Our nation is faced with a shortfall in funding desired transportation improvement programs. Texas is one of many states currently at crisis level as it is faced with an estimated annual funding shortfall of about $7 billion dollars between projected needs and transportation fund availability. This is a result of increased vehicle miles traveled and significant population growth that has outpaced the state's transportation fund availability. Not only is the Texas transportation system declining in quality, but it is rapidly falling behind in the quantity needed to maintain current quality of life. As the Texas Mobility Fund balance approaches zero, the state needs to look toward non-traditional financing mechanisms to address its revenue shortfall. This report examines the problems associated with increased transportation demands in Texas and financing the expansion and maintenance of the state's transportation system.
Under the current fuel-tax-based highway financing system, the funding gap between highway needs and revenue available is expected to grow as vehicle fuel economy improves and use of alternative fuels increases. Consequently, the highway financing mechanism needs to be restructured or a different financing strategy undertaken. Previous research provided examples of successful implementation of pricing schemes in terms of design of pricing scheme, technology issues, legal and institutional issues, and public acceptability. Synthesizing this information, a methodological framework was established for evaluation of alternative user charging schemes. Based on the assessment of the current and projected highway revenue and the needs and demand of Indiana, the study developed three alternative financing schemes: (1) enhancement of the current tax system; (2) addition of new funding sources to supplement the current system; and (3) replacement of the current system with new financing schemes. Each alternative was evaluated on the basis of the established criteria and compared with the other two alternatives. The third alternative, to replace the current fuel tax system with VMT fees, was found to have the best potential in achieving revenue adequacy, system efficiency, and equity. The implementation of this alternative, however, could be cost-prohibitive and could face opposition from the public. Based on evaluation results, a stepwise modification of the current system was proposed, aiming at a long-term goal of implementing ISCURP.
For more than a decade, transportation officials have been concerned that, at current levels, the fuel tax, the primary funding source of surface transportation in the United States, would not provide enough revenue to satisfy the ever rising transportation needs. Recent studies have evaluated alternative funding strategies at the national and state levels. In this dissertation, the author improves this evaluation procedure by developing a multi-criteria evaluation of different funding options for implementation in Texas using a technique called PROMETHEE. This evaluation uses a new criteria system established through his Delphi survey of Texas-based experts who are experienced in transportation financing and/or participate in transportation funding policy decisions. With a well-organized survey process, the author tries to develop a consensus among the officials from metropolitan planning organizations in Texas, various districts of the Texas Department of Transportation and the staff of the Texas Legislative Transportation Committee members regarding the criteria and their weights. The resultant criteria weights seem to indicate that the expert panel members recognize the importance of public opinion and its impact on reaching a legislative solution. They appear to be less concerned about criteria that may be addressed through research and modifications to the funding alternatives. This research shows that the funding policy is not seen as a tool for improving user efficiency; this result differs from the common view in the literature that encourages the fuel tax's replacement with VMT charges, which have high implementation and operating costs. Since the criteria system is based on a Texas based panel opinion, it likely strengthens the credibility of the resultant recommendations among the public. Based on his evaluation, the author recommends increasing the fuel tax and tolling all new freeway capacity, while gradually moving towards congestion based tolls on all toll roads as the set of future funding options. Through a scenario analysis, he shows that his recommendations are not affected by the differences in opinion regarding the criteria weights or any uncertainties in the scoring. Complex, high-cost methods that require advanced technology such as VMT charges and tolling of all existing urban highways are not preferred. Previous researchers' attempts to identify new alternatives have mainly concentrated on improving the revenue sustainability and promoting efficient travel behavior. With this research, the author tries to bring back the focus to public acceptance and any factors that influence it. Effort to improve the public awareness of transportation funding needs and to improve the public acceptance of increasing the fuel tax and other user charges appear critical for future success. The author also analyzes the choice of implementing local funding solutions in place of statewide funding solutions. In the expert survey, the panel members suggest a balance between the two types of funding while the statewide funding should remain primary. Based on the literature review and Delphi survey responses, the author proposes the integration of both methods such that statewide funding remains primary, local funding is coordinated by regional planning and the user-pay principle continues to govern transportation funding.
