The US Department of Transportation completed an extensive study of costs and uses of the federal highway system, the Federal Highway Cost Allocation Study (HCAS). This study led to recommendations for significant changes in user fees paid by private citizens (e.g., in fuel taxes) and commercial enterprises (e.g., licenses and fuel taxes paid by highway transportation companies). The costs of highway usage include their construction and repair due to traffic and weather damage. In a major departure from previous studies, the HCAS recommended including environmental impacts, safety, congestion, and noise caused by the federal highway system in the costs to be shared by highway users. Federal highway spending, not including mass transit, environmental impacts, and so on, amounted to approximately

$27,102,000,000.

Vehicle miles traveled (VMT) on federal highways continued to be dominated by private automobile traffic as shown:

VMT Total Number of Passenger Vehicles (millions) Percentage Vehicles Percentage AULOSHAAS hae ae oe ree 1,818,461 67.5% 167,697,897 70.0%

RiCkUDS/NaISitew. abe. Gtescesaesrce e ee 669,198 24.8 63,259,330 26.4 BUSCSA BeAnte) eeee ae ne 13897 08 754,509 0.3 Sing@le=Umit thUCKS >. ee cteee- coe 83,100 hil 5,970,431 2x5)

CombpinationtiUCks emer cere: 115,689 4.3 1,971,485 0.8 WCU eeneeaete ceerentag': hor Meeeceasees x 2,693,845 100% 239,653,602 100%

Required

a. Compute highway spending costs per vehicle (by type) by allocating $27,102,000,000 highway spending on the basis of (1) the number of vehicles and (2) the VMT. Would inequities be created by either of these allocations? Explain.

b. The federal HCAS recommended the following cost pools and allocation bases:

Cost Pool* Amount Allocation Base New construction and pavement replacement.......... $19.161 billion VMTs weighted by,passenger car equivalents (PCE)

Bridge construction and replacement..........cccccee 3.757 billion VMT FUOMWayieninamCenlemSoa.tecq-cenatan-csrertaeneeeeeceMee:e e 4.184 billion VMT weighted by PCE INE ISSAUPENTISIL soce drctenancnanersecunhurenmnticshoedteeee aeneenceweernecs 5.787 billion VMT

*Not included in the previous total obligations.

TA passenger car equivalent (PCE) measures each type of vehicle’s effects on highways compared to an automobile, pickup, or van. On average, a bus has a PCE of 4.0, a single-unit truck has a PCE of 5.4, and a combination truck has a PCE of 10.6. One mile driven by a bus, for example, has 4 times the effect as an automobile, pickup, or van.

Allocate the $27,102,000,000 highway costs to the types of vehicles using these cost pools and allocation bases. Compare them to allocations based on VMT alone.