Regional Transportation Infrastructure Finance in the

United States: Influences and Trends

Final Report

Principal Investigator: Martin Wachs

Director, Institute of Transportation Studies

109 McLaughlin Hall

University of California, Berkeley

Berkeley, CA 94720-1720

Phone: (510) 642-3585

Fax: (510) 642-1246

E-mail: mwachs@uclink4.berkeley.edu

Funded by a University of California Transportation Center research grant (year 12).
DISCLAIMER
The contents of this report reflect the views of the authors, who are responsible for the facts and the accuracy of the information presented herein. This document is disseminated under the sponsorship of the Department of Transportation, University Transportation Centers Program, in the interest of information exchange. The U.S. Government assumes no liability for the contents or use thereof
Acknowledgements
The research on which this report is based was carried out for the University of California Transportation Center (UCTC). Funding for the Center comes in equal parts from the US Dept. of Transportation and the California Department of Transportation (Caltrans.)  The University of California also provides support though reduction of overhead charges and the donated time of many faculty, students, and administrative staff.  The researchers of the UCTC are grateful for all of this support.

Objective:

This study examined the extent to which states have devolved one of the most fundamental decisions in transportation policy -- whether to use taxation powers to fund transportation improvements -- to local and regional governments.  The purpose of the study was to generate a baseline of knowledge on “local option transportation taxes” in all fifty states, including the relevant legislative authority for these taxes, the extent to which local areas have adopted them, and the roles they play within their states’ overall transportation finance frameworks.

Research Approach:

The first stage of our research involved an examination of existing sources of data on local transportation finance, including publications from the Federal Highway Administration, Federal Transit Administration, and the U.S. Census Bureau, as well as publications by non-governmental entities such as the Commerce Clearing House.  These were followed by information requests to state departments of transportation, departments of revenue, and major transit agencies.  A third step, involved a state-by-state examination of laws governing local option taxes and a search of state web pages for data on actual tax rates and revenues.  Fourth, we surveyed city and county governments in a dozen states (Arizona, Colorado, Florida, Georgia, Illinois, Missouri, Nevada, New York, Ohio, Pennsylvania, Texas, and Washington) to develop a more detailed picture of how various local option transportation taxes are actually implemented.  The final step, was to ask transportation finance experts in each state to review our preliminary findings, to ask for their assistance in filling data gaps, and to interview them about overall issues and trends in their states.

Key Findings:

The study found that local option taxes are being used in one form or another for transportation finance in nearly every state.  Sales taxes are the most commonly used revenue source for major new transportation initiatives.  The rapid spread of state laws authorizing local option sales taxes, and of local actions to adopt these taxes, stands in sharp contrast to the relatively stagnant use of local gasoline and vehicle taxes around the country.  This suggests a relative decline over time in the significance of user fees in local transportation finance.

Another key finding is that with few exceptions, metropolitan planning organizations are given no role in determining the uses of revenues from local option transportation taxes.  In most states the uses of these taxes are fixed in law at the time a tax is adopted, or is left to the discretion of a city, county, special district, or special transportation authority charged with administering the tax.  This suggests that key decisions about major new transportation services and infrastructure investments are made outside the federally-mandated metropolitan transportation planning process.

Project Outcomes:

1.  Todd Goldman, Sam Corbett, and Martin Wachs. Local Option Transportation Taxes in the United States, Part I: Issues and Trends. Report UCB-ITS-RR-2001-3, March 2001.

2.  Todd Goldman, Sam Corbett and Martin Wachs. Local Option Transportation Taxes in the United States, Part II: State-by-State Findings. Report UCB-ITS-RR-2001-4, March 2001.

3.  Creation of a web site for publication of state-by-state results.  This is available at: http://www.its.berkeley.edu/publications/localoptiontax/localoptiontaxmain.html

4.  Todd Goldman and Martin Wachs. “A Quiet Revolution in Transportation Finance” (To be submitted to a journal in March, 2002).

Acknowledgements

This research was funded with a generous grant from the University of California Transportation Center, and conducted at the Institute of Transportation Studies, University of California at Berkeley.

The authors would like to thank to Marieke Baan, Aimee Chong, Rachel Hiatt, Justine Lam, and David Weinreich for their helpful research assistance.  We would also like to express our deep gratitude to the hundreds of transportation and public finance professionals in government and private associations who provided us with data, explanations, and feedback throughout this research project.   This research would not have been possible without their generous and insightful assistance.