Kathryn Davis Partner, PwC 101 Capitol Drive New Caldonia, W estmead 12345 Dear Kathryn, Thank you for tak ing the time to meet with me today. I appreciate your insights on the issues we are facing. As we discussed, we are facing a potential crisis. This letter is meant to summarize the key points of our conversation and to describe the ty pe of information we are looking for from P wC. For the last 25 years, Westmead has relied on revenues generated through a tax on Motor Fuels to maintain our highways and bridges and to fund related infrastruct ure improvements. My o fce, the Westmead Ofce of Transportat ion (WOOT) is the independent agency of Westmead state gov ern ment charged with manag ing those revenues. From 2008 to 2012, revenues from the “gas tax” have declined from $2,298 million to $57 5 million. Ou r research ha s shown that 92% of that decline can be attributed two sources: • Automob iles, overall, are more fuel efcient; and • The number of Westmeadia ns purchasing and operating al ternat ivel y powered vehicles has increased from virtually zero vehicles to nearly 25% of vehicles on the road in the last 5 years. The good news here is that, as consumers, we are using less gas and promoting a greener environment. The bad news is that f uel efcient, hybrid, and electric vehicles hav e the same impact on our roads and bridges as regular gasoline-powered vehic les, yet provide little or no money for infrastructure maintenance. As a consequence, our agency has experienced revenue shortfalls since 2009. W e have deferred needed road and br idge maintenance to the extent possibl e, but this is only a temporary solution. I have been asked by t he Governor’ s Chief of Staff to develop recommendations on how we might fund this revenue shortfall in both the short term and long term. Our recommendations will be included as a package of proposed reforms to be presented to the state legislature. The Governor’ s Ofce and I believe that the best solution to WOOT shortfalls will requir e changes to our overall tax system, but recognize that the state legislature will not entertain any proposal that is not revenue neutral. State of Westmead Westmead Ofce of Transportation
