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Texas Dept. of Transportation on how much road gas taxes pay for

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  • Christopher Miller
    An interesting web page from the Texas Department of Transportation on how much of road sconstruction/upkeep is actually paid for by gas taxes:
    Message 1 of 1 , Jul 10, 2008
      An interesting web page from the Texas Department of Transportation on
      how much of road'sconstruction/upkeep is actually paid for by gas taxes:

      http://www.keeptexasmoving.com/index.php/news/Do_Roads_Pay_for_Themselves%3F

      ==========================================================

      Do Roads Pay for Themselves?
      1. What is a traveler paying for when he or she pays state gas tax at
      the pump?

      State motor fuel tax is collected from all over the state and goes
      into a single pool of revenue�about one quarter of which goes to fund
      education, and about three-quarters of which goes to the state�s
      highway fund, where it is spent on transportation uses and some non-
      transportation functions of government.

      Then the state receives federal funds as the state�s share of the
      federal fuel tax; about 70 cents of every gas tax dollar Texans send
      to Washington comes back for road use.

      The significant point here is that historically the fuel tax paid in
      any locality of the state is unrelated to the road projects in that
      locality. Every fuel taxpayer in the state paid something for any
      given road�which leads to the next issue.

      2. When is a given road actually �paid for?�

      Just like your car, it never is. You may have paid the note, but
      maintenance and fuel costs go on as long as you own the vehicle. Once
      a road is built, maintenance and rehabilitation costs last its entire
      life, generally about 40 years.

      The decision to build a road is a permanent commitment to the
      traveling public. Not only will a road be built, but it must also be
      routinely maintained and reconstructed when necessary, meaning no road
      is ever truly �paid for.�

      Until recently, when TxDOT built or expanded a road, no methodology
      existed to determine the extent to which this work would be paid off
      through revenues.

      The Asset Value Index, was developed to compare the full 40-year life-
      cycle costs to the revenues attributable to a given road corridor or
      section. The shorthand version calculates how much gasoline is
      consumed on a roadway and how much gas tax revenue that generates.

      The Asset Value Index is the ratio of the total expected revenues
      divided by the total expected costs. If the ratio is 0.60, the road
      will produce revenues to meet 60 percent of its costs; it would be
      �paid for� only if the ratio were 1.00, when the revenues met 100
      percent of costs. Another way of describing this is to do a �tax gap�
      analysis, which shows how much the state fuel tax would have to be on
      that given corridor for the ratio for revenues to match costs.

      Applying this methodology, revealed that no road pays for itself in
      gas taxes and fees. For example, in Houston, the 15 miles of SH 99
      from I-10 to US 290 will cost $1 billion to build and maintain over
      its lifetime, while only generating $162 million in gas taxes. That
      gives a tax gap ratio of .16, which means that the real gas tax rate
      people would need to pay on this segment of road to completely pay for
      it would be $2.22 per gallon. This is just one example, but there is
      not one road in Texas that pays for itself based on the tax system of
      today. Some roads pay for about half their true cost, but most roads
      we have analyzed pay for considerably less. To conclude, in the SH 99
      example, since the traffic volume for that road doesn't generate
      enough fuel tax revenue to pay for it, revenues from other parts of
      the state must be used to build and maintain this corridor segment.
      The same is true across the state, meaning that, as revealed by the
      tax gap analysis, overall revenues are not sufficient to meet the
      state�s transportation needs.

      ==========================================================

      Christopher Miller
      Montreal QC Canada



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