Highway Information Seminar

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Highway Information Seminar

• Motor Fuel Session
• November 16, 2004

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The Big Picture

• FHWA determines how much federal Highway Trust
  Fund tax money comes from each State
• Compared to how much each State receives from
  FHWA
• Derives a for every dollar in, how much does my
  State receive ratio

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The Big Picture II

• This analysis is extremely important
• To Congress
• FHWA
• States
• Its important that the data be correct

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Background

• Uses of State motor fuel data
• Federal-aid highway funds Apportionment
• Federal motor fuel Attribution
• Importance
• 20 years ago, historical records
• Today, drives the distribution of significant
  federal funds
• Tomorrow, indications are the data will remain
  significant

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Apportionments

• Funds for several FHWA programs are apportioned
  to the States
• Formula based
• Set by law
• About 85 of Federal highway funds are
  apportioned
• Under TEA-21, about 12 billion (40 of Federal
  Highway Programs) was annually apportioned based
  on motor fuel data

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Apportionment and MotorFuel Data
Program Approximate Annual Funding Motor Fuel Factor Apportionment Based on Motor Fuel
Surface Transportation 6 Billion 35 2 Billion
Interstate Maintenance 6 Billion 33.3 2 Billion
National Highway System 6 Billion 30 2 Billion
Minimum Guarantee 6 Billion 100 6 Billion
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The Attribution Process

• FHWA attribution supports the apportionment
  process
• How FHWA calculates attribution
• The role of State data

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How Attribution Works I

• State-by-State contributions to the Federal
  Highway Trust Fund are not available from the
  Internal Revenue Service (IRS)

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How Attribution Works II

• Typical federal motor fuel taxpayer is an oil
  company or oil wholesaler
• 8,000 are licensed with IRS
• Federal tax is imposed as the fuel crosses the
  rack
• Where is the fuel consumed?
• IRS didnt know, but has begun to address fuel
  tracking

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How Attribution Works III

• IRS reports tax receipts for each motor fuel tax
  type
• HTF contributions from highway users in each
  State are estimated using State motor fuel data
• States report the motor fuel taxed under each
  States procedures
• FHWA uses established procedures to derive a
  consistent, compatible dataset for attribution

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How Attribution Works IV

• Measure on-highway gallons of motor fuel
• (Gasoline - Gasohol - Special fuels)
• Sum to derive the national total (by type)
• Derive each States share of the national total
• Use those shares to determine revenue shares

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How Attribution Works V

• For the federal truck taxes
• Tire tax
• Truck and trailer retail sales excise tax
• Heavy vehicle use tax
• Attribution to each State is in proportion to the
  highway use of special fuels

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Attribution and Data Quality

• FHWAs goal is an accurate data-set with which to
  determine attribution
• To improve data quality, FHWA needs to work with
  State data providers to achieve accurate
  reporting

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In Summary

• Processes
• Apportionment process
• Attribution process
• Importance
• Measurement of motor fuel data
• Equitable treatment for all States
• FHWA needs your commitment

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FHWA Motor Fuel Reporting

• Accomplishments
• Challenges
• Changing Environment

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Accomplishments

• Re-Assessment
• Input procedures
• Motor fuel reviews
• Data verification
• Outreach

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Accomplished Re-Assessment

• Time line
• Began in late 1998
• Shortly after TEA-21 passed
• Methodology
• Expert advisory group
• Identify issues
• Propose solutions

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Accomplished Re-Assessment

• General Accounting Office (GAO)
• Concurrent assessment
• Cooperative effort
• Substantial agreement on conclusions
• GAO identified several actions
• Review verify State MF reporting
• Document FHWA attribution methodology
• Independent review of FHWA methodology
• Evaluate EXSTARS-EXFIRS for validation

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Accomplished Re-Assessment

• FHWA identified areas for further study/revision
• Federal Register Notice
• General support for the proposals
• Publication Attribution and Apportionment of
  Federal Highway Tax Revenues Process Refinements

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Accomplished Input Procedures

• Implemented a submittal process
• All motor fuel data since January 2002
• Generally considered easy-to-use
• Computer security requirements
• Secure submittal site
• Required change to Input Tool use
• Data providers received USERID
• Managed by Division Offices

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Accomplished MF Reviews

• Division Office reviews
• Continuous Process Improvement Model
• 45 States have done reviews
• Quality varies

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Accomplished Data verification

• Process review versus data verification
• Why verify?
• Old procedure - data hand-entered
• Data needs checking until new procedures
• Verification memo
• Sent in March June each year
• Typically, several States revise their data
• So several iterations occur

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Accomplished Publications

• Attribution and Apportionment of Federal Highway
  Tax Revenues Process Refinements
• Your States Share Attributing Federal Highway
  Revenues to Each State
• Guide to Reporting Highway Statistics has been
  revised and approved by OMB

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Accomplished Revised Guide to Reporting Highway
Statistics

• Data requirements have changed
• Data providers need to be aware of these changes
• It will require some effort on the States part
  to be aware and make these changes
• FHWA will discuss these with you at any time, if
  you need assistance

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Challenges

• Motor fuel reviews and follow-up
• Quality of reviews
• Quality improvements
• Risk assessment
• Verification of data
• Communication

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Challenges MF Reviews

• Quality of reviews/Quality improvements
• Need to bring up the average
• Three core items
• Procedures document
• Procedures assessment
• Oversight plan
• Risk assessment

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Challenges Communication

• Goal Keep stakeholders in loop
• Methods
• Workshop-Video conference options
• November workshops on Highway Statistics
• January-February motor fuel workshops
• Special request/event video conferences

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Challenges Verification of Data

• About 20 are reviewing the data
• Apparently, about 30 are not reviewing the data
• Its the States last chance to make sure what
  they reported is correct

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Challenges Communication II

• Methods (continued)
• Community of Practice
• Location for all publications/materials
• Bulletin-board style listserv
• http//knowledge.fhwa.dot.gov/cops/hcx.nsf/home?op
  enformgroupmotor20 fuel20reporting/htf20attrib
  ution

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Changing Environment

• Reauthorization
• Reporting changes
• Attribution analysis changes
• Gasohol data
• Federal law changes combating tax evasion

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Changing Environment Reauthorization

• TEA-21 ended September 30, 2003
• Administration-proposed legislation
• 8 month extension until May, 2005
• What Congress will do is unknown
• No significant MF changes expected

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Changing EnvironmentReporting Analysis Changes

• FHWA will be treating some data differently
• On-highway public diesel use
• Alternative fuels reporting
• Loss allowance treatment
• Reporting changes
• Computer security
• Data uniformity
• State responsibilities

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Changing EnvironmentGasohol Revenue

• Hot topic in reauthorization
• American Jobs Creation Act of 2004
• Highway Trust Fund compensated for gasohol
  subsidy
• How this will be treated administratively is
  still to be determined
• Will mean increased revenue to the Trust Fund

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Changing EnvironmentFuel Tax Evasion

• Federal law changes
• Mobile machinery
• Aviation grade kerosene
• Dye injection equipment
• Intercity buses
• Pipeline/vessel registration
• Other administrative changes
• Contact Linda Morris at FHWA

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In Summary

• Identified and discussed
• Accomplishments
• Challenges
• Changes in the MF environment

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FHWA Motor Fuel Reporting

• Data Submittal Process
• Discussion of Improvements

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Background I

• 2002 and beyond motor fuel data submitted
  electronically
• Submitted by State DOTs, DORs, or FHWA
• Form 551M submitted monthly
• Form 556 submitted annually

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Background - II

• Reported using Smart Input Tool
• Submitted using
• Spreadsheet view
• Wizard view
• Direct XML
• Instructions for reporting Guide to Reporting
  Highway Statistics Chapter 2

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Motor Fuel Reporting

• We begin here..

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Motor Fuel Reporting

• Gallons from tax returns of seller
• Depending on point of taxation in State
• Terminal Holders
• Wholesalers
• Retailers

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Motor Fuel Reporting

• Gasoline and Gasohol Gross Volume Reported
  Includes
• Fully taxed
• Exempt sales
• Fully refunded sales
• Partially exempted sales
• Partially refunded sales
• Taxed at reduced rates
• Assessments

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Motor Fuel Reporting

• Diesel and LPG Gross Volume Reported Includes
•  
• Only Highway Use of Diesel and LPG
• Include Public Use Diesel
• Revised Chapter 2 of Guide March 2003

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Motor Fuel Reporting

• Other State Fuel Data
• Alternative fuels
• Per gallon equivalent
• Registration fees in lieu of per gallon taxes
• Aviation Fuels
• Transit Fuels

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Motor Fuel Reporting

• Consistency in Data Entries
•  
• Enter text and data on same line each month
•  
• New text and data - Identify the entry in the
  comments section on page 2

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Motor Fuel Reporting

• New Feature in DBMS
•  
• Data that is incorrectly submitted will be
  rejected
•  
• State will be notified that their submittal has
  been rejected and comments to explain why
•  

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Motor Fuel Reporting

• Stop reporting Off-Highway Diesel fuel
• Enter zero or nothing in the cell(s)
• Remember to remove the gallons from the Highway
  Diesel/LPG Gross Volume Reported in line 1

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Motor Fuel Reporting

• Report current State tax rates every January, and
  in any month there is a change
• Enter all rates that apply in your State
• Enter the effective date
• Important because the FHWA DBMS uses these
  entries as input

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Motor Fuel Reporting

• Form Section Defaults Allows you to
• Customize the form for your State
• Set a time period for the custom settings
• Revise the settings if your State legislature
  changes motor fuel tax law

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Motor Fuel Reporting- Conclusions

• Report accurate data
• Enter text and data consistently each month
• Use Form Section Defaults
• Enter tax rates
• Stop reporting off-highway diesel
• New Procedure FHWA ability to reject data
• Revised Chapter 2 March 2003