Assignment: Free Ride
Name:
1. Define ‘what is a tax’. (Note: this is not easy to answer, write about at least 3 points of
taxation)
2. Define ‘what is a taxpayer’. (Note: this is not easy either, write about at least 3 of the variables
of being a taxpayer)
Explore the Department of Transportation Finance Page
(http://leap.leg.wa.gov/leap/Budget/lbns/2003partvii.pdf)
There is also material listed at the end of the assignment document that may help you with this
assignment.
Look at Section 1 (Highway Account Revenues Table and Pie Chart)
1. List the seven places where the government gets the money for the roads.
2. Where does the majority of the income come from?
3. How much comes from that source?
4. What percentage of the income is from Truck and Trailer Sales?
Look at Section 2 (Federal Obligations Table and Pie Chart)
1. What are the three largest expenses that the government paid for with roads in 1999?
2. What percentage was spent on emergency relief?
Look at Section 3 (What It's Used For Table and Chart)
1. How much was spent on Bridge Replacement and Bridge Rehabilitation combined?
2. Place the following steps in order by creating a flow-chart:





Tax is charged
Government pays people to build and maintain roads
Government decides how to spend the tax money
People buy Gasoline
Government collects taxes
3. Answer the following question. Explain your answer in 1 – 2 paragraphs.
Who really pays for the roads?
1. The Highway Trust Fund--Where It Comes From
The Federal Highway Trust Fund (HTF) is the principal source of funds for federal surface
transportation programs. Established by the Highway Revenue Act of 1956, and extended
periodically through subsequent legislation, the HTF receives revenues from excise taxes
on gasoline, diesel, and other motor fuels, as well as several excise taxes related to heavy
trucks. The current rate of federal taxation for gasoline is 18.4 cents per gallon, and 24.4
cents per gallon for diesel fuel. The HTF has two accounts: Highway and Mass Transit. The
programs of FHWA are supported by the Highway Account. Revenues to the Highway
Account of the HTF by category for FY 1999 are shown at right.
Current law requires that a portion of the revenue to the HTF accrues to a Mass Transit
Account, used to finance federal transit programs. The amount accruing to the Mass Transit
Account equals 2.86 cents per gallon of the federal gasoline and diesel taxes, and a portion
of other fuel taxes. In FY 1999, the Mass Transit Account was credited with $5,477,927,289.
WHERE IT COMES FROM
Highway Account Revenues(in millions)
Category
FY 1999 Revenue
Gasoline
$ 20,800
Gasohol
$ 1,256
Diesel and Special Fuel
$ 7,719
Truck and Trailer Sales
$ 2,810
Truck Tires
$ 416
Heavy Vehicle Use
$ 814
Fines and Other Income
Total
$8
$ 33,823*
2. Program Activity FY 1999--Where It Goes
The Transportation Equity Act for the 21st Century and prior highway authorization acts
provide for the apportionment and allocation of funding to the states in the form of contract
authority. This allows the FHWA to enter into project agreements with states in advance of
appropriations providing for cash reimbursements. The obligation of federal funds
constitutes the federal government's commitment to pay a state for the federal share of a
project's cost, and occurs when a project is approved and a project agreement is executed.
Reimbursements, or cash outlays, occur upon request by a state after costs have been
incurred.
Obligations (in
millions)
WHERE IT GOES
Federal-Aid Category
FY 1999 Obligations
Interstate (including Maintenance & Substitution
Funds)
$ 3,697
National Highway System
$ 4,891
Surface Transportation Program
$ 6,231
Minimum Allocation & Donor State Bonus
$ 294
Bridge Replacement
$ 2,565
Metropolitan Planning
$ 187
Planning & Research
$ 485
Congestion Mitigation & Air Quality
$ 1,145
Emergency Relief
$ 223
ISTEA Mandates & Intelligent Vehicle Highway
System
$ 232
Minimum Guarantee
$ 2,882
High Priority Projects
$ 578
Other Programs
$ 2,288
Other Funds and Adjustments*
$ 313
Total
$ 26,012**
3. Types of Highway Improvements --What It's Used For
The following illustrates the amount of money spent on various types of improvements or
highway projects in 1999.
WHAT IT'S USED FOR
Improvement Type
New Route
Route Relocation
Obligations (in millions)
FY 1999 Obligations
$ 1,910
$ 529
Reconstruction*
$ 4,952
Widening
$ 2,303
Restoration and Rehabilitation
$ 2,455
Resurfacing
$ 3,253
New Bridge
$ 841
Bridge Replacement
$ 2,029
Bridge Rehabilitation
$ 1,395
Safety/Traffic/TSM
$ 2,490
Environmentally related
$ 1,125
Other**
$ 2,730
Total
$ 26,012
4. Total Federal Funds Obligated (1987-1999) --How It's Grown
The following shows the total level of federal-aid funding obligated for highway-related
activities from 1987 to 1999.
TOTAL FEDERAL FUNDS OBLIGATED 1987-1999 (in millions)
Fiscal Year
Fiscal Year
1987
$ 12,819
1994
$ 21,338
1988
$ 12,965
1995
$ 20,885
1989
$ 13,666
1996
$ 20,038
1990
$ 14,365
1997
$ 21,825
1991
$ 16,641
1998
$ 21,407
1992
$ 18,449
1999
$ 26,012
1993
$ 18,242
2000 (estimate)
$ 28,734
http://www.fhwa.dot.gov/programadmin/interstate.cfm