Transcript On Whom The Toll Falls 1998

Revenue and Financing
David Levinson
Logrolling
• Logrolling and vote trading are
ubiquitous aspects of public
financing of infrastructure.
They are also essential because
simple majority decisions say
nothing about the intensity of
preferences. Yet when allowed
to proceed too far, they create
other inefficiencies -- there is a
finance externality.
• Logrolling is only significant
when minority feelings are more
intense than the majority's,
otherwise the majority prevails
anyway.
• Simple logrolling model
A
Major Road
B
C
Referenda
Imagine N farmers, each on cul-de-sac like roads A, B, and C, off of a
Major Road.
1) Each referendum to repair a single road, paid by all fails, farmers on
roads B and C won't vote for A, etc. --- Non-Cooperative
2) Kantian road service standards, when in need of repairs, any road
below some threshold gets repaired --- Cooperative, may require a
"Constitutional Arrangement"
Formula are possible in a narrow domain such as road repair, but much
harder when comparing between domains (roads vs. education).
Financing Mechanisms
•
•
•
•
•
•
•
•
•
•
Statute labor, or the corvee, working out the road tax
Donations
Private subscriptions
Assessments on adjacent property
Tolls
Fines for failure to perform statute labor
Public lotteries
Public land sales
Military Funds
Taxes
• (Railroads have financed with 3, 5, 7, 8 and some public subscription.
Public land sales were particularly important)
History
• In the 1790s, Lancaster Pike was the first significant
turnpike in the US
• In 1808, Gallatin posited that
• It was legitimate for government to finance roads
• Only roads with reasonable returns should be built
• Effective transportation is vital to the national defense
• The Federal Road of Act of 1916 established
formula funding, the state highway organization,
and the relative roles of government.
Public Role in Private
Sector
• Traditional
– Private contributions - $, in kind
• Facilitator
– Planning (Government coordination)
– Matching private $ affect government grants
– State as Broker
• Investor
– Sate as stockholder in private investment
– Transportation corridor development corporation
– State as developer
Private Role in Public
Sector
• e.g. Highways
• Design
• Build
• Operate (Lease to city for tax advantages?)
• Transfer
• Maintain
Financing
• Taxes relating to
transportation
– Tax increment financing
(Bonds issued against
increment)
– Value Capture Districts
(% increase in assessed
value due to
accessibility)
– Exactions and impact
fees (proportionate to
infrastructure or
congestion created)
– Proffers
– Regulation with
loopholes
•
Incentives to build
infrastructure
– Tax Exempt Bonds
– Regulatory Exemptions
– Government Backed
Bonds
– Eminent Domain
•
Alternative Private
Ownership of
Infrastructure
– Toll Road
– Local "Club"/Private
Driveways
Cost Allocation Study
•
•
•
•
Highways
Passenger Vehicles
93% of Travel miles,
64% of costs
Combination Trucks 5%
25%
weight distance tax would improve equity in the system and efficiency
Over Pay
Under Pay
Pickups and Vans cars, 3 axle-trucks,
tractor trailers
2-axle trucks
Buses
Transit Allocation
• Transit
– 1997 Fares total $7.126 Billion, Total Operating Funds,
$17.931 Billion
– Unlinked Trips 7.954 Billion
– -> approximately $1 fare, $3 average cost, marginal cost
probably less.
Financing Local
Transportation
Infrastructure
David Levinson
Disbursements for
highways Minnesota
($ in '000)
Category
Capit al
Maintenance
Administ rat ion
Interest
Bond Retirement
Grants in Aid to Locals/Payment s to Stat e
TOT AL
State (1997)
Local (1996)
558,716
724,807
268,519
443,418
146,587
220,608
4,484
49,586
12,785
194,313
459,304
36,934
1,450,395
1,669,666
Revenue for Highways
in Minnesota
Category
Motor Fuel Taxes
Vehicle Carrier Taxes
Federal FHWA
Federal Other
General Fund
Property T ax
Miscellaneous
Bond Proceeding
Local Governments/Payment from State
TOT AL
State (1997)
519,456
526,619
304,899
4,749
0
0
66,647
603
29,103
1,452,076
Local (1996)
0
0
0
4,045
430,700
399,416
55,424
177,962
604,962
1,672,509
Notes:
• No local user tax, no local tolls
• State doesn't use tolls or general revenues
• Local Miscellaneous much higher in
California
• Vehicle Tax has gone down since this data
out (reduction in vehicle tab)
Metro Transit (1995)
From National Transit
Database
Revenue Category
Operat ing
Fares
Fare Revenue Returned
Retired
Other Revenue
NonTransportation
Dedicated Other
UZA Formula
Other Federal
St ate General Revenue
St ate Dedicated
Local General Revenue
Dedicated Other (Local P rop erty Taxes)
TOT AL
Capit al
Property T ax
Gas Tax
Federal Capital Grant
UZA
TOT AL
Amount
43,69 8.5
3.3
0
1,32 4.5
79 1.0
0
3,37 7.2
23 8.1
0.0
20 6.6
20,20 0.0
56,09 5.5
12 5,93 4.8
14,20 3.1
86.4
5,17 3.4
13,40 8.9
32,87 1.8
Expenses
• Operating Expenses - $125,000,000 (837 vehicles > $149,000 / vehicle)
• Capital Expenses - #33,063,000 (Rolling Stock
23,617,000; Facilities 6,277,000; Other 3,173,000)
Cost Category
operat ing cost / vehicle revenue hour
operat ing cost / vehicle revenue mile
maintenance cost / vehicle revenue mile
non-vehicle maint enance / vehicle revenue mile
general administration / vehicle revenue mile
Unit Cost
$75.8
$3.3
$1.1
$0.2
$0.9
Gas Tax
• Federal - 18.4 cents/gallon
• State - 20.0 cents/gallon
• Range: 8 cents in Alaska to 30.8 cents in
Pennsylvania
Planners “Financing”
Tools
• Developer Exactions
• Impact Fees/Taxes
- Tend to be for basic services and infrastructure
- Technically straight-forward
- Legal Basis
- Minimize Cost to Developers
- Cost Sharing
• Negotiations and Proffers
• Development Districts
• Road Clubs
Transit Operators
Financing Tools
• Cervero - Rail Transit and Joint
Development
- Air Rights Leasing
- Benefit Assessment Districts
- Connection to Transit Charges
• History of railroad and checkerboard pattern
of development of American West
Other Financing Tools
• Local Option Gas Tax,
• Local Option Sales Tax
• Toll Roads, (Orange County, CA is building
network)
• VMT (Odometer) Tax
• Private Roads
Why States Toll:
An Empirical Model of Finance Choice
by David Levinson
Research Questions
•
•
•
•
States can impose tolls, yet not all do.
What are the explanatory factors?
How significant are they?
What would happen if transportation
powers were decentralized to metro areas
or counties?
Hypotheses
• Share of Toll Revenue Can be Explained by:
– Non-Resident Workers (+)
– Neighboring States’ Policies (+)
– Historical Factors (Miles of Toll Road before
Interstate Era) (+)
Perceptions of Toll
Incidence
Toll Incentives
Workplace
Residence
In (C)
In (D)
Out (B)
Local (Resident Worker)
Exported Labor
No incentive to toll
Out (A)
Imported Labor (Non-Resident Worker)
Medium incentive to toll
Small incentive to toll
Through
Large incentive to toll
Data by State
STATE
Alabama
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusett
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New
New Jersey
New Mexico
New York
North
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Percentage
Revenue from
Tolls (S)
0.0
0.0
0.0
2.1
0.3
0.0
25.3
7.8
0.4
0.0
0.0
9.3
4.3
0.1
6.5
0.8
2.9
10.5
7.0
10.4
0.7
0.0
0.0
0.1
0.0
0.2
0.0
11.8
27.3
0.0
33.2
0.1
0.0
3.3
7.6
0.5
11.7
3.7
0.0
0.0
0.0
2.5
0.1
0.0
4.7
4.1
6.6
0.0
0.0
Workers Who
Live Out of
State (O)
2.4
1.1
4.0
0.5
0.8
4.6
13.8
0.8
2.8
1.0
2.6
2.8
3.3
3.7
7.1
6.3
2.1
2.1
7.0
5.0
0.8
2.3
3.1
7.2
0.8
4.3
4.3
8.5
7.0
1.9
5.1
2.2
5.9
2.8
1.1
3.7
3.4
7.6
2.1
3.0
4.6
0.9
1.0
4.9
6.5
1.5
8.3
1.4
2.6
Residents
Who Work Out
of State
3.6
1.6
3.2
0.4
1.0
4.7
9.5
1.0
2.4
0.5
4.0
2.9
4.8
4.3
7.6
6.7
1.9
3.1
17.3
3.1
1.5
1.8
5.9
4.8
1.2
2.3
1.2
16.8
11.7
2.5
2.4
1.8
3.7
2.2
2.9
2.1
4.3
11.9
1.8
4.0
3.3
0.8
1.3
5.8
9.3
2.7
9.7
3.2
2.0
Miles
Toll Roads in
1963
Federal
Land
3.3
41.5
8.3
44.6
36.0
0.2
2.2
7.6
3.9
8.5
60.6
1.3
1.7
0.2
0.5
4.2
2.8
0.9
3.1
1.2
10.1
3.1
4.3
3.8
27.5
1.2
77.1
12.8
3.3
33.9
0.7
6.9
4.0
1.1
1.5
51.8
2.2
0.7
3.8
5.5
5.7
1.4
63.1
6.4
9.4
24.1
7.0
5.3
48.5
0
0
0
0
17
194
11
207
11
0
0
185
157
0
241
205
0
112
42
124
0
0
0
0
0
0
0
77
309
0
629
0
0
241
174
0
469
0
0
0
0
30
0
0
35
0
86
0
0
Freeways,
Expwy, 1995
925
1250
646
3750
1170
542
51
1861
1413
77
613
2245
1303
781
1008
855
929
383
711
762
1458
1042
726
1460
1190
497
586
266
728
1003
2328
1237
570
1937
1064
780
2087
137
894
681
1176
4474
948
1329
339
1079
560
830
916
Correlations Matrix
Population
(P)
Toll Share (S)
Toll
Share
(S)
1
Toll Mile
1963
Imported
Workers
Neighbor
Effect (N)
Land
Densit
y
Population (P)
0.27
1
Toll Mile 1963
0.71
0.39
1
Imported Workers (O)
Neighbor Effect (N)
Land
0.49
0.61
-0.32
-0.27
-0.03
0.36
0.16
0.36
-0.22
1
0.54
-0.50
1
-0.45
1
Density
0.53
0.18
0.39
0.39
0.70
-0.48
1
Federal Land (%)
-0.28
-0.07
-0.32
-0.29
-0.22
0.45
-0.32
Federal
Land
(%)
1
Regression Results
Intercept
Population (P) (millions)
Mile Ratio (M)
Imported Workers (O)
Neighbor Effect (N)
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
Observations
F
Significance F
Model 1
Coefficients
-0.03
0.00383
0.30
0.85
89877
0.81
0.65
0.62
0.04
49
20.87
0.00
t Stat
-2.42 **
3.20***
4.13***
2.92 **
1.71 *
Model 2
Coefficients
-0.036
0.00386
0.35
0.84
0.79
0.63
0.60
0.05
49
25.76
0.00
t Stat
-2.51 **
3.15***
5.25***
2.85 **
California Results
CMSANAME
Share
Bakersfield
Chico
Fresno
Los Angeles
0.027
0.014
0.025
0.027
Merced
Modesto
Redding
Sacramento
0.049
0.057
0.075
0.010
Salinas
San Diego
San Francisco
0.017
0
0.011
Santa Barbara
Stockton
Visalia
Yuba
NonMetro
0.028
0.141
0.012
0.057
0.069
APUMA (Counties)
Kern
Butte
Fresno
Orange
Los Angeles
Ventura
Riverside
San Bernardino
Merced
Stanislaus
Shasta
Yolo
Placer
El Dorado
Sacramento
Monterey
San Diego
Alameda
Contra Costa
Marin
San Francisco (city)
San Mateo
Santa Clara
Santa Cruz
Sonoma
Napa
Solano
Santa Barbara
San Joaquin
Tulare
Sutter, Yuba
Del Norte, Lassen, Modoc, Siskiyou
Humboldt
Lake, Mendocino
Colusa, Glenn, Tehama, Trinity
Nevada, Plumas, Sierra
Alpine, Amador, Calaveras, Inyo, Mariposa, Mono, Tuolumne
Madera, San Benito
Kings
San Luis Obispo
Imperial
Share
0.027
0.014
0.025
0.125
0.087
0.048
0.094
0.117
0.049
0.057
0.075
0.274
0.272
0.074
0.094
0.017
0
0.213
0.208
0.222
0.345
0.265
0.115
0.076
0.024
0.115
0.135
0.028
0.141
0.012
0.057
0.107
0.061
0.066
0.198
0.074
0.035
0.134
0.127
0.042
0.000
Conclusions
• Finance Choice depends on (positively) crossborder flows, neighboring state tolls, historical use
of tolls, and population.
• Devolving power to metropolitan areas is
insufficient to achieve significant road pricing.
• Under radical decentralization tolls may become
widespread.