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The need to conserve energy, inflationary pressures, decreasing user tax revenues, and recent national automotive policy decisions have created problems that have seriously affected the state highway financing process. This paper discusses the development and application of a computer model that can be used to analyze and estimate the complex interactions among the factors influencing highway financing and their ultimate impacts on highway performance. The model uses the national energy and economic forecasts developed by Data Resources, Inc., along with a set of possible highway policy options, and simulates their effects on factors such as vehicle fuel efficiency commercial and noncommercial vehicle travel, fuel consumption, revenue generation, and highway maintenance and capital expenditures. Application of the model to the Indiana problem indicated that an overall deterioration in highway performance can be expected because the revenue required to stabilze or improve highway performance is enormous. However, the scenarios tested showed that highway policy options such as revised highway performance criteria and programs to reduce future highway use can have a significant impact on future highway performance. Thus, combinations of increased tax rates and non-revenue-generating highway policy options may be necessary to ensure the sustenance of a tolerable level of highway performance in the future. (Author)

Methodology for Evaluating the Impacts of Energy, National Economy, and Public Policies on State Highway Financing and Performance