Friday, November 27, 2015

UT Highway Study
The University of Tennessee has completed a study on the future of Roadway Funding in Tennessee. On a per-capita or per-vehicle-mile-traveled (VMT) basis, Tennessee spends less than almost any other state on its highways and roads. Fuel tax rates are among the lowest in the nation and transportation-related debt is nonexistent. Compared to other states, roadway dollars have been far less plentiful. Still, Tennessee has planned, built, and continues to maintain a roadway network that has better pavement, better bridges, and less congestion than most other comparable state systems. But funding continues to deteriorate. In 2013, TDOT had roughly $312 per person to spend on highways, placing the state third lowest in the nation. The gasoline and motor fuel (diesel) taxes together account for nearly 60 percent of state highway fund revenues. Tennessee’s combined gasoline tax of 21.4 cents per gallon ranks 12th lowest in the U.S.. Tennessee also is one of only five states that are free of highway-related debt. Stil, Tennessee roadways are in good condition. The state’s bridges are better than average. The researchers say a five cent increase in the tax rate would restore the purchasing power of the gasoline tax to levels seen in the early 2000s. And indexing the tax rate to inflation would help sustain revenue levels until 2023 when gasoline consumption is projected to decline. A combination of a higher tax rate and indexing would provide for significant revenue gains over time. Indexing the rate to vehicle fuel economy also would stem the erosion of revenue. The simplest and most commonly discussed policy response would be an increase in gasoline and diesel tax rates. Tennessee, like some other states, could apply a sales tax to gasoline purchases to generate additional revenues. But some of the states that embraced this approach only a few years ago are now abandoning it. Finally, there are a number of more ambitious, forward-looking fiscal tools that could be used to meet the projected revenue shortfall. For example, the state could tax roadway users based on the type of vehicle and the miles driven however the transition costs would be rather high. The study concludes with two cautions. First, the decision to do nothing and just accept whatever the status quo delivers, is probably a bad choice. Second, the degradation of existing highway performance is a very gradual process and not directly perceived by the eye or by one’s driving experience. This reality, coupled with the long lead time needed to build (or significantly expand) roads, suggests that, by the time we actually observe failing roadway capacity, the opportunity for a timely response will have long since passed.


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