Highway Information Seminar - Motor Fuel Session - November 16, 2004

PowerPoint presentation: mfbigpic.ppt (1,150 KB)

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

The Big Picture II

• This analysis is extremely important to CONGRESS, FHWA, and the STATES
• It's important that the data be correct.

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

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.

Apportionment and Motor. Fuel Data:

Programs:

• Surface Transportation: Approximate Annual Funding = $6 Billion, Motor Fuel Factor = 35%, Apportionment based on Motor Fuel = $2 Billion
• Interstate Maintenance: Approximate Annual Funding = $6 Billion, Motor Fuel Factor = 33.3%, Apportionment based on Motor Fuel = $2 Billion
• National Highway System: Approximate Annual Funding = $6 Billion, Motor Fuel Factor = 30%, Apportionment based on Motor Fuel = $2 Billion
• Minimum Guarantee: Approximate Annual Funding = $6 Billion, Motor Fuel Factor = 100%, Apportionment based on Motor Fuel = $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 wholesaler
• 8,000 are licensed with IRS
• Federal tax is imposed as the fuel crosses the rack
• Where 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 type
• HTF contributions from highway users in each State are estimated using State motor fuel data
• States report the motor fuel taxed under each State's procedures
• FHWA 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 total
• Use those shares to determine revenue shares

How Attributrion 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

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 process
• Attribution process

Importance:

• Measurement of motor fuel data
• Equitable treatment for all States

FHWA needs your commitment

FHWA Motor Fuel Reporting:

Accomplishments, Challenges, and Changing Environment

Accomplishments:

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

Accomplished: Re-Assessment

Time Line: Began in late 1998 and shortly after TEA-21 passed

Methodology:

• Expert advisory group
• Identify issues
• Propose solutions

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

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

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: 1) Data providers received USERID 2) Managed by Division Offices

Accomplished: MF Reviews

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

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

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

Challenges:

• Motor fuel reviews and follow-up: 1) Quality of reviews 2) Quality improvements 3) Risk assessment
• Verification of data
• Communication

Challenges: MF Reviews

Quality of reviews/Quality improvements:

• Need to bring up the average
• Three core items: 1) Procedures document 2) Procedures assessment 3) Oversight plan

Risk Assessment

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

Challenges: Verification of Data

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

Challenges: Communication II

Community of Practice:

• Location for all publications/materials
• Bulletin-board style listserv

http://knowledge.fhwa.dot.gov/cops/hcx.nsf/home?openform&Group=Motor%20Fuel%20Reporting%20and%20HTF%20Attribution

Changing Environment:

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

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

Changing Environment:.Reporting & 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

Changing Environment:.Gasohol 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

Changing Environment:.Fuel 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 (Linda.Morris@fhwa.dot.gov)

In Summary

Identified and discussed:

• Accomplishments
• Challenges
• Changes in the MF environment

FHWA Motor Fuel Reporting:

Data Submittal Process and Discussion of Improvements

Background I

• 2002 and beyond motor fuel data submitted electronically
• Submitted by State DOT's, DOR's, or FHWA
• Form 551M submitted monthly
• Form 556 submitted annually

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

Motor Fuel Reporting: We begin here.

Motor Fuel Reporting

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

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

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

Motor Fuel Reporting

Other State Fuel Data:

• Alternative fuels a) Per gallon equivalent and b) Registration fees in lieu of per gallon taxes
• Aviation Fuels
• Transit 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 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

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

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

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