Revenue Modeling (8)
Description:
A revenue modeling tool allows an agency to compare scenarios, such as doing nothing, increasing rates of existing taxes and fees (such as fuel excise taxes and vehicle-based fees), and enacting new mechanisms such as RUC. Revenue modeling tools help clarify the magnitude and urgency of the revenue outlook in any given jurisdiction. The tools also give decision-makers and lawmakers a clear picture of the stakes and motivations for considering RUC.
Details:
Revenue modeling creates a mathematical model built on a software tool, such as a spreadsheet, to forecast costs and revenues for RUC and other vehicle-related charges. The model uses a range of inputs to produce a range of outputs. Inputs may include transportation forecast values, such as vehicle miles traveled and number of vehicles; policy inputs, such as RUC rates and transition strategies; and technical inputs, such as mileage reporting account manager costs and state agency operational costs. Outputs may include yearly breakdowns of total and net RUC revenue, as well as total and net fuel tax revenue.
Primary Uses:
Generate policy studies focused on transportation revenue or legislative impact statements. Combine with cost model to create overall financial model for project.
Best Practices/Lessons Learned:
- Develop best practices based on an existing model or models used in the state or elsewhere.
- When forecasting, consider a range of realistic policy scenarios. The “do-nothing” scenario should always be considered, as should various scenarios involving RUC.
- For each policy scenario, consider a low- and high-cost sub-scenario, and a low- and high-vehicle-miles traveled sub-scenario.
- To begin, use a RUC rate that is revenue-neutral with the gas tax. Use of other RUC rates can be discussed later with policymakers.
- Consider different sets of subject vehicles as appropriate for modeling needs. RUC rates will likely vary by vehicle weight category.
State Government Context and Assumptions:
The leading agency or task force may perform or oversee revenue modeling specifically for RUC.