February 2018 Motor Fuels Tax

COMMONWEALTH TRANSPORTATION FUND REVENUE REPORT February 2018

Summary

Commonwealth Transportation Fund (CTF) revenues declined by 0.7 percent in February due to slow motor fuels tax collections. Year-to-date growth now stands at 0.8 percent.

Motor Fuels Tax

Motor fuels taxes fell by 10.1 percent in February and are up 0.9 percent for the fiscal year.

U.S. regular gasoline retail prices averaged $2.48 per gallon (gal) in February, down almost 9 cents/gal from the average in November but 22 cents/gal higher than at the same time last year. U.S. regular gasoline retail prices averaged $2.42/gal in 2017 and are forecast to average $2.57/gal in 2018 and $2.58/gal in 2019.

Motor Vehicle Sales and Use Tax

Motor vehicle sales tax collections decreased by 2.0 percent in February and have fallen by 2.1 percent year-to-date.

Despite the lower sales figure, consumers still spent about 3.5 percent more money on new vehicles than a year earlier. This is because of the inflation in average new-vehicle transaction prices, which topped $32,000. It is not a coincidence that average transaction prices and light trucks' share of sales both reached records in the same month; light trucks and SUVs tend to have higher margins and selling prices than their car counterparts. As an example, Ford reported that its average transaction price reached an all-time high of $37,000. This was thanks to a sales increase of the higher-priced and immensely popular Ford F-Series pickup truck. At the same time, Ford's car sales dropped by a whopping 23.3 percent.

The trend in consumer demand toward SUVs and light trucks is unrelenting, with evidence of this presenting itself down to the model level. In the pickup truck segment, for example, the Ford F-Series remained extremely popular. Also, GM's best-selling Chevrolet Silverado saw a sales jump of 14.5 percent. GM heavily discounted Silverados to prepare for the arrival of a newer version of the pickup later this year. One exception in this segment was Ram brand trucks, where sales dropped 16 percent.

In the crossover and SUV segments, the biggest anomaly was the Honda CR-V; sales of this previously hot-selling model dropped almost 17 percent. Other models in these segments retained their popularity, however. Toyota posted excellent results largely because of a blowout month for its crossover and SUV models, including the RAV4, Highlander and 4Runner. Of Fiat-Chrysler's five North American brands, Jeep was the best performer with a 2 percent bump in sales. Nissan Rogue crossover sales led the pack, having increased nearly 26 percent. Finally, Volkswagen's two SUV models--the Atlas and the Tiguan--comprised almost half of VW's sales.

Incentive spending remained at a relatively high level of just over $3,700 per vehicle as automakers begin to focus more on the 2018 model-year vehicles. According to JD Power, sales of such vehicles comprised 73 percent of retail sales, which is an increase of 11 percentage points compared with December.

Tightening access to credit caused by moderately weakening credit conditions-- especially in subprime groups--and a few interest rate hikes that will make car loans more expensive, will hinder new-vehicle sales in 2018. In addition, off-lease volumes will continue to support higher demand for used vehicles.

State Retail Sales Tax

The transportation portion of the state retail sales tax increased by 3.5 percent in February.

Motor Vehicle Licenses

Motor vehicle registration fee collections increased by 11.7 percent in February.

Commonwealth of Virginia/Department of Accounts Highway Maintenance and Operating Fund and Transportation Trust Fund Revenues

Summary Statement of Selected Revenue Estimates & Collections For the Fiscal Years 2017 and 2018 (Dollars in Thousands)

Revenue

FY 2018 Estimate

As a % of Total

Fund

FY 2018

February FY 2017

% Change

Year-To-Date

FY 2018

FY 2017

% Change

% Annual Growth Required By Estimate

Motor Fuel Taxes

$898,700

Priority Transportation Fund (PTF)

168,018

Motor Vehicle Sales and Use Tax

963,300

State Sales and Use Tax

1,047,000

Motor Vehicle License Fees

259,200

International Registration Plan

64,400

Recordation Tax

48,300

Interest Earnings

3,300

Misc. Taxes, Fees, and Revenues

17,200

Total State Taxes and Fees

$3,469,418

# Percentage is greater than or equal to 1,000%.

18.51 $65,309 $72,647

3.46

0

0

19.85

69,958

71,420

21.57

74,633

72,140

5.35

21,378

19,144

1.33

5,860

3,910

1.00

2,863

2,948

0.07

107

33

0.35

1,720

1,179

71.49 $241,828 $243,421

(10.1) $536,318

-

168,018

(2.0)

643,887

3.5

642,943

11.7

162,778

49.9

39,415

(2.9)

30,653

224.2

4,160

45.9

12,050

(0.7) $2,240,222

$531,685 163,142 657,436 626,509 162,766 34,593 31,705 3,038 11,481

$2,222,355

0.9 3.0 (2.1) 2.6 0.0 13.9 (3.3) 36.9 5.0 0.8

3.0 3.0 (3.4) 2.6 (0.4) (2.7) 0.4 (48.2) (6.5) 0.5

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Commonwealth of Virginia/Department of Accounts Highway Maintenance and Operating Fund and Transportation Trust Fund Revenues

Statement of Revenue Estimates & Collections For the Fiscal Years 2017 and 2018 (Dollars in Thousands)

Revenue

HIGHWAY MAINTENANCE

AND OPERATING FUND: Motor Fuel Taxes (Includes Road Tax) Motor Vehicle Sales and Use Tax State Sales and Use Tax Motor Vehicle License Fees International Registration Plan Misc. Taxes, Fees, and Revenues

Total State Taxes and Fees

FY 2018 Estimate

$718,200 692,800 287,000 236,600 64,400 17,200

$2,016,200

As a % of Total

Fund

14.80 14.28

5.91 4.88 1.33 0.35 41.55

FY 2018

February FY 2017

$53,400 50,538 20,482 19,531 5,860 1,720

$151,531

$60,388 51,727 19,844 17,479 3,910 1,179

$154,527

% Change

(11.6) (2.3) 3.2 11.7 49.9 45.9 (1.9)

FY 2018

Year-To-Date FY 2017

$433,634 464,697 180,833 148,607 39,415 12,050

$1,279,236

$429,740 472,521 170,219 148,622 34,593 11,481

$1,267,176

Other Revenues: Federal Grants and Contracts Miscellaneous Revenues Transfer (to) / from Transportation Trust Fund Total Highway Maintenance and Operating Fund

$0 18,061

121,031

$2,155,292

0.00 0.38

2.49

44.42

$2,383 2,480

0

$156,394

$3,608 2,233

0

$160,368

(34.0) 11.1

-

(2.5)

$26,651 22,700

84,832

$1,413,419

$38,576 15,029

50,000

$1,370,781

TRANSPORTATION TRUST FUND: Motor Fuel Taxes

(Includes Aviation & Road Taxes) PTF Insurance Premiums Tax Motor Vehicle Sales and Use Tax

(Includes Rental Tax) State Sales and Use Tax Motor Vehicle License Fees Recordation Tax Interest Earnings

Total State Taxes and Fees

$180,500 168,018

270,500 760,000

22,600 48,300

3,300 $1,453,218

3.71 3.46

5.57 15.66

0.47 1.00 0.07 29.94

$11,909 0

19,420 54,151

1,847 2,863

107 $90,297

$12,259 0

19,693 52,296

1,665 2,948

33 $88,894

(2.9) -

(1.4) 3.5 10.9 (2.9) 224.2 1.6

$102,684 168,018

179,190 462,110

14,171 30,653

4,160 $960,986

$101,945 163,142

184,915 456,290

14,144 31,705

3,038 $955,179

Other Revenues: Federal Grants and Contracts Receipts from Cities/Counties Toll Revenues (Includes Route 28) Miscellaneous Revenues Total Other Revenues

$1,191,025 150,867 17,000 5,893

$1,364,785

24.55 3.11 0.35 0.12

28.13

$30,738 19,284 2,630 17,581

$70,233

$33,690 19,106 918 2,015

$55,729

(8.8) 0.9 186.5 772.5 26.0

$812,557 177,041 12,583 48,454

$1,050,635

$815,830 124,167 8,191 28,397

$976,585

Transfer (to) / from Highway Maintenance and Operating Fund Total Transportation Trust Fund

($121,031) $2,696,972

(2.49) 55.58

$0 $160,530

$0 $144,623

11.0

($84,832) $1,926,789

($50,000) $1,881,764

TOTAL HIGHWAY MAINTENANCE AND OPERATING AND TRANSPORTATION TRUST FUND

$4,852,264

100.00

$316,924

$304,991

3.9

$3,340,208

$3,252,545

# Percentage is greater than or equal to 1,000%.

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% Change

% Annual Growth Required By Est

0.9 (1.7) 6.2 0.0 13.9 5.0 1.0

(30.9) 51.0

69.7

3.1

2.7 (4.0) 3.6 (0.6) (2.7) (6.5) (0.2)

(100.0) (23.1)

33.4

(1.7)

0.7 3.0

(3.1) 1.3 0.2 (3.3) 36.9 0.6

(0.4) 42.6 53.6 70.6

7.6

(69.7) 2.4

4.4 3.0

(1.8) 2.2 1.6 0.4 (48.2) 1.5

6.6 (28.5) (10.8) (82.5)

(1.2)

(33.4) (0.9)

2.7

(1.3)

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