Email Newsletter: October 7, 2008          

The Arizona Department of Transportation (ADOT) is holding a series of workshops throughout the state in November 2008 for the ongoing “bqAZ” or “Building a Quality Arizona” framework planning process.

Your input is needed to help shape Arizona into a more desirable home for future generations! Twelve Community Workshops are scheduled between November 10 and 20, 2008. Please visit www.bqaz.gov for a complete list of workshop dates, times, and locations statewide.

Make Your Mark on Arizona’s Future

The numbers tell us that a projected 16 million people will live in Arizona by the year 2050. Arizona’s current transportation infrastructure is inadequate to handle the amount of traffic created when an additional 10 million residents travel to where they work, live and play.

All interested individuals are invited to attend upcoming public meetings to review and discuss scenarios that demonstrate future transportation development options for each state area.

These scenarios, the product of the input from public meetings conducted statewide in April and May 2008, have been developed by engineers and land use planners to reflect the vision and values of participants from both rural and urban areas.

The bqAZ Statewide Transportation Planning Framework was designed to be much more than a “wish list.” It is an effort to help Arizonans to become more informed consumers and actively contribute their ideas and insights to our statewide multimodal transportation system. A complete report of the public input received to date is available on the bqAZ.gov website.

Transportation Funding Overview

We Arizonans love our cars. We’re accustomed to driving distances equal to the width of many East coast states just to get to work each day; we seldom think about how highway expansion and maintenance is funded.

 “Taxes” would be the simple answer, but the funding system is actually a complex formula of state, federal and local assessments combined to create our highway transportation fund base.

Each State Funds Its Highways Differently

As many Arizona residents are relative newcomers to the state, they are often unaware of the unique situation caused by decades of burgeoning growth. In Sunbelt states, the need for roads always exceeds the ability to fund them, and our sparse mass transit options throw a burden on roadways that is unequalled in other areas of the country.

Other states have come up with different ways to generate freeway construction revenues:

• Some states index their gas tax to inflation. 
• Others have both a per-gallon tax and a sales tax on gasoline.
• State gas taxes range from $0.08 cents per gallon in Alaska to $0.375 cents in Washington D.C.
• Oregon is experimenting with a per-mile vehicle tax.

Arizonans spend about $0.03 per vehicle-mile of travel — primarily from state and federal taxes — to build, operate and maintain the roads.

Arizona Highways Funded by Fixed and Variable Sources
 
Arizona funds its highways from a variety of sources:

• $.18 cent per gallon gas tax
• The annual vehicle license tax
• Composite local and area special assessments  

The Arizona Legislature has not increased the tax per gallon ($0.18) since 1991; federal gas tax has not increased since 1993.  With escalating gasoline prices but no proportional increase in gas taxes, Arizona is in the position of trying to keep up with the growing demand for highways tied to a funding level set when a soda still cost 35¢!

In Arizona the vehicle license tax (VLT) is based on the value of the car, decreasing each year as the vehicle depreciates in value. The typical VLT generates $150 to $300 per year, which is apportioned among a number of ADOT programs, including highways.

Local streets are generally built from development fees paid by builders and developers at the time that subdivisions are created. These fees, often ½ of the cost of actual construction, are designated for the creation of roads, but not for their continuing upkeep. As roadways age, municipalities have to maintain them using general revenues such as sales taxes, which have many competing needs as consumer spending slows.

Arizona statutes allow toll roads and toll bridges. The City of Houston in Harris County, Texas for example, has integrated express toll roads as popular transit options for high-speed travel across certain corridors in the city. Although part of Arizona’s history, none exist in Arizona today. They may become part of a viable option for future highway development.

Highway User Revenue Fund (HURF)

Most highway-related taxes and fees, including a portion of the VLT, go into an account called the Highway Users Revenue Fund (HURF). The HURF collects about $1.3 billion in revenues per year statewide, distributed by formula to the Arizona Department of Transportation (ADOT), municipalities, counties, and the Department of Public Safety. ADOT receives about half of the money to use on state routes, including freeways. The allocations to local governments used to build and maintain local streets are based roughly on population.

Highway Trust Fund (HTF)

The $0.184 cent per gallon federal tax goes into the Highway Trust Fund, some of which goes to fund public transit. The Highway Trust Fund recently ran out of money for the first time, and Congress infused $8 billion as a temporary fix while looking for a permanent solution. 

Funding for Public Transit and Local Transportation

In Arizona funding for mass transit is problematic. The state constitution restricts use of the HURF to street and highway purposes only. Minor state funding is available from the lottery and VLT, so most communities rely on general funds, bonds, sales taxes, federal subsidies and transit fares.  Except in cities and counties with a dedicated revenue source, transit competes for funds with other public services like public safety, conservation and recreation programs.

All Arizona counties currently have a 0.5 percent sales tax used wholly or partially for transportation. Municipalities and counties may impose development impact fees for transportation, as do Maricopa, Pima and Pinal counties. Impact fees may be used only for capacity improvements that benefit the fee payers, so dispersed urban growth outpaces revenue collection for multimodal transportation. 

Arizona’s Rapid Growth Creates Disparity

The large gap between the revenue collected and the amount needed to build and maintain an efficient transportation system for a growing population creates traffic congestion and lengthens the time between funding and needed roadways and upgrades.

“We have a difficult dilemma facing Arizona,” says Curtis Lueck, PhD, transportation and land use consultant. “Our legislature has not increased the tax on gasoline since 1991, and federal gasoline taxes have not been increased since 1993. Of the $0.585 per mile* it takes us to operate a vehicle, only about $0.03 goes toward building and maintaining roads across the state. As the cost of gasoline increases and conservation efforts diminish highway revenues, our future highway revenues will be reduced even further. We simply do not have enough funds to adequately maintain existing roads, much less build and maintain new roads.”

“No one ever wants to increase taxes, but in a state with decades of explosive growth, and a severely under funded transportation system, we will have to make some serious decisions about resource allocation in the next two decades.”

*IRS allowable business use of an automobile; effective July 1, 2008

The Implications of Alternative Fuels

Higher fuel cost is inducing people to travel less and switch to more efficient vehicles, further reducing transportation revenues. Electric vehicles do not pay gas tax, nor will vehicles operating on fuel cells, natural gas, biodiesel or other alternative fuels. We need to identify other sources of funding highway construction as more drivers “think green.”

Your Chance to Be Heard

Arizona faces a looming transportation funding impasse, but we do have opportunities and solutions. Economic prosperity and quality of life depend on continued investment in roads and transit; participating in the bqAZ public outreach meetings is your chance to learn about your options, and to contribute to the Statewide Transportation Planning Framework.

Meetings are being held in each of the bqAZ planning districts. Click here for a listing of times and places in your district, and invite your neighbors to join you to in attending one of these landmark sessions.

Twelve Community Workshops are scheduled between November 10 and 20, 2008.  Please visit www.bqaz.gov for a complete list of workshop dates, times, and locations statewide .