Latest / Thinking Transportation: Engaging Conversations about Transportation Innovations / Building by the Numbers: How economic indicators guide road construction.
Transcript
- 0:14Bernie Fette (host): Welcome.
- 0:15Bernie Fette (host): This is Thinking Transportation-- conversations about how we get ourselves and the things we need from one place to another.
- 0:23Bernie Fette (host): I'm Bernie Fette with the Texas A&M Transportation Institute.
- 0:29Bernie Fette (host): Road building in Texas is a multi-billion d ollar endeavor, impacted by a wide array of economic forces, all of which are constantly changing.
- 0:40Bernie Fette (host): We can think of them as pieces of a puzzle, each of which is dynamic, shifting daily in shape and size.
- 0:49Bernie Fette (host): TTI Research Scientist Brianne Glover keeps a close eye on those evolving factors.
- 0:55Bernie Fette (host): She and her colleagues track a vast array of economic indicators from the price of crude oil, to airline passenger boardings, to unemployment rates, all to paint a clear picture of the fiscal realities and better inform the way that we fund our transportation system.
- 1:14Bernie Fette (host): Thank you for joining us, Brianne.
- 1:16Brianne Glover (guest): Thanks for having me.
- 1:18Bernie Fette: So in a, in a research agency where we've got a lot of engineers, you stand out as not being one of them.
- 1:26Bernie Fette: Your background is quite different.
- 1:28Bernie Fette: Your research area is called infrastructure investment analysis, which to me anyway, sounds a bit complex.
- 1:35Bernie Fette: So in simple terms that a high school freshman could understand, please tell us what it is that you do.
- 1:43Brianne Glover: Sure.
- 1:43Brianne Glover: Yeah.
- 1:44Brianne Glover: It's, it's a mouthful-- infrastructure investment analysis.
- 1:46Brianne Glover: So we do research regarding finance and economics.
- 1:51Brianne Glover: So that's things like how do we pay for a road or how do we pay for an improvement at a port or an airport?
- 1:59Brianne Glover: We look at all modes, but it also looks at the, the economic side of things as well.
- 2:03Brianne Glover: So things like if we spend money in a certain area or on a certain type of infrastructure, what does that mean for the region or the state in general, in regards to economic impacts.
- 2:18Bernie Fette: Okay.
- 2:18Bernie Fette: And you do all of that without a crystal ball, right?
- 2:22Brianne Glover: I wish I did have one.
- 2:23Brianne Glover: Sometimes our group, we've got a lot of folks with policy backgrounds.
- 2:28Brianne Glover: I have a legal background.
- 2:30Brianne Glover: And so we're kind of one of the groups in TTI that doesn't really have a lot of engineering background.
- 2:37Bernie Fette: Yeah.
- 2:38Bernie Fette: And even though you don't have a crystal ball, you've got a pretty robust website that I'd love for us to talk about just a little bit later in our conversation.
- 2:46Bernie Fette: Maybe we can get to that in a few minutes.
- 2:48Bernie Fette: When we actually started this conversation a couple of weeks ago, we were talking specifically about the state motor fuels tax.
- 2:56Bernie Fette: That's the tax that drivers pay in Texas on a gallon of gasoline or diesel.
- 3:02Bernie Fette: We talked about what that tax pays for, how it works.
- 3:06Bernie Fette: Can we continue there, pick up there and let you describe how and why you study the gas tax?
- 3:13Brianne Glover: Sure.
- 3:13Brianne Glover: So the gas tax, there's two different forms of the gas tax.
- 3:17Brianne Glover: You've got the state portion and you've got the federal portion.
- 3:21Brianne Glover: The state portion in Texas is 20 cents per gallon.
- 3:24Brianne Glover: And the federal portion is 18.4 cents per gallon.
- 3:28Brianne Glover: Now, neither one of these have been changed since the early nineties, 1991 for Texas for the state tax and 1993 for the federal fuel tax.
- 3:39Brianne Glover: And so a very large portion of the transportation fund is made up of these revenues, these motor fuels tax revenues.
- 3:47Brianne Glover: And so the amount that comes in from that is a very important part of how we pay for our roads in Texas.
- 3:54Bernie Fette: And if it doesn't change, what are we saying close to 30 years?
- 3:59Bernie Fette: What's the result of that?
- 4:01Brianne Glover: So it's gone up a little in the past.
- 4:03Brianne Glover: It's continued to trend upward, but that is mostly because the population of Texas has grown.
- 4:08Brianne Glover: And so as our population grows, we put more cars on the road and those more cars are buying fuel.
- 4:14Brianne Glover: And so we've continued to increase the revenue, um, of the motor fuels tax.
- 4:19Brianne Glover: But recently that's sort of slowed down, plateaued and may even be starting to decline.
- 4:25Brianne Glover: And that's a lot due in fact, to fuel efficiency.
- 4:28Brianne Glover: We've got cars that can go further on a gallon of gas than they used to, especially since 1991.
- 4:36Brianne Glover: And you've got more electric vehicles and alternative fuel vehicles on the road.
- 4:39Brianne Glover: And all of these things tend to affect the amount of motor fuels tax that we're bringing into the state to pay for roads.
- 4:48Bernie Fette: And there are other ways also that the state collects money to fund the transportation system, right?
- 4:53Bernie Fette: Can you tell us a little bit about those?
- 4:56Brianne Glover: Yeah.
- 4:56Brianne Glover: So traditionally the motor fuels tax and the, your vehicle registration fee have been the two big traditional funding sources for transportation in Texas.
- 5:06Brianne Glover: So in the mid-2010s, somewhere around 2014 and a few years thereafter, the Legislature passed proposition one and proposition seven, which were new forms of revenue for transportation in Texas.
- 5:19Brianne Glover: Proposition one is based on the oil and gas severance tax.
- 5:24Brianne Glover: And so what that does is it takes a portion of that and gives it to transportation.
- 5:29Brianne Glover: And what that means is that as Texas produces oil and gas, as they pump it out, that tax is based on the amount of production, but also the price of oil.
- 5:40Brianne Glover: And so that revenue stream can change depending on how much we're pumping and what the cost of oil is.
- 5:47Brianne Glover: The other one, proposition seven, prop seven, that is based on sales tax.
- 5:52Brianne Glover: So everything you buy is taxed.
- 5:54Brianne Glover: You get a sales tax on it, almost everything.
- 5:56Brianne Glover: And so a portion of that goes to transportation, but that also includes sales tax when you buy a motor vehicle or when you rent a car, those also get included as well.
- 6:06Bernie Fette: And since you mentioned sales tax, I think maybe it's worthwhile to make that reference or make that comparison with the motor fuels tax.
- 6:15Bernie Fette: Whenever we go out and buy a car, as you mentioned, or we go out and buy a television, or pretty much anything, we pay a sales tax that's based on the price of the product that we're buying.
- 6:27Bernie Fette: But the motor fuels tax doesn't work that way, right?
- 6:30Brianne Glover: Correct.
- 6:31Brianne Glover: And that seems to be a point of confusion, a lot with the public when you talk about motor fuels tax.
- 6:36Brianne Glover: So the motor fuels tax is based on a 20 cents per gallon.
- 6:41Brianne Glover: So, you know, if gas is$2 a gallon or gas is$5 a gallon, you're still only paying 20 cents per gallon in motor fuels tax.
- 6:50Brianne Glover: Whereas, you know, recently we've seen the price of a lot of things go up with inflation.
- 6:54Brianne Glover: So the more you're paying for a good, let's say, like you said, I go buy a television.
- 6:59Brianne Glover: As that price increases, well, I'm paying more sales tax on that.
- 7:02Brianne Glover: And so that's not really a apples-to-apples comparison when you look at the tax for gas.
- 7:08Bernie Fette: Right.
- 7:09Bernie Fette: And whenever you have a situation like that, you mentioned earlier that that per gallon tax hasn't been changed since the early 1990s, while you also mentioned that we are paying more for a lot of other things.
- 7:22Bernie Fette: And I guess that also goes for the materials that go into building roads and highways.
- 7:26Bernie Fette: Right?
- 7:27Brianne Glover: That's correct.
- 7:28Brianne Glover: Yeah.
- 7:29Bernie Fette: And isn't that one of the other things that you and your colleagues study, cuz I'd like to let you talk a little bit, if you could, about some of the other things that you study.
- 7:38Bernie Fette: Some of them seem to have a very direct connection to roads and bridges, others perhaps.
- 7:43Bernie Fette: And one that comes to mind right now is commercial airline boardings, which doesn't appear to have the same kind of direct relationship with building roads and bridges, but you still that's one of the things you study.
- 7:54Bernie Fette: Can you help us understand some of the other things that you guys look at and why?
- 8:00Brianne Glover: Yeah.
- 8:00Brianne Glover: So this really ramped up during the pandemic.
- 8:02Brianne Glover: Early in the pandemic, we started tracking a lot of different economic factors, economic indicators that we call them, across the board, not just transportation-related and this sort of helps us get a feel for what's happening out there in the economy, not just in our narrow field of transportation.
- 8:20Brianne Glover: And so you mentioned a couple of things.
- 8:22Brianne Glover: One of the things that we look at is the highway cost index, the HCI for Texas.
- 8:27Brianne Glover: And so that's what the cost of materials to build roads.
- 8:33Brianne Glover: It tracks them what they look like, what the, how much their cost.
- 8:37Brianne Glover: And so this sort of helps us see, you know, is it a good time to build the road?
- 8:40Brianne Glover: Is it a good time to spend the money right now?
- 8:43Brianne Glover: You know, sometimes it doesn't matter.
- 8:45Brianne Glover: It's a necessity and that has to happen anyway, but then that can in turn impact the other things that you can spend money on.
- 8:51Brianne Glover: If you're having to spend more on project A, you have less money left over for projects, B, C, and D.
- 8:58Brianne Glover: And so that's a good thing that helps us track and see what's going on with the cost and how we pay for roads.
- 9:04Bernie Fette: Does that also help you foresee or consider the possibilities of, of the different combinations of funding that you could use to build a road, meaning tax revenue on one hand and perhaps bonding or, or having the state borrow money to build roads, does what you do help to find the right mix of those funding sources?
- 9:25Brianne Glover: It can in general.
- 9:27Brianne Glover: I think it gives us a better idea of not necessarily that we can predict what's coming, but if we can say, Hey, over the past five years, we've been tracking pretty high on what it costs to build roads or, or whatever period of time we wanna look at.
- 9:40Brianne Glover: Whereas, you know, in a different time period, it was lower.
- 9:43Brianne Glover: We knew that we'd have the cash on hand to pay for things.
- 9:47Brianne Glover: But if we know things tend to be, you know, tracking higher in cost, well maybe then that's a time when the state, as a whole needs to look into those things like bonds.
- 9:56Brianne Glover: But that also will depend on the other hand on interest rates and things like that that also can be tracked and looked at as the economic health in general.
- 10:06Bernie Fette: And some of those things you, for instance, interest rates heavily influenced by things outside of Texas.
- 10:14Bernie Fette: Federal reserve decisions and such.
- 10:16Bernie Fette: Can we look at a couple of other examples?
- 10:18Bernie Fette: Tell me how looking at data from the transportation security administration, commercial airline boardings, how does that figure into planning for roads and bridges?
- 10:29Brianne Glover: Sure.
- 10:29Brianne Glover: So, well, and also we, we don't just look at roads and bridges.
- 10:32Brianne Glover: We're looking at funding for all forms of transportation.
- 10:35Brianne Glover: And that can include, you know, airports as well.
- 10:38Brianne Glover: But as far as TSA throughputs go, like you said, the, the amount of people who are getting on and off of airplanes, this gives us an idea of not only how the airline industry is doing, but also sort of people's appetite for travel.
- 10:52Brianne Glover: There's been a few years where people have been very hesitant to fly.
- 10:56Brianne Glover: And in those times we saw that people were more willing to take a car say for the summer vacation, which is happening, you know, soon we're heading into the summer.
- 11:05Brianne Glover: But it also, you know, we we're seeing the price of gas increase.
- 11:09Brianne Glover: And so that can impact that as well.
- 11:10Brianne Glover: But it really just helps us get a feel for possible travel patterns.
- 11:15Bernie Fette: Right.
- 11:16Bernie Fette: Which can help state and local agencies sort of have their own predictive methods for figuring out, okay, how much of a road do we build here?
- 11:27Bernie Fette: And when do we build it?
- 11:28Brianne Glover: Yeah, exactly.
- 11:30Bernie Fette: Okay.
- 11:30Bernie Fette: Housing starts.
- 11:31Bernie Fette: I think that that's another one that you study.
- 11:33Bernie Fette: Is that right?
- 11:34Brianne Glover: Yeah.
- 11:35Brianne Glover: We've looked at home sales and home inventories.
- 11:39Brianne Glover: But again, this goes towards the general feel for the economy and sort of people's attitudes towards location and their ability to take risks.
- 11:47Brianne Glover: Let's say everybody starts, you know, like right now the cost of housing has jumped a lot over the past year or two.
- 11:53Brianne Glover: Right.
- 11:53Brianne Glover: And so that may influence where people are buying homes.
- 11:56Brianne Glover: So let's say I wanna buy a home, but I can't afford close, you know, in the city, if I'm in a larger city, I can't afford close to where I work.
- 12:03Brianne Glover: And so I'm having to broaden my search for a new home.
- 12:08Brianne Glover: And let's say, I'm suddenly instead of Dallas, I'm in McKinney.
- 12:11Brianne Glover: And so that's gonna make my commute longer to work.
- 12:14Brianne Glover: So again, that looks at travel patterns, but it also, we noticed early on in the pandemic that had a lot to do with people were looking to buy a different home because they needed a home office.
- 12:23Brianne Glover: That was one of the things I found kind of interesting.
- 12:25Brianne Glover: That was sort of anecdotal.
- 12:26Brianne Glover: Yeah.
- 12:27Brianne Glover: Yeah.
- 12:27Brianne Glover: And so that, again goes back to travel patterns as well.
- 12:29Brianne Glover: If you're taking those people off the road and they can afford to live, you know, somewhere different.
- 12:34Bernie Fette: Right.
- 12:35Bernie Fette: So either short-term or long-term, it does have an impact on where roads need to be built or expanded.
- 12:41Brianne Glover: Yes.
- 12:42Brianne Glover: Yes.
- 12:41Bernie Fette: Okay.
- 12:42Bernie Fette: So you work with a lot of moving targets.
- 12:44Brianne Glover: Yeah.
- 12:45Brianne Glover: There's a lot of'em and we like to keep tabs on'em.
- 12:47Brianne Glover: Some of them may not be as important, you know, at the immediate time that we're looking at them, but it's good to track them because you never know when a specific factor maybe combined with another one could help tell a story of what's happening in the economy.
- 13:02Bernie Fette: Or influence a third or fourth factor.
- 13:04Bernie Fette: So lot of moving targets.
- 13:07Bernie Fette: Can you give us an example of some of the scenarios that you work with in trying to answer the questions that you try to answer?
- 13:16Bernie Fette: Maybe this is an opportunity for you to describe your TRENDS website and how that works in terms, especially as it relates to some of the scenario forecasting that we're talking about.
- 13:27Brianne Glover: Sure.
- 13:28Brianne Glover: Yeah.
- 13:28Brianne Glover: So we like to look at a bunch of different scenarios of different funding opportunities.
- 13:33Brianne Glover: And so what that means is we can look at how we currently fund things and we can change how we might fund them in the future.
- 13:41Brianne Glover: And to do that, we have created a model several years ago and we keep it up to date called the TRENDS model.
- 13:46Brianne Glover: The TRENDS model is the Transportation Revenue Estimator Needs Determination System.
- 13:52Brianne Glover: It's a mouthful as well.
- 13:54Bernie Fette: So how does the TRENDS model work?
- 13:57Brianne Glover: So the TRENDS model takes a bunch of different data each month from the Texas Department of Transportation, as well as the Texas Comptroller-- things that they're tracking like sales tax, motor fuels tax, vehicle registration fees, all of these things.
- 14:13Brianne Glover: We get the historical data and we keep it updated every month.
- 14:17Brianne Glover: But what we're able to do is then looking at population projections, we're able to say, okay, out to 2050, here's what we think the trend in these different revenues is going to be.
- 14:30Brianne Glover: And so we, we forecast out the fuel tax, the vehicle registration fee, prop one, prop seven.
- 14:38Bernie Fette: And you also look at oil prices too, right?
- 14:41Bernie Fette: Which have, have been pretty high lately for instance, and fluctuated a lot over the years.
- 14:46Brianne Glover: We do, we look at historical oil prices, but we're very hesitant to forecast that out into the future.
- 14:52Brianne Glover: Um, if I could predict the price of oil, I'd be a millionaire right now.
- 14:56Bernie Fette: You wouldn't be working for us.
- 14:58Brianne Glover: yeah.
- 14:58Brianne Glover: But, but with the TRENDS model, we're able to look at a lot of different revenues that we don't already use.
- 15:05Brianne Glover: So that's things like a vehicle miles fee or say a local option fee, all of these different things.
- 15:13Brianne Glover: We're able to project out and say, okay, if you were to implement this type of tax or this type of fee, here's the kind of revenue stream you're looking at.
- 15:22Brianne Glover: And one of those we've also recently added is alternative fuel vehicles.
- 15:26Brianne Glover: So one of the issues is they don't necessarily pay the fuels tax.
- 15:30Brianne Glover: And so a lot of states have implemented a vehicle registration fee for these vehicles over and above what the regular state vehicle registration fee is.
- 15:38Brianne Glover: So if we pay$50 in Texas to register our vehicle, let's say I have a electric vehicle.
- 15:45Brianne Glover: They're gonna pay the$50 plus a hundred in certain states.
- 15:49Brianne Glover: And so that's another option that the TRENDS model lets you look at as well.
- 15:52Bernie Fette: Now that we're talking about a couple of other potential or future potential funding sources, like you mentioned an additional fee on electric vehicles to compensate for the fact that they're not paying the gas tax.
- 16:05Bernie Fette: You also mentioned a vehicle miles traveled fee, which guess correct me if I'm wrong here, but you pay based on not the amount of gas you use, but the amount of miles that you drive.
- 16:17Bernie Fette: So it's kind of a unit cost much like how we pay for electricity, right?
- 16:21Brianne Glover: Yeah.
- 16:21Brianne Glover: Very similar it's more of a user fee is the way it's typically termed and there's states that have done pilot programs and have started implementing this to a small degree, Oregon, Washington, Utah.
- 16:33Brianne Glover: If they're starting to look into these things and it's typically considered a replacement fee for the gas tax.
- 16:40Brianne Glover: So not something in addition to it, but something that would replace it in theory.
- 16:45Bernie Fette: These other alternative potential funding sources that you're talking about.
- 16:49Bernie Fette: Have you noticed any change in recent years in the interest in Texas, the policy interest, uh, or the appetite for those kinds of options, has that changed at all?
- 17:01Bernie Fette: Or is it growing?
- 17:02Bernie Fette: Is it receding?
- 17:04Brianne Glover: So the last Legislative Session, they did take a look at some sort of fee for alternative fuel vehicles.
- 17:11Brianne Glover: And so I think that's something that's gaining some traction and we'll probably see again, as far as the road user charges or road user-based fees, like the, the vehicle miles traveled fee, that's something that's on the radar, but in the past we haven't really had the appetite for it here in Texas.
- 17:29Brianne Glover: There's an issue with privacy that tends to come up.
- 17:32Brianne Glover: And so as other states are working through that, that's something that we need to keep an eye on for the future in Texas.
- 17:39Bernie Fette: And, and all of those different factors or funding scenarios are part of that TRENDS website that you described, which is maybe as close to a crystal ball as we're going to get.
- 17:49Brianne Glover: Yeah.
- 17:50Brianne Glover: It, it's a crystal ball that you can change as you want to, you can go in and try different things and see what they look like.
- 17:56Bernie Fette: Yeah.
- 17:57Bernie Fette: And it's a crystal ball that's actually scientific.
- 17:59Brianne Glover: Yeah.
- 17:59Brianne Glover: We, we tried to use a lot of public sources for the data that sort of is the foundation for the model.
- 18:05Bernie Fette: All right.
- 18:06Bernie Fette: You've given us a better understanding of the questions that you have been trying to answer over recent years.
- 18:13Bernie Fette: I'm wondering if there are any questions that you'd like to focus on more.
- 18:17Bernie Fette: Research questions, funding, policy questions that you'd like to focus on more or entirely new questions.
- 18:22Bernie Fette: What might you be studying on this front several years from now?
- 18:28Brianne Glover: Yeah, that's a good question.
- 18:29Brianne Glover: I'm not sure.
- 18:30Brianne Glover: You know, when I started looking at these things, when I started working on the TRENDS model over a decade ago, fuel tax, that was the biggest question of the time.
- 18:38Brianne Glover: I didn't even think about including things that had to do with alternative fuel vehicles.
- 18:42Brianne Glover: And so I think as that has changed over the past decade or so, I think, you know, into the future, we'll see that take a larger part, start playing a bigger part in how we fund transportation.
- 18:54Brianne Glover: But I don't know.
- 18:55Brianne Glover: I think there'll be a lot of different options.
- 18:57Brianne Glover: States are starting to get creative and I think we just need to keep an eye on them and see what's happening.
- 19:02Bernie Fette: You might have a lot of potential for adventure on that front in the coming years.
- 19:08Bernie Fette: You mentioned 10 years ago.
- 19:10Bernie Fette: So that was somewhat after the time that you finished law school and decided, you know, you walked off the stage at law school with your degree in hand and said, I think I'm going to become a transportation economist.
- 19:22Bernie Fette: That's exactly how it happened, right?
- 19:24Brianne Glover: Sure.
- 19:25Brianne Glover: I, I worked for a civil engineering firm before I went to law school as a designer and went to law school, not really wanting to be an attorney, just wanting to learn and do something different.
- 19:38Brianne Glover: And then when I finished law school, this opportunity popped up and I thought, you know, that, that sounds really interesting.
- 19:43Brianne Glover: These people are doing some cool things.
- 19:45Brianne Glover: And so I jumped in and didn't look back.
- 19:49Bernie Fette: What is it then that makes you want to show up to work every day?
- 19:52Bernie Fette: What is it about your work that really motivates you?
- 19:56Brianne Glover: So I I'd have to say the people.
- 19:57Brianne Glover: I love the people that I work with.
- 19:59Brianne Glover: I have a great group.
- 20:01Brianne Glover: They are constantly questioning everything.
- 20:04Brianne Glover: And I think that's fantastic.
- 20:05Brianne Glover: We have great in-depth conversations about what could be and what might be.
- 20:11Brianne Glover: And I think that's great for research.
- 20:13Brianne Glover: It really allows us to think outside the box and come up with different things and maybe cool new ways to do things.
- 20:20Brianne Glover: And so I enjoy that and that's what makes me come back every day.
- 20:25Bernie Fette: TTI research scientist and crystal ball reader, Brianne Glover.
- 20:31Bernie Fette: Brianne, thanks very much for helping us understand this topic a bit more clearly.
- 20:35Bernie Fette: We do appreciate it.
- 20:36Bernie Fette: Thank you.
- 20:38Brianne Glover: Thank you guys.
- 20:40Bernie Fette: Funding our transportation needs is a pricey undertaking, and it calls for precision in tracking myriad financial trends.
- 20:49Bernie Fette: Transportation planners and policy makers alike navigate an economic environment that transforms daily as they face complex questions related to transportation funding.
- 21:02Bernie Fette: Research helps them find the answers.
- 21:06Bernie Fette: Thanks for listening.
- 21:08Bernie Fette: Please join us again for our next episode, when we visit with David Bierling, who will walk us through some of the latest research related to tropical storm evacuation, just as the current hurricane season is getting ramped up.
- 21:24Bernie Fette: Thinking Transportation is a production of the Texas A&M Transportation Institute, a member of the Texas A&M University System.
- 21:32Bernie Fette: The show is edited and produced by Chris Pourteau.
- 21:36Bernie Fette: I'm your writer and host Bernie Fette.
- 21:39Bernie Fette: Thanks again for listening.
- 21:40Bernie Fette: We'll see you next time.