis. Both inflation and increasingly demanding fuel economy standards have reduced the real value of transportation revenue streams, while the politics surrounding transportation revenues has become more contentious. Funds required to operate and manage existing programs are in short supply, and these programs often must compete for financial support with proposed new capital investments. This makes accurate forecasting of transportation revenue increasingly important. At the same time, fluctuations in economic conditions and reliance on new sources of revenue that are beyond the control of state authorities, such as voter-approved county sales taxes, make transportation revenues more difficult to forecast at the state level. Even as state and local governments develop their short- and long-range transportation programs and evaluate potential new or alternate funding sources, there is as yet little published guidance on or consistency in the methods used to forecast traditional revenue sources, and even less on techniques for estimating revenue from innovative sources. This synthesis report presents information based on a review of the literature; a national survey of departments of transportation (DOTs) in the 50 states and the District of Columbia and Puerto Rico; telephone interviews of state officials; and reviews of documents describing state practices. The results of the synthesis offer a number of findings that help characterize state DOT revenue forecasting. The key findings are: ⢠Revenue forecasting is commonly practiced, yet the methods, projected years of fore- cast, and institutional arrangements by which it is done vary significantly. ⢠The types of transportation revenues that most states report forecasting are generally âtraditional,â that is, from fees, taxes, and federal or state allocations. States also con- sider a variety of miscellaneous, less significant sources. ⢠The methodologies used by states to forecast transportation revenue include trend extrapolation; expert judgment; and econometric modeling, solely or in combination, and with varying degrees of sophisticationâno one of which was found to be unam- biguously superior. ⢠States have generally been satisfied by the accuracy of their revenue projections, though several reported that uncertainty concerning relevant conditions, including federal funding and data quality, had increased over the past decade. ⢠Mathematically sophisticated models were not shown to more accurate than simple projections or expert opinions; or considered to be worth the added procedural burdens and data requirements. ⢠Most states do not routinely measure nor report on the accuracy achieved by past forecasts. ⢠Few state DOTs take the lead in forecasting consequences of potential innovative reve- nue sources; instead, they perceive their roles to be implementing and enforcing policy. SUMMARY