Communication and Public Awareness

Transportation Funding...

Don't let the Treasure Valley fall through the cracks

Why is transportation funding such a big deal?

Transportation is the lifeblood of our economy. Without a well-functioning transportation system, our residents can’t get to their jobs, our farmers and factories can’t get their goods to the market, and our stores can’t stock their shelves. Without the ability to get people and goods from “here” to “there,” our economy stops.

Our transportation also impacts our quality of life, from how much time we spend sitting in traffic, to the choices we have in how we get around, to the safety of those choices.

The big deal is that we don’t have enough money to maintain the system we have now, much less to “grow” the system for the future. The population of Ada and Canyon Counties alone is expected to increase to by over 440,000 people by the year 2040, for a total forecasted population of 1.022 million.

COMPASS estimates that the region will need an investment of approximately $359 million per year between now and 2040 to meet maintenance needs and the demands of growth. Funding estimates conducted in 2014 showed that we were $159 million short of meeting those needs, each year, in Ada and Canyon Counties alone. However, in 2015, the Idaho legislature passed a bill to increase Idaho’s transportation funding by about $95 million per year. Local agencies in Ada and Canyon Counties will receive approximately $9 million per year of this new funding.

While an additional $9 million certainly helps, it still leaves a funding gap of $150 million per year. Moreover, it does nothing to address the lack of funding for public transportation -- fuel taxes cannot be used for public transportation in Idaho at all – or expansion, as the Idaho Legislature stipulated that this new funding can only be used for maintenance.

To learn more and share this information, view and print this transportation funding handout.

Maintenance Matters!

Due to the funding shortfall, when developing Communities in Motion 2040, the COMPASS Board of Directors made the decision to focus available federal funding on maintaining the existing transportation system. While it doesn’t receive the fanfare of a new road, bus service, or bike path, maintenance is critical to ensuring our existing transportation system continues to function. Yet, even with this focused funding, the two-county area will not have enough money to keep up with maintenance needs. Learn more about the importance of celebrating our maintenance projects:

 

What does that mean to you?

While progress has been made, without additional funding, your commute will look very different in 2040 than it does today. For comparison…

Commute Today 2040
Drive time from Caldwell to downtown Boise 34 minutes

70 minutes

Drive time from the City of Star to St. Luke's Regional Medical Center in Boise 30 minutes

60 minutes

Average weekday hours of delay (time spent stuck in traffic) 27,670 hours

430,350 hours

How do we pay for transportation now?

For the most part, transportation is funded through a “user pay” system – most of our transportation infrastructure is funded through fuel taxes, vehicle registration fees, and other mechanisms, as opposed to coming from general tax dollars. The federal fuel tax is placed in the federal Highway Trust Fund, then allocated to states. The State of Idaho collects gas tax and registration fees and places them in the state Highway Distribution Account. Transportation agencies use these and other funds to pay for transportation infrastucture.

  • Federal fuel tax:
    • 18.4 cents per gallon for gasoline; 24.4 cents per gallon for diesel
    • Unchanged since 1993
  • State fuel tax:
    • 32 cents per gallon for gasoline and diesel
    • Raised in 2015
  • Local property tax:
    • Assessed by highway districts
    • Also used by Valley Regional Transit, through contributions from cities (Valley Regional Transit cannot assess property tax itself)
  • Impact fees: ACHD and City of Nampa only:
    • Fees collected on new development
  • Vehicle registration fees:
    • ACHD (through a local option vote)
    • Idaho Transportation Department
      • Update! annual increase of $21 for most vehicles – effective July 1, 2015 (see below for more details)
  • Transit fares:
    • Collected by Valley Regional Transit and ACHD Commuteride

While transportation funding is extremely complicated, there are a few key issues that affect how it is collected, distributed, and used:

  • Fuel tax:
    • The state fuel tax increased by 7¢ per gallon on July 1, 2015; the federal fuel tax has not increased since 1993. Neither are adjusted for inflation, which means that without Legislative or Congressional action, transportation funding will not increase as transportation costs do.
  • Money silos:
    • There is not simply one “pot” of transportation funding. State and federal laws and policies frequently dictate how and where transportation funds can be used, putting the money in “silos.” For example, in Idaho, the state constitution prohibits fuel tax from being used for public transportation. Federal funding also is divided into “silos,” which specify how certain funds can be used.
  • Donors vs donees:
    • In Idaho, we get more back in federal gas tax than our citizens put in, due to federal legislation that sets a minimum share per state regardless of population. The amount varies, but generally we get at least $1.50 for every $1 our citizens pay. This may change in the future, decreasing Idaho’s share of federal transportation dollars.
  • Gas mileage:
    • We have seen a significant increase in fuel economy in the past 20 years, and the trend is for even more hybrid, electric vehicles, and fuel efficient cars. While that is a good thing for the environment, it means that people are purchasing less fuel - therefore paying less in fuel tax - while still using the roads. Funding based on fuel tax is not a sustainable funding source for the future.

What are our options and what do they mean to me?

While $150 million per year sounds like a lot, if we all contribute our share, it is only $2 per household, per day. That’s less than a latte!

Many options exist to increase our transportation funding, including the option to do nothing. Below is a brief list of options.

Increase state fuel tax rate:

  • However, this is a flat rate, so will not increase as costs increase. If the fuel tax were to be increased an additional 1¢ per gallon per year, it would generate an additional $9 million per year, over the previous year.
  • Idaho state fuel taxes cannot be used for public transportation, so increases to the fuel tax rate only address a portion of the transportation funding issue.

Increase federal transportation funding:

  • Federal fuel taxes do not generate enough revenue to support the federal Highway Trust Fund.  While there is general agreement on the problem, there is little agreement on a solution. An increase in the federal fuel tax rate has been discussed, but received very little support. Other options are being discussed, including changes to the federal tax code. In the meantime, short-term infusions of money from the federal general fund have kept the Highway Trust Fund solvent. Watch COMPASS social media and follow links to transportation funding in the news for ongoing updates.  

Increase state vehicle registration fees:

  • State registration fees provide about 30% of the state's Highway Distribution Account funds and are used for roadway construction and maintenance. All drivers (including owners of hybrid and electric vehicles) contribute to the transportation fund via registration fees.
  • The 2015 Idaho Legislature increased registration fees by $21 per year for most vehicles. In addition, owners of hybrid vehicles pay an annual fee of $75 and owners of electric vehicles pay an annual fee of $140.The increased registration fees are expected to generate an additional $30.9 million per year.
  • The 2015 legislation that increased the fuel tax and registration fees also stipulated that by January 2019 an additional registration fee will be added to all commercial vehicles.
  • Idaho state registration fees cannot be used for public transportation, so increases only address a portion of the transportation funding issue.

Institute a local option sales tax:

  • Local option sales tax is a tool that allows a taxing district, such as a county or city, to present a local sales tax proposal, along with a description of the project the revenue would be used for, to the voters. The voters then decide if they wanted to tax themselves for that project. If the proposal passes, the tax is instituted and the project proceeds. If the proposal fails, no new tax is instituted and the project does not proceed – or at least goes back to the drawing board.
  • Outside of a few resort communities, this tool is not available in Idaho. Legislative action is needed to provide local entities with the authority to use local option sales tax.
  • This tool has the potential to provide flexibility to be used for all types of transportation (and other) community infrastructure projects, meaning it could be used to fund public transportation, unlike fuel tax and registration fees.
  • If this tool were to become available, the amount of funding it could generate would be dependent on the community’s wishes, as well as many other variables. However, as an example, a 1% local option sales tax (raising the current sales tax from 6% to 7%) enacted in both Ada and Canyon Counties combined would generate about $54.8 million per year.

Institute a tax on vehicle miles traveled:

  • A vehicle miles traveled tax, or road usage tax, charges drivers based on the number of miles driven, instead of the amount of fuel purchased. As vehicles become more fuel efficient, the amount of transportation funding generated through fuel taxes is decreasing. This type of tax would shift the tax away from the amount of fuel purchased to the number of miles driven, thus tying the amount of tax to actual use and stabilizing the funding mechanism. Oregon is the first state to institute a road usage tax. Learn more online here and at the COMPASS education series presentations on Oregon’s road usage tax on September 24 and 25, 2015.

Submit a Question

Submit your transportation funding questions in the Questions box on the left side of this page, and COMPASS staff will answer them here. After you have submitted your question, be sure to check back on this page for an answer.

COMPASS response: Thank you for asking. The regional long-range transportation plan for Ada and Canyon Counties - Communities in Motion 2040 - outlines the annual transportation funding needs and available funding, which are used to determine the annual funding shortfall. This plan was approved by the COMPASS Board of Directors in July 2014.

The $150 million shortfall was determined in part through a financial analysis conducted by consultants (Honey Creek Resources, Inc. and BBC Research & Consulting, Inc.) with input from fifteen public agencies in Ada and Canyon Counties that provide transportation. Link to full financial forecast. The other part came from the funded projects and unfunded needs.

The planning level cost estimates for the unfunded needs were developed by COMPASS staff with input from member agencies. Transportation needs for years 2014 to 2040 total $359 million per year, while the total funding available per year is only $200 million. The available funding is comprised of federal, state, and local funding sources – but these combined sources still fall $150 million short every year.

This figure reflects ALL types of transportation funding and needs - roadway, public transportation, capital, maintenance, and bicycle and pedestrian.

*Please note: these figures do not include Idaho Transportation Department (ITD) maintenance needs.

COMPASS response: Good question. Actually, the $2 per day example is just that – an example. COMPASS simply split the total transportation funding shortfall ($150 billion) among each household in Ada and Canyon Counties – regardless of whether the houses are owned or rental properties.

COMPASS response: Yes, sometimes it does!

COMPASS response: All states handle commercial truck fees differently –Oregon is the leader of aggressive cost allocation for trucks and collects more revenue to maintain the roads via truck fees than other states. Changes to the fee structure for trucks in Idaho require action by the Idaho State Legislature. In April 2015, the Legislature passed a $95 million transportation funding bill (HB312); one aspect of the bill increased commercial truck registration fees by $25. This legislation also stipulated that the Idaho Legislature will revisit this issue before 2019, but no action has been taken yet.

COMPASS response: Great question – thanks for asking. Transportation funds are generated through several revenue streams, including federal and state fuel taxes and state vehicle registration fees. In addition to fuel economy and number of vehicles registered, the number of miles driven (vehicle miles traveled, or VMT) impacts transportation funding. Below is a breakdown of three significant factors affecting transportation funding.

1. Federal and state fuel taxes

As you noted, available transportation funding generated from fuel taxes decreases as fuel economy increases. Better fuel economy means drivers are buying less fuel, and therefore paying less fuel tax. Federal fuel taxes (18.4¢/gallon for gasoline and 24.4¢/gallon for diesel) go into the Federal Highway Trust Fund and are then distributed to states to fund transportation projects. Idaho state fuel taxes (32¢/gallon) go into Idaho’s Highway Distribution Account. Together, federal and state fuel taxes make up the majority of Idaho’s transportation funds.

The increase in average fuel economy and the inability for current fuel tax revenues to keep up with inflation contribute to a national and statewide transportation funding shortfall. The graph below provides an example of the amount of gas tax paid by an individual per year based on fuel economy. For example, at the current federal and state gas tax rates, the owner of a vehicle getting 25 miles per gallon (MPG) who drives 12,000 miles per year would pay $154 in state gas tax and $86 in federal gas tax. As you can see, the driver would pay more gas taxes driving a vehicle that gets 20 MGP and less gas taxes driving a vehicle that gets 30 MPG.

Idaho and federal gas tax revenue and fuel efficiency chart

2. Vehicle registration fees

Although there has been an increase in the number of vehicles registered in Idaho – 35% more registered vehicles in 2015 than 2005 – there has also been an 18% decrease in registered vehicles nationally between the same years. In Idaho, state vehicle registration fees contribute to transportation funding, so the increase in the number of vehicles provides some additional revenue.

3. Vehicle miles traveled (VMT)

The number of vehicles miles traveled – and therefore the amount of fuel used and fuel tax collected – has a significant impact on funding. While there have been decreases in some years, overall the total number of vehicle miles traveled has been increasing both nationally and in Idaho as the population has increased and more and more people are driving. Increasing national and statewide vehicle miles traveled impact Idaho’s available transportation funding generated from the federal and state fuel taxes. The graphs below illustrate the increase in total vehicle miles traveled nationally and in Idaho.

Idaho VMT trends

national VMT trends

 

Ultimately, identifying where the decrease in funding from fuel taxes and the increase in funding from vehicle registrations and total VMT meet is very difficult – there are many changing variables to consider. One simplified example of the impact on federal fuel tax shows a decrease of less than 1% in annual federal fuel tax revenue by 2025. This example includes assumptions regarding the number of alternative fueled vehicles, the average MPG, average VMT, and number of vehicles registered. We use this example due to its relative simplicity, but please keep in mind that due to its simplicity, it does not necessarily capture all nuances. And, of course, all assumptions about the future are just that – assumptions.

Bear in mind, while this example shows only a slight decrease in revenue, that is coupled with an ongoing increase in costs, due to an estimated 2.5% average annual inflation rate. These two factors combined will cause transportation funding to continue to fall further and further behind transportation needs.

COMPASS response: The decision to institute a toll on I-84 falls upon the Idaho State Legislature. The Idaho Code grants the state legislature toll road authority, but no tolls currently exist in the state. Occasionally, the legislators do inquire about this topic; however, it is likely to face political and public resistance in Idaho.

In most cases when tolls are used, a new road or bridge is built and a toll is put in place on that road or bridge and users are charged until it is paid for. Federal law allows tolling to finance needed reconstruction or rehabilitation of existing interstates (like I-84) in three states only – Virginia, Missouri, and North Carolina. Although federal law does allow tolling on existing interstates in instances when capacity is being increased (e.g., adding additional travel lanes), it’s not a reasonable option in Idaho due our low traffic volumes – we simply don’t have the heavy traffic that some states do to pay off the cost of the new infrastructure in a reasonable amount of time. Additionally, because we don’t have heavy traffic volumes, many motorists would likely shift to other east-east corridors, such as State Highway 44/State Street or US Highway 20/26 (Chinden Boulevard), to avoid paying a toll on I-84.

COMPASS response: Tolls: The decision to institute a toll on I-84 falls upon the Idaho State Legislature. Idaho Code grants the state legislature toll road authority, but no tolls currently exist in the state. For more information, please see the answer we provided to a similar question about tolling above.

Tobacco tax: Idaho law outlines how revenue from the cigarette tax will be distributed through fiscal year 2019, and provides another distribution formula to take effect after that. Currently, the total revenue is split among nine state funds, two of which help pay for transportation.

  1. Each year, $4.7 million from the cigarette tax is directed to the GARVEE Debt Service Fund. The GARVEE program invested $857.6 million in 59 road and bridge improvements from 2006 to 2015 through bonds that need to be repaid.
  2. After the first eight state funds have received their distributions, any remaining cigarette tax revenue is directed to the State Highway Distribution Account.

After 2019, the GARVEE Debt Service Fund and the State Highway Distribution Account will be removed from the cigarette tax distribution formula. Further legislation can again redirect revenue to new funds under a new distribution formula.

Alcohol tax: Idaho law outlines how revenue from beer and wine taxes are distributed. Currently, the majority of the revenue collected is directed to related substance abuse treatment programs and other funds; however, after these funds have received their distributions, the remaining beer and wine tax revenue is directed to the General Fund.

Any decision to increase tobacco or alcohol taxes, or to change the distribution formulas for these taxes, must be made by the Idaho Legislature.