Alternative approaches to forecasting highway related revenues in Virginia
The highway related revenues for the Commonwealth of Virginia from three major tax sources; fuel tax, registration fee, and sales and use tax are estimated under three scenarios. Each scenario assumes different economic conditions for the future. The base case expects normal or moderate situations for future economy, where the optimistic case expects lower inflation rates and the pessimistic case assumes higher inflation rates.
Two modeling approaches have been used in forecasting the fuel tax revenue. One is based on travel, and the other is based on gasoline demand. The sales and use tax revenue has also been forecasted using two different approaches. One method depends on the demand for vehicle, and the other on the historical amount of revenues generated. Registration fee revenue for five types of vehicles are forecasted using number of registered vehicles and the average registration fees.
A comparison of the developed model with other existing state revenue forecasting models are also presented.