Transportation Funding: How it Works and Why It Matters to Agriculture David R. Ellis, Ph.D. Senior Research Scientist Infrastructure Investment Analysis Program Texas A&M Transportation Institute The Texas A&M University System
Transportation Funding: How it Works and Why It Matters to Agriculture The Bigger Picture
Accepted Truths • Once upon a time the U.S. had the most efficient transportation systems in the world
Accepted Truths ? • Once upon a time the U.S. had the most efficient transportation systems in the world. • Arizona had one of the most efficient transportation system in the U.S. • Is this still true?
So…what happened? U.S. World Ranking 25 th in Overall Infrastructure • 20 th in Quality of Roads • 19 th in Quality of Port Infrastructure • 30 th in Air Transport Infrastructure •
Sampling of Countries Ahead of the United States • • France Spain • • UAE Japan • • Portugal Canada • • Oman Denmark • • Switzerland South Korea • • Austria Saudi Arabia • • Hong Kong Bahrain • • Finland Singapore • • Germany Iceland • • Netherlands South Africa
So…what happened? So…what happened?
Percent Annual Increase: 1970 to 2015 Demand Supply 238% 250% Annual Percent Increase 200% 172% 150% 125% 100% 50% 19% 0% Population Registered Vehicle Miles State-Maintained Vehicles Traveled Lane Miles
Where does the money come from?
Where does the money come from? • State/Local Motor Fuel Taxes
Where does the money come from? • State/Local Motor Fuel Taxes • Reimbursement of Federal Motor Fuel Taxes
Where does the money come from? • State/Local Motor Fuel Taxes • Reimbursement of Federal Motor Fuel Taxes • Vehicle Registration Fees
Where does the money come from? • State/Local Motor Fuel Taxes • Reimbursement of Federal Motor Fuel Taxes • Vehicle Registration Fees • Debt
Where does the money come from? • State/Local Motor Fuel Taxes • Reimbursement of Federal Motor Fuel Taxes • Vehicle Registration Fees • Debt • General Revenue
Where does the money come from? • State/Local Motor Fuel Taxes • Reimbursement of Federal Motor Fuel Taxes • Vehicle Registration Fees • Debt • General Revenue • Others?
How Arizona Ranks Vehicle Registration Cost of Vehicle Fuel Taxes Fees Ownership 0 5 10 15 20 25 30th 30 36th 35 40 45 50th 50
7.2 6.6 '13 Effective Federal Tax Rate 7.8 7.2 '12 Effective State Tax Rate 9.2 8.5 '11 Purchasing Power of the Gasoline Tax 9.9 9.1 '10 9.6 8.9 '09 7.6 7.0 '08 8.5 7.9 '07 8.4 7.7 '06 9.6 8.8 '05 12.0 11.0 '04 13.5 12.4 '03 13.6 12.5 '02 13.1 12.1 '01 13.9 12.8 '00 13.9 12.8 '99 14.8 13.6 '98 16.1 14.8 '97 16.6 15.3 '96 17.1 15.7 '95 17.6 16.2 '94 18.1 18.4 '93 18.9 13.3 '92 20.0 14.1 '91 40 35 30 25 20 15 10 5 0 Cents Per Gallon
Fuel Efficiency (Miles per Gallon) 14 16 18 20 22 24 '91 Gallons of Gasoline Used Fuel Efficiency (in MPG) '92 '93 '94 '95 Downside of Increased '96 '97 Fuel Efficiency '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 500 550 600 650 700 750 Gallons of Gasoline
What Do We Know? • Transportation funding has not kept pace with demand • Mobility will get worse – How much worse? Depends on how much effort to address the problem • Failure has consequences • The Cost of “No” is High!
Labor Markets and Consumer Markets Shrink 1 Hour
Labor Markets and Consumer Markets Shrink 1 Hour
What Can We Do?
What Can We Do? • Increase Funding
What Can We Do? • Increase Funding • Be Smarter
Benefit-Cost Analysis
Benefits to Calculate Vehicle Business Time Personal Time Operating & Reliability & Reliability Cost savings Cost Savings Cost Savings Safety Shipper Social & Reduction Logistics Environmental Value Productivity Value
What Can We Do? • Increase Funding • Be Smarter • Be Innovative
What Can We Do? • Increase Funding • Be Smarter • Be Innovative • Get Started
How Do You Eat an Elephant?
How Do You Eat an Elephant? One Bite at a Time
You think the world isn’t changing? Has the World Changed? Ask:
You think the world isn’t changing? Has the World Changed? Ask: • Blockbuster
You think the world isn’t changing? Has the World Changed? Ask: • Blockbuster • Kodak
You think the world isn’t changing? Has the World Changed? Ask: • Blockbuster • Kodak • Borders
You think the world isn’t changing? Has the World Changed? Ask: • Blockbuster • Kodak • Borders • Radio Shack
You think the world isn’t changing? Has the World Changed? Ask: • Blockbuster • Kodak • Borders • Radio Shack • RIM (Blackberry)
You think the world isn’t changing? Has the World Changed? Ask: • Blockbuster • Kodak • Borders • Radio Shack • RIM (Blackberry) • Polaroid
You think the world isn’t changing? Has the World Changed? Ask: • Blockbuster • Kodak • Borders • Radio Shack • RIM (Blackberry) • Polaroid • Newspapers
Transportation Funding: How it Works and Why It Matters to Agriculture The Current Funding System
Where does the money come from? • State/Local Motor Fuel Taxes • Reimbursement of Federal Motor Fuel Taxes • Vehicle Registration Fees • Debt • General Revenue • Others?
7.2 6.6 '13 Effective Federal Tax Rate 7.8 7.2 '12 Effective State Tax Rate 9.2 8.5 '11 Purchasing Power of the Gasoline Tax 9.9 9.1 '10 9.6 8.9 '09 7.6 7.0 '08 8.5 7.9 '07 8.4 7.7 '06 9.6 8.8 '05 12.0 11.0 '04 13.5 12.4 '03 13.6 12.5 '02 13.1 12.1 '01 13.9 12.8 '00 13.9 12.8 '99 14.8 13.6 '98 16.1 14.8 '97 16.6 15.3 '96 17.1 15.7 '95 17.6 16.2 '94 18.1 18.4 '93 18.9 13.3 '92 20.0 14.1 '91 40 35 30 25 20 15 10 5 0 Cents Per Gallon
Fuel Efficiency (Miles per Gallon) 14 16 18 20 22 24 '91 Gallons of Gasoline Used Fuel Efficiency (in MPG) '92 '93 '94 '95 Downside of Increased '96 '97 Fuel Efficiency '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 500 550 600 650 700 750 Gallons of Gasoline
How Arizona Ranks Vehicle Registration Cost of Vehicle Fuel Taxes Fees Ownership 0 5 10 15 20 25 30th 30 36th 35 40 45 50th 50
What Does it All Mean?
What Does it All Mean? Three Things • The current system of funding is not sufficient
What Does it All Mean? Three Things • The current system of funding is not sufficient • A new system will need to replace it – probably a mileage based fee or some sort
What Does it All Mean? Three Things • The current system of funding is not sufficient • A new system will need to replace it – probably a mileage based fee or some sort • Private money will be used – public-private partnerships
Transportation Funding: How it Works and Why It Matters to Agriculture The Future of Funding
“The Trump Infrastructure Plan”
“The Trump Infrastructure Plan” The Basic Elements • $1.5 trillion in infrastructure investment over the next 10 years
“The Trump Infrastructure Plan” The Basic Elements • $1.5 trillion in infrastructure investment over the next 10 years • Of the $1.5 trillion, $200 billion would be federal funds
“The Trump Infrastructure Plan” The Basic Elements • $1.5 trillion in infrastructure investment over the next 10 years • Of the $1.5 trillion, $200 billion would be federal funds • $1.3 trillion would come from states, cities, counties, the private sector, and other sources
“The Trump Infrastructure Plan” The Basic Elements • $1.5 trillion in infrastructure investment over the next 10 years • Of the $1.5 trillion, $200 billion would be federal funds • $1.3 trillion would come from states, cities, counties, the private sector, and other sources • “Infrastructure” mean roads, airports, ports, rail, airports, flood control, water, wastewater
“The Trump Infrastructure Plan” The $200 Billion • $100 billion in competitive grants to states based on a 80 percent state/20 percent federal cost sharing basis
“The Trump Infrastructure Plan” The $200 Billion • $100 billion in competitive grants to states based on a 80 percent state/20 percent federal cost sharing basis • $50 billion for rural instrastructure with 80 percent of the funds distributed on a fomula-based basis
“The Trump Infrastructure Plan” The $200 Billion • $100 billion in competitive grants to states based on a 80 percent state/20 percent federal cost sharing basis • $50 billion for rural instrastructure with 80 percent of the funds distributed on a fomula-based basis • $20 billion added to existing loan programs
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