United States Department of Transportation
i
Revenue Enhancement Alternatives for the Alabama Department of Transportation
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2012-10-01
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[PDF-1.07 MB]
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Edition:Final report.
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Abstract:This report examines several potential revenue enhancement alternatives for ALDOT. To provide specific, useful information, it focuses on three areas: A survey of Alabama citizens to determine their attitude toward several revenue enhancement alternatives; An evaluation of which of the alternatives are capable of producing significant revenue increase. Because of specific interest within ALDOT, this study estimated potential revenues from levying tolls on Interstate highways in Alabama The telephone survey of 1011 Alabama citizens aged 19 years and older asked respondents which of eight alternative revenue sources they prefer if additional resources were needed to improve Alabama roads and bridges. Some of the most pertinent results are shown below: Respondents are most strongly opposed to raising the gasoline tax (83.3% oppose or strongly oppose) and show low support for a road use fee (67.7% oppose or strongly oppose). Respondents show high support for taxing citizens other than themselves; they would raise taxes on the small percentages of Alabama citizens who own hybrids and electric vehicles (29.4% support or strongly support. Respondents showed highest support for taxing long Interstate trips (37.4% and 28.0% for 100-mile trips and 50-mile trips, respectively) Researchers examined seven options for increasing transportation funding revenue in Alabama. Indexing current revenue sources by both the Consumer Price Index and the Price Index of Construction Cost showed that those options generate little revenue in the short and mid-term. A tax on hybrid and electric vehicles would also raise little revenue in the short term. Revenue estimates for four other options show higher potential for significant revenue: Implementation of Sales Tax on Gasoline and Diesel Fuel Purchases. A 4% sales tax on these purchases could increase revenue by over $380 million/year. Increase in Excise Tax on Gasoline and Diesel Fuel. Each penny/gallon increase on gasoline raises approximately $26 million/year. Tax on Hybrid and Electric Vehicles. A 1% addition to the current 2% tax would raise approximately $1.7 million/year. General Vehicle Sales Tax Increase. Each percent-point increase above the current 2% tax rate would generate approximately $89 million/year. Application of a Road Use Tax. A road use tax of one cent per mile for driving on Alabama roads and highways would generate $68 million/year. Researchers ran two different models to estimate potential revenue from an eighth alternative: tolling Interstate highways in Alabama. Results from both models indicate that revenues of at least $240 million/year could be generated from implementing Interstate highway tolls. Results from the two models’ “Most likely” scenarios generated values of $249 million/year and $390 million/year. The estimates generated for this study are for a mature toll system. Implementing a toll system requires many one-time expenditures that may cost millions of dollars each, such as an investment-grade traffic-and-revenue study and software and equipment purchases for the Customer Service Center. Additionally, toll road use is depressed in the first years of operation while drivers become aware and accustomed to the toll and decide whether or not it is a good value. Estimates produced for this study do not include these one-time purchases, nor do they account for initial lower facility use after a toll has been implemented.
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