Highway Information Seminar

Motor Fuel SessionNovember 16, 2004

The Big PictureThe Big Picture

FHWA determines how much federal Highway Trust Fund tax money comes from each StateCompared to how much each State receives from FHWADerives a “for every dollar in, how much does my State receive” ratio

The Big PictureThe Big Picture II

This analysis is extremely important:

To CongressFHWAStates

It’s important that the data be correct

Background

Uses of State motor fuel dataFederal-aid highway funds ApportionmentFederal motor fuel Attribution

Importance20 years ago, historical recordsToday, drives the distribution of significant federal fundsTomorrow, indications are the data will remain significant

Apportionments

Funds for several FHWA programs are apportioned to the States:

Formula basedSet by lawAbout 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

Apportionment and MotorFuel Data

ProgramApproximate Annual Funding

Motor Fuel Factor

Apportionment Based on Motor Fuel

SurfaceTransportati

on$ 6 Billion 35 % $ 2 Billion

InterstateMaintenance

$ 6 Billion 33.3 % $ 2 Billion

NationalHighway System

$ 6 Billion 30 % $ 2 Billion

MinimumGuarantee

$ 6 Billion 100 % $ 6 Billion

The Attribution Process

FHWA attribution supports the apportionment process

How FHWA calculates attribution

The role of State data

How Attribution Works I

State-by-State contributions to the

Federal Highway Trust Fund are

not available from the Internal

Revenue Service (IRS)

How Attribution Works II

Typical federal motor fuel taxpayer is an oil company or oil wholesaler8,000 are licensed with IRSFederal tax is imposed as the fuel crosses the rackWhere is the fuel consumed? IRS didn’t know, but has begun to address fuel tracking

How Attribution Works III

IRS reports tax receipts for each motor fuel tax typeHTF contributions from highway users in each State are estimated using State motor fuel dataStates report the motor fuel taxed under each State’s proceduresFHWA uses established procedures to derive a consistent, compatible dataset for attribution

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 State’s share of the national totalUse those shares to determine revenue shares

How Attribution Works V

For the federal truck taxes:Tire taxTruck and trailer retail sales excise taxHeavy vehicle use tax

Attribution to each State is in proportion to the highway use of special fuels

Attribution and Data Quality

FHWA’s 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

In Summary

Processes:Apportionment processAttribution process

Importance:Measurement of motor fuel dataEquitable treatment for all States

FHWA needs your commitment

FHWA Motor Fuel Reporting:

Accomplishments

ChallengesChanging

Environment

Accomplishments:

Re-AssessmentInput proceduresMotor fuel reviewsData verificationOutreach

Accomplished: Re-Assessment

Time lineBegan in late 1998Shortly after TEA-21 passed

MethodologyExpert advisory groupIdentify issuesPropose solutions

Accomplished: Re-Assessment

General Accounting Office (GAO)Concurrent assessmentCooperative effortSubstantial agreement on conclusions

GAO identified several actionsReview & verify State MF reportingDocument FHWA attribution methodologyIndependent review of FHWA methodologyEvaluate EXSTARS-EXFIRS for validation

Accomplished: Re-Assessment

FHWA identified areas for further study/revision

Federal Register NoticeGeneral support for the proposals

Publication: Attribution and Apportionment of Federal Highway Tax Revenues: Process Refinements

Accomplished: Input Procedures

Implemented a submittal processAll motor fuel data since January 2002Generally considered easy-to-use

Computer security requirementsSecure submittal siteRequired change to Input Tool use

Data providers received USERIDManaged by Division Offices

Accomplished: MF Reviews

Division Office reviewsContinuous Process Improvement Model45 States have done reviewsQuality varies

Accomplished: Data verification

Process review versus data verificationWhy verify?

Old procedure - data hand-enteredData needs checking until new procedures

Verification memoSent in March – June each yearTypically, several States revise their dataSo several iterations occur

Accomplished: Publications

Attribution and Apportionment of Federal Highway Tax Revenues: Process Refinements

Your State’s Share: Attributing Federal Highway Revenues to Each State

Guide to Reporting Highway Statistics has been revised and approved by OMB

Accomplished: Revised Guide to Reporting Highway Statistics

Data requirements have changedData providers need to be aware of these changesIt will require some effort on the State’s part to be aware and make these changesFHWA will discuss these with you at any time, if you need assistance

Challenges:

Motor fuel reviews and follow-upQuality of reviewsQuality improvementsRisk assessment

Verification of dataCommunication

Challenges: MF Reviews

Quality of reviews/Quality improvements

Need to bring up the averageThree core items:

Procedures documentProcedures assessmentOversight plan

Risk assessment

Challenges: Communication

Goal: Keep stakeholders in loop

MethodsWorkshop-Video conference options

November workshops on Highway StatisticsJanuary-February motor fuel workshopsSpecial request/event video conferences

Challenges: Verification of Data

About 20 are reviewing the dataApparently, about 30 are not reviewing the dataIt’s the States last chance to make sure what they reported is correct

Challenges: Communication II

Methods (continued)Community of Practice:

Location for all publications/materialsBulletin-board style listserv

http://knowledge.fhwa.dot.gov/cops/hcx.nsf/home?openformgroup=motor%20 fuel%20reporting/htf%20attribution

Changing Environment:

ReauthorizationReporting changesAttribution analysis changesGasohol dataFederal law changes combating tax evasion

Changing Environment: Reauthorization

TEA-21 ended September 30, 2003Administration-proposed legislation 8 month extension until May, 2005What Congress will do is unknownNo significant MF changes expected

Changing Environment:Reporting & Analysis Changes

FHWA will be treating some data differently

On-highway public diesel useAlternative fuels reportingLoss allowance treatment

Reporting changesComputer securityData uniformityState responsibilities

Changing Environment:Gasohol Revenue

Hot topic in reauthorizationAmerican Jobs Creation Act of 2004

Highway Trust Fund compensated for gasohol subsidyHow this will be treated administratively is still to be determinedWill mean increased revenue to the Trust Fund

Changing Environment:Fuel Tax Evasion

Federal law changesMobile machineryAviation grade keroseneDye injection equipmentIntercity busesPipeline/vessel registrationOther administrative changes

Contact: Linda Morris at FHWA

In Summary

Identified and discussedAccomplishmentsChallengesChanges in the MF environment

FHWA Motor Fuel Reporting:

Data Submittal Process

Discussion of Improvements

Background I

2002 and beyond motor fuel data submitted electronicallySubmitted by State DOT’s, DOR’s, or FHWAForm 551M submitted monthlyForm 556 submitted annually

Background - II

Reported using Smart Input ToolSubmitted using

Spreadsheet view Wizard viewDirect XML

Instructions for reporting – Guide to Reporting Highway Statistics – Chapter 2

Motor Fuel Reporting

We begin here……..

Motor Fuel Reporting

Gallons from tax returns of sellerDepending on point of taxation in State:

Terminal HoldersWholesalersRetailers

Motor Fuel Reporting

Gasoline and Gasohol Gross Volume Reported Includes:

Fully taxed Exempt salesFully refunded salesPartially exempted salesPartially refunded salesTaxed at reduced ratesAssessments

Motor Fuel Reporting

Diesel and LPG Gross Volume Reported Includes:

 Only Highway Use of Diesel and LPGInclude Public Use DieselRevised Chapter 2 of Guide – March 2003

Motor Fuel Reporting

Other State Fuel DataAlternative fuels

Per gallon equivalentRegistration fees in lieu of per gallon taxes

Aviation FuelsTransit Fuels

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

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

 

Motor Fuel Reporting

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

Motor Fuel Reporting

Report current State tax rates every January, and in any month there is a changeEnter all rates that apply in your StateEnter the effective dateImportant because the FHWA DBMS uses these entries as input

Motor Fuel Reporting

Form Section Defaults Allows you to:

Customize the form for your StateSet a time period for the custom settingsRevise the settings if your State legislature changes motor fuel tax law

Motor Fuel Reporting- Conclusions

Report accurate dataEnter text and data consistently each monthUse Form Section DefaultsEnter tax ratesStop reporting off-highway dieselNew Procedure – FHWA ability to reject dataRevised Chapter 2 – March 2003