# Presentation: 319711

## Highway Information Seminar

- Motor Fuel Session
- November 16, 2004

##    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
- 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

| 
Program | Approximate Annual Funding | Motor Fuel Factor | Apportionment Based on Motor Fuel |
| --- | --- | --- | --- |
| Surface
Transportation | $ 6 Billion | 35 % | $ 2 Billion |
| Interstate
Maintenance | $ 6 Billion | 33.3 % | $ 2 Billion |
| National
Highway System | $ 6 Billion | 30 % | $ 2 Billion |
| Minimum
Guarantee | $ 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 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 Attribution 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
- Changing Environment

## Accomplishments:

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

## Accomplished: Re-Assessment

- Time line
- Began in late 1998
- 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
- Data providers received USERID
- 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
- Quality of reviews
- Quality improvements
- Risk assessment
- Verification of data
- Communication

## Challenges:  MF Reviews

- Quality of reviews/Quality improvements
- Need to bring up the average
- Three core items:
- Procedures document
- Procedures assessment
- 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

- Methods (continued)
- Community of Practice:
- Location for all publications/materials
- Bulletin-board style listserv
- http://knowledge.fhwa.dot.gov/cops/hcx.nsf/home?openformgroup=motor%20 fuel%20reporting/htf%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

## In Summary

- Identified and discussed
- Accomplishments
- Challenges
- Changes in the MF environment

## Slide 37

## Slide 38

## Slide 39

## Slide 40

## FHWA Motor Fuel Reporting:

- Data Submittal Process
-  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
- Per gallon equivalent
- 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