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A Guide to Transportation Funding Options

Highway Funding – Fees

Container Fees (California)

The Alameda, CA freight rail was the first to institute container fees to help pay for intermodal infrastructure improvements, including highways. Up to $30 fees are assessed on each container that uses or could have used the corridor. The terminal operators in the ports of Los Angeles and Long Beach, CA have also imposed a daytime surcharge on container movements in an effort to encourage more nighttime operations. The port of Oakland, CA is also expected to raise fees.

Development Impact Fees (DIF)

New infrastructure is built or improved with money that developers pay. The term "developers" in this instance refers to business developers or land developers rather than a project developer. Developers may pay the required fees in cash or by donating rights-of-way or anything else that the developer and the project sponsor may negotiate. This infusion of cash and/or equity can greatly increase the financial viability of a project. The amount of development impact fees that will be collected over a period of time can be projected and the proceeds can be pledged to pay off bonds that may be issued to finance the project. The 51 miles of toll roads in Orange County, CA, opened between October, 1993 and February, 1999, were implemented with development impact fees.

Environmental Impact Fees (EIF)

Similar to the Underground Storage Tank Tax imposed at the Federal level, EIFs are imposed by States on the privilege of being a receiver of certain petroleum products such as motor fuel, home heating oil, kerosene and aviation fuel. The tax and fee are paid by the receiver who first sells or uses the products.

Inspection Fee

A fee imposed per gallon for the inspection of motor fuel.

Motor Vehicle Use Fee

A motor fuel use tax on fuel used by interstate commercial motor vehicles.

Registration Fees

All states assess fees in a variety of ways for the registration of passenger and commercial vehicles.

Passenger Vehicle Registration Fees

Each state levies passenger vehicle registration fees using one or a combination of the following methods. Annual state personal vehicle registration fees range between $10 and $634 per vehicle. In some states, county and/or local registration fees are collected either with the state fee or separately.

Flat Fee

The same annual fee is charged to register all passenger vehicles, irrespective of age, value or weight of the vehicle. The flat fee is the most widely used method of assessing passenger vehicle registration fees in the United States.

Horsepower

Currently, Missouri is the only state that bases its vehicle registration fees on the vehicle engine's horsepower. Each vehicle's taxable horsepower is recorded on the title of the vehicle.

Value

Currently six states (Arizona, California, Iowa, Louisiana, Michigan and Minnesota) base at least part of their passenger vehicle registration fees on the value of the vehicle.

Vehicle Age

States that assess registration fees based on vehicle age decrease the fee as a vehicle ages.

Weight

Vehicles are divided into two or three different weight classes, assessing higher fees to heavier vehicles. Heavier classes include sport utility vehicles (SUVs) and full-sized pickups.

Commercial Vehicles

States are more uniform in their methods for assessing registration fees on commercial vehicles than on passenger vehicles. All states except Wyoming base at least part of their registration fees on gross vehicle weight. Combinations of methods include a flat fee plus a weight-based fee, or a fee based on both the weight and model year of the vehicle being registered. Wyoming charges a flat fee of $60 for commercial vehicle registration, which is much lower than the average registration fee for commercial vehicles in other states. Commercial vehicle registration fees range between $10 and $2,920 per vehicle.

Roadway Impact Fees

Cities assess these fees in an effort to recover infrastructure costs to serve future development. Typically a city will enact a development ordinance that requires Roadway Impact Fees. The fee is based on land use assumptions and population and employment projections. The area is limited to six miles and must be within the corporate city limits. The impact fee structure is often done in conjunction with a capital improvement plan (CIP). Recoverable costs include:

• Construction, planning, surveying, and engineering
• Land acquisition and associated costs
• Capital improvement planning and/or financial consulting
• Projected interest and finance costs
• Local share for state and federal roadways

Several cities in Texas currently assess Roadway Impact Fees, including New Braunfels, Mansfield, Cedar Hill, McKinney, Lancaster, Rowlett, The Colony and Flower Mound.

Tire and Lead-Acid Battery Fee (Missouri)

Effective October 1, 2005, Missouri statute imposes a fee of $0.50 on the retail sale of new tires and a fee of $0.50 on the sale of lead-acid batteries. The tire fee applies to the retail sale of all new tires designed for use on trailers and self-propelled vehicles not operated exclusively on tracks. The battery fee applies to the retail sale of batteries that contain lead and sulfuric acid with a nominal voltage of at least six volts and are of the type intended for use in motor vehicles and boat/vessels. Both fees are collected by retailers at the point of sale.

Vehicle Miles Traveled (VMT) Fee

Some states are exploring use of a VMT fee to supplement or replace the fuel tax. The collection of this fee would rely on the use of Global Positioning Satellite (GPS) technology to assess fees based on the miles traveled. It may also involve the use of electronic toll collection (ETC) technology and/or in-vehicle computer systems. Presumably, the fee could vary based on time of travel as well as the roadways traveled. This fee is typically seen as a longer term solution for highway finance.

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