The construction and maintenance of Virginia’s highway system are financed primarily by “user" charges and fees. “Users" are all individuals who use the highway system and pay for that use through taxes directly related to highway travel, such as gasoline taxes, license and registration fees, and sales taxes on automobiles and trucks. The principal exception to user funding is the local tax revenue used by cities to augment or match State expenditures for road construction and maintenance. Overall, however, 99 percent of State highway revenue comes from taxes and fees placed directly on the user of the highway system.

A basic principle user tax equity is that the proportion of revenues derived from each user should be equal the to the proportion of costs the public bears in providing serviceable highways for that user. A balanced tax structure would produce revenues from each user sufficient to cover all costs incurred on behalf of that user. While such a balance is difficult to achieve, knowing the relationship between taxes and highway use and service cost is a first step in designing an equitable tax structure.

The analytic process used to examine the balance between revenues paid by user taxes and the cost associated with providing the highway system is generally referred to as a cost responsibility study.

Cost Responsibility Concept

An underlying consideration of a cost responsibility study is that the highway system is built to accommodate a variety of vehicles. Different vehicles have a wide range of requirements for pavement width, strength, and amount of roadway. In cases where construction and maintenance expenditures are due to the needs of particular vehicles, those costs should be borne by the vehicle classes that require them. Examples are expenditures such as raising overpasses for truck clearance, or maintaining ferries which only haul automobiles.

In other cases, expenditures are made which cannot be directly related to special vehicle needs. For example, all vehicles benefit from traffic signs in equal measure. Separating costs associated with specific vehicle classes those which are common to all vehicles requires careful analyses and a complex methodology.

A glossary has been included at the end of this report which identifies key terms and addresses some additional technical considerations.