1. Transportation Revenue Sources Presentation to the Discovery Institute October 6, 2004 Amy Arnis Deputy Director Strategic Planning and Programming Washington State Department of Transportation

2. 2003 Legislative Funding Package Revenue Sources: Increased taxes and Fees: Gas Tax: 5¢/gal Gross Weight Fee for Trucks: 15% New Taxes and Fees: Additional Sales Tax on Vehicle Sales: 0.3% License Plate Number Retention fee: $20.00

3. To raise a billion dollars of new revenue per year what type of tax increase is needed?

4. How much could be borrowed if tolls paid the debt service? What is the potential funding level from tolls for SR 520? SR 167 HOT Lane Pilot Project: How much will the toll be & what revenues will be raised? Most recent work done this year… Examined 24 financial scenarios encompassing various financial and operating assumptions Produced a funding range from $320 M to $1.07 B for the six lane alternative if bonded Showed several combinations could likely yield $700 M Found that a four lane alternative funding is 5-10% less  Dynamic pricing; Toll rate will be changed based on the congestion in the corridor and is estimated to be:  $0.60 during the off peak and potentially free at night  $1.20 at peak period and potentially more during severe congestion.  Rates will increase if congestion continues to grow.  Opening year revenue is estimated to be $1.1M  Capital costs could be paid off in approximately 12-14 years by revenue System-Wide Tolling Estimates (Analysis Done in 2002) How much revenue might be raised if we tolled all major freeways in the Puget Sound? $285 - $530 million/year* Included in the analysis: I-5, Alaska Way Viaduct SR-520, SR 167 I-405 SR 509 I-90 Confidence level: 2002 analysis - very preliminary Further analysis done in 2004 indicate revenues may be higher Implementation issues: numerous * Displayed in 2014 dollars

5. Bonding and Debt Service Requirements 1¢ of gas tax generates approximately $32.5 million in revenue per year (September 2004 Transportation Revenue Forecast) The amount of debt service that 1¢ of gas can pay for depends on the interest rate.  At 4% interest, $32.5 million will pay level debt service on about $500 million of bonds.  At 5% interest, $32.5 million will pay level debt service on about $450 million of bonds.  At 6% interest, $32.5 million will pay level debt service on about $400 million of bonds. * Multimodal Account Bonds will be paid from revenues deposited in the Multimodal account, i.e.. Rental Car Tax, Sales tax on new and used vehicles, and licenses, permits and fees. ** Tacoma Narrows Bridge toll revenues will be used to pay debt service on the TNB bonds. Interest Rates on Bonds Sold for the 2003-2005 Biennium August 2003 Bond Sale February 2004 Bond Sale August 2004 Bond Sale 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Gas Tax Backed Bonds Multimodal Bonds Tacoma Narrows Bridge Bonds No Bond Sale forMultimodal ProjectsNo Bond Sale forMultimodal Projects 4.65% 5.38% 4.41%4.44% 4.89% 4.67% 5.19%

6. Vehicle Mile Tax (VMT) – What work is going on nationally regarding VMT type taxes? Pooled Research Study – Completed in 2002 developed a GPS/GIS concept for VMT.  11 States, FHWA, TRB, AASHTO  Minnesota DOT Lead Agency  University of Iowa Public Policy Center Oregon Road User Fee Task Force has developed a mileage fee concept.  Per mileage charge (1.22¢/mile)  Mileage is collected electronically at gas stations  Payment is made at gas stations In October 2005 a field test is planned in Eugene, Oregon with 280 vehicles and up to four gas stations. Puget Sound Regional Council has a $1.88 million grant from the USDOT for a value pricing study.  Demonstration is currently underway  GPS will track when and where vehicles travel  Participants will have a budget and will be charged for travel based on the time of day and routes they choose  Exposes drivers to “congestion-pricing” road user charges

7. Although no state currently imposes a VMT Tax, four states currently have weight-distance taxes. Note: 100% of revenues are used for highways in all four states. Oregon offers a reduced tax rate for additional axels. Weight-Distance and Diesel Fuel Tax Rates