Ove rvie w o f T ranspo rtatio n F unding Optio ns fo r No rth - PDF document

3/14/2018 Ove rvie w o f T ranspo rtatio n F unding Optio ns fo r No rth Dako ta Alan Dybing – Asso c iate Re se arc h F e llo w No rth Dako ta Sympo sium o n T ranspo rtatio n F unding Bismarc k Radisso n Marc h 14, 2018 Upper Great Plains Transportation Institute North Dakota State University Ove r vie w Taxes Fees Other Fuel Tax Registration Fees Tolls General Sales Tax Driver’s license fees PPP Vehicle Sales Excise Tax VMT Fee Transit Fares Property Taxes Utility Fees Special Assessments Overweight Permits Wheelage Tax Oil tax Legend: Existing source, most or all revenue allocated to transportation Existing source, allocated to various funds Potential source, currently non‐existent in North Dakota 1

3/14/2018 Pr e se ntation F or mat Description Viability Brief overview of the funding Assessment of the additional option. revenue that could be generated by the discussed option. Also, reflects on the implementation complexity from the administrative perspective. ND and peer states Sustainability Current use in ND and seven peer Responsiveness to higher fuel states: efficiency, changes in the global oil MN, WI, SD, NE, IA, MT, ID price, and alternative vehicle propel technologies (hybrid, electric). F ue l T ax (state ) Description Viability Fixed per‐gallon rate tax collected at High, currently generates $170 M in fuel racks. Not adjusted for inflation. annual revenue. Current Collected independently from the management and administration in fixed federal tax ($0.184/gal). place. ND and peer states Sustainability Vulnerable to higher fuel efficiency ND $ 0.230 NE $ 0.293 and emergence of alternative MN $ 0.286 IA $ 0.305 technologies. SD $ 0.329 MT $ 0.315 WI $ 0.300 ID $ 0.330 2

3/14/2018 F ue l T ax (state ) • Additio nal pro je c tio ns o f future de c line – Many studie s and pape rs have be e advanc e d in re c e nt ye ars. – Ve hic le MPG pro je c tio ns will impac t re ve nue • T e xas DOT study pro je c ts auto MPG to inc re ase to as high as 80 MPG by 2030 – c urre nt is 20 MPG – Co nne c tic ut sanc tio ne d 2017 study c o nduc te d by CDM Smith • Pro je c tio n – De c line in fue l sale s by 2040 ranging fro m 34% to 45% de c re ase • Pro je c tio ns – De c line in fue l tax re ve nue o f $20.8 billio n/ ye ar by 2025 (c o mbine d state & F e de ral) F ue l T ax (state ) 3

3/14/2018 F ue l T ax (state ) F ue l T ax (state ) • Additio nal pro je c tio ns o f future de c line – I f go ve rnme nts want to still ge ne rate e quivale nt re ve nue to ke e p up with future trave l le ve ls, gas tax rate s will ne e d to be inc re ase d to as muc h at $1.16 pe r gallo n to o ve rc o me the e ffe c t o f inc re asing fue l e ffic ie nc y. (c urre nt c o mbine d fe de ral and state ave rage rate is $.45/ gal. 4

3/14/2018 F ue l sale s tax Description Viability Sales tax collected on fuel sales. High revenue potential. Based on a percentage of the pre‐ Depending on the adopted tax fuel price. collection method, might require additional administrative resources. ND and peer states Sustainability Not collected in ND and any of the Positively correlated with fuel peer states. Collected in several prices. Higher fuel efficiency would states across the U.S. reduce the revenue. Ge ne r al sale s tax Description Viability General tax collected on sales of various Reliable, strong revenue source. goods and services, collected by the N.D. currently collects approx. state and local jurisdictions. A portion of $1.5 billion from sales tax. sales tax revenue could be allocated to transportation funds. ND and peer states Sustainability Combined State and Local Higher fuel prices could have some State State Sales Tax Tax (Average) ND 5.0% 6.78% negative impact on consumer MN 6.875% 7.3% activity, reducing sales tax revenue. WI 5.0% 5.42% SD 4.5% 6.39% NE 5.5% 6.89% IA 6.0% 6.8% MT None None ID 6.0% 6.03% 5

3/14/2018 Ve hic le sale s e xc ise tax Description Viability Sales tax collected on vehicle Existing, well‐established revenue transactions. source. The car sales market in N.D. exceeds $2 billion per year. ND and peer states Sustainability State Tax Rate Transportation fund allocation No – Not since 1970's & 10% in . 2007 ND 5.0% Long term higher fuel prices could Yes, min. 40% goes to transit, rest to the highway fund MN 6.5% result in reduced vehicle ownership, No WI 5.0% though the impact may be minimal. Yes SD 4.0% Yes NE 5.5% Yes IA 5.0% No tax MT No tax No ID 6.0% Pr ope r ty T axe s (mill le vie s) Description Viability Collected by all types of jurisdictions High revenue potential, but use is as a certain percent of the limited primarily to local projects. property’s taxable value. Also, residents are sensitive to any tax increase. ND and peer states Sustainability Varies on a jurisdictional level on a case‐ No relationship with fuel economy by‐case basis. State mills are and fuel prices. insignificant (as in the case of ND) or do not exist at all. States typically do not collect property tax dedicated to infrastructure at the state level. 6

3/14/2018 Spe c ial Asse ssme nts Description Viability Additional taxes levied to fund a Local use only, limited revenue specific investment at the local potential. level. ND and peer states Sustainability Authorized to use by all jurisdictions No relationship with fuel economy in ND and peer‐states. Specific and fuel prices. formulas vary on a case‐by‐case basis. Utility F e e s Description Viability Fixed rate utility prices based upon Local use only, limited revenue potential. number of residents, property type or Easy to administer, but could raise property size. significant opposition (flat fee collected independently of actual highway use and income). ND and peer states Sustainability Many cities in ND and peer states charge No relationship with fuel economy utility fees for streetlights and other and fuel prices. minor maintenance expenses. No utility fees are collected for transportation infrastructure investments anywhere in the region. 7

3/14/2018 Whe e lage T ax Description Viability Per‐vehicle fee levied by local Moderate to high revenue potential, jurisdiction, similar to the state depends on vehicle ownership levels. registration fee. Would require new administrative resources to implement and collect. ND and peer states Sustainability Not in use anywhere in ND No relationship with fuel economy and fuel prices. Used by selected jurisdictions across the peer states; e.g. in MN a $10‐20 tax is collected by 53 out of 87 counties . Oil T ax Description Viability Tax charged on fossil fuels and other High revenue potential (currently minerals extracted and/or N.D. collects approx. $1.5 billion/yr processed within the state. from oil tax). Existing revenue source, easy to administer. ND and peer states Sustainability Tax rates ND 5% tax for oil, $.04/1,000 cu. ft. for gas, $0.4/ton for coal. MN $2.56 per ton for iron. No oil tax. Revenue is positively correlated WI 7% tax for oil, 3‐15% tax for metals with fuel price, opposite to many SD 4.5% + 2.4 mills on all minerals other sources. NE 2‐3% tax for oil, 2% tax for uranium IA none MT 0.3% tax on oil, 3‐15% tax on coal ID 5 mills/bbl. of oil and 5 mills/50,000 cu. ft. of gas, additionally 2.5% oil production tax. 8

3/14/2018 Ve hic le R e gistr ation F e e s Description Viability Per‐vehicle fee assessed annually on Well‐established funding source all vehicle. Currently based upon with high revenue ($85 million/yr). vehicle age and weight. ND and peer states Car 4‐door Open‐box 2‐door 4‐door SUV sedan pickup Sustainability Year 2017 2012 2007 Weight 3199 lb. 5500 lb. 6100 lb. $ initial $24,000 $29,000 $38,000 Generally independent from fuel $ current $20,000 $12,000 $10,000 ND $73 $65 $117 price changes and technology MN $236 $71 $35 advancements (under current WI $75 $75 $75 SD $72 $108 $100 formula). NE $342 $234 $99 IA $252 $312 $215 MT $217 $87 $28 ID $69 $57 $45 Hybr id/ E le c tr ic R e gistr ation F e e s Description Viability Additional surcharge for Easy to implement, but has limited hybrid/electric cars, assessed to revenue potential. Only 1,200 recoup lower fuel tax revenues, hybrid/electric cars are currently reduced due to higher efficiency registered in N.D. ND and peer states Hybrid or Electric Surcharge State Sustainability None ND $75 MN Revenue would increase along with $75 hybrid, $100 electric WI higher hybrid/electric vehicle None SD ownership. Higher fuel prices might $75 NE stimulate that ownership. None, electric vehicles pay a discounted $25 fee IA None MT $75 hybrid, $140 electric ID 9