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This memorandum updates an earlier Congressional Budget Office study, The Growth of Federal User Charges (August 1993). That study documented the growth of user charges from 1980 to 1991, analyzed the economic and legal issues they have raised over the years, and discussed their role in the budget process. This memorandum looks at the growth of user charges from 1991 through 1994, compares it with the growth from 1980 through 1991, and analyzes the effects of recent legislation, particularly the Omnibus Budget Reconciliation Acts of 1990 and 1993.

The memorandum was prepared by Pearl Richardson of the Tax Analysis Division, under the direction of Rosemary Marcuss, Frank Sammartino, and Richard Kasten.

Paul L. Houts edited the manuscript. Chris Spoor provided editorial assistance. Peter Ricoy assisted with the graphics, and Simone Thomas prepared the final version of the manuscript.
 
 

SUMMARY AND INTRODUCTION

MAJOR DEVELOPMENTS IN THE GROWTH OF USER CHARGES

• Effects of the Omnibus Budget Reconciliation Acts of 1990 and 1993
• The Growth of User Charges in the 1980s and 1990s

USER FEES

• Charges for Benefits and Services
• Rents, Royalties, and Sales of Products

REGULATORY FEES

• Significant Increases
• The Current State of Regulatory Charges

BENEFIT- AND LIABILITY-BASED TAXES

• Benefit-Based Taxes
• Benefit-Based Taxes as a Source of Transportation Financing
• Liability-Based Taxes

THE OUTLOOK FOR USER CHARGES

APPENDIX: DATA ON FEDERAL USER CHARGES IN 1991 AND 1994
 

TABLES
1.	Average Annual Real Growth of User Charges, 1980-1991 and 1991-1994
2.	Real Growth in User Fee Collections by Type, 1991-1994
3.	Fees and Gross Outlays of Selected Regulatory Agencies, 1994
A-l.	Total User Charges by Type in 1991 and 1994
A-2.	Federal Financial Resources in 1991 and 1994
A-3.	User Charges as a Percentage of Federal Financial Resources in 1991 and 1994
A-4.	Insurance Charges in 1991 and 1994
A-5.	Fees for Benefits and Services, Other Than for Insurance and Postal Services, in 1991 and 1994
A-6.	Rents, Royalties, Bonuses, and Sales of Products in 1991 and 1994
A-7.	Inspection, Licensing, and Other Regulatory Fees in 1991 and 1994
A-8.	Benefit- and Liability-Based Taxes in 1991 and 1994
A-9.	Summary of User Charges by Category of Budget Classification in 1991 and 1994
FIGURES
1.	User Charges by Type, 1982-1994
2.	Charges for Benefits and Services in 1991 and 1994

 

SUMMARY AND INTRODUCTION

Between 1991 and 1994, user charges--measured in constant dollars--increased by nearly 9 percent, reaching a total of almost $140 billion. User charges are of four general types: user fees, regulatory fees, benefit-based taxes, and liability-based taxes. Between 1991 and 1994, user and regulatory fees increased, while benefit- and liability-based taxes combined did not.

• User fees--payments made by individuals or businesses for goods or services provided by the government, consumed voluntarily, and not generally shared by other members of society--increased by 10 percent to nearly $107 billion.
  
  
• Regulatory fees--charges that stem from the government's powers to regulate the economy and the activities of individuals--increased by 40 percent to more than $6 billion.
  
  
• Benefit-based taxes--taxes dedicated to trust funds and levied on commodities that are related in varying degrees to use of a publicly provided good or service--amounted to $24.5 billion, an increase of only 1 percent.
  
  
• Liability-based taxes--excises dedicated to trust funds and levied to abate hazards or compensate for injuries--declined by 11 percent to $2.4 billion.

The data that follow indicate the level of user charges in 1994 and their growth in dollars and in relation to federal financial resources since 1991. An earlier Congressional Budget Office study, The Growth of Federal User Charges (August 1993), covered the period from 1980 through 1991. Federal financial resources are the funds available to the government from budget receipts (income taxes, social insurance taxes and contributions, excise and other taxes, customs duties, and miscellaneous receipts) and user charges that are offset against (that is, subtracted from) outlays. The growth in user charges between 1991 and 1994 is measured in terms of constant purchasing power, in 1994 dollars. The adjustment is based on the gross domestic product deflator. (See Appendix Tables A-l, A-2, and A-4 to A-9 for data in nominal dollars for 1991 and 1994; see Table A-3 for a breakdown of user charges in relation to federal financial resources.)

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