Surface Transportation - Finance Context & Issues

New York Public Transit Association Spring Meeting

Innovation, Sustainability, Public TransitGlens Falls, New York

June 12, 2009

Session Objectives

Provide a status on:

– ARRA

– State Dedicated Highway and Bridge Trust Fund

– Next Five-Year State Transportation Plan

– Federal Highway Trust Fund

– Authorization

Discuss some of the alternative revenue/funding options being discussed

To provide a framework for the future/jumping off point for Rick

ARRA Programs and Funding

Highways- $27.5 billion/NYS share - $1.1 billion

Transit- $8.4 billion/NYS share - $1.3 billion (formula)/$274.3 million New Start (discretionary)

Rail- discretionary grants available

– $8.0 billion for High Speed Rail/State Capital Projects/NYS share - TBD – $1.3 billion for Amtrak

Aviation- $1.3 billion in discretionary grants/NY share - $30.5 million

100 percent federal

How are we doing? - ARRA Progress

Planned Infrastructure Accomplishments Under ARRA

Based on Section 1511 Certifications 1-6/174 projects totaling $523 million (ARRA STIP $ amounts)

What Does This Mean?

Rural Public Transportation ARRA Update

$26.3 million available for projects in non-urbanized areas

State applies on behalf of rural sponsors

Department solicited projects from municipal sponsors this past Spring

Have recommended funding for projects in 36 county, city and authorities and 5 intercity carriers representing over 80 different projects

– 79% of funding will be used for buses/other vehicle replacement– 21% will be for other projects including construction, ITS, shelters, signs

and fareboxes

State Dedicated Highway and Bridge Trust Fund

NYSDOT’s Five-Year Capital Program - 2005-2010

Highways and Bridges $15.246 Billion

Industrial Access $0.045 Billion

CHIPS/Marchiselli $1.681 Billion

Multi-Modal Program $0.350 Billion

Rail/Ports $0.235 Billion

Aviation $0.116 Billion

Upstate Transit $0.235 Billion

Canals $0.050 Billion

Total $17.958 Billion

$17.958 Billion from 4/1/05 to 3/31/10

Finance Plan Construction Dollars Lost to Inflation 2005-2010

$1.8$1.6

$1.5 $1.5 $1.5

$0.3 $0.5$0.6

$0.8

$-

$0.5

$1.0

$1.5

$2.0

$2.5

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

in b

illio

ns

On & Off System $$ Lost to Inflation

Original Value of Lettings $10.2 billionDollars Lost -2.2 billion (22% LOST)Construction - After Inflation $8.0 billion

Based on FHWA BPI Average Growth (2002 to 2006)

$1.8

$1.9 $2.0

$2.1

$2.3

DHBTF Debt Service…

$0

$500

$1,000

$1,500

$2,000

$2,500

00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14

in b

illio

ns

DEDICATED HIGHWAY AND BRIDGE TRUST FUNDDEBT SERVICE AND REVENUE TRENDS

REVENUES AT $2 BILLION/YEAR

DEBT SERVICE

)

Asset Class / Program AreaInvestment

LevelState Highway Bridges 17.4$ Local Highway Bridges 13.2$ State Pavements 40.0$ Selected Local Pavements 3.9$ Traffic & Safety 1.2$ Mobility 2.7$ Pedestrian / Bicycle / ADA 2.0$ Drainage / ITS / Guide Rail / Rest Areas / Fleet & Facilities 15.7$ Public Transit Capital 6.5$ Freight Rail, Passenger Rail, and Ports 5.2$ Aviation 4.3$ Local Capital Aid 8.6$ NYSDOT Other * 4.5$

NYSDOT Capital Program Subtotal 125.2$ Illustrative Major Projects 50.0$

20 Year Total 175.2$ * NYSDOT Other includes Capital Program Management, Bridge Inspection, Emergency Repairs, and Miscellaneous

20 Year Transportation Capital Needs(2007 $ in billions)

Next Five-Year State Transportation Plan

Current NYSDOT multiyear capital program expires in March of 2010. MTA’s 5 year plan expires in December of this year.

Recent legislation addressing MTA financing requires the Department to begin immediately to develop the next multiyear program

Requires objective and performance measures for this program to be submitted to the Governor and Legislature by October 1, 2009.

The Department’s plan also addresses the needs of systems other than the MTA.

We intend to start immediately, as the Governor and Legislature have directed us, to begin to develop our next multiyear, multimodal program.

Next Five-Year State Transportation Plan

We need the help of NYPTA/MPOs/local officials to articulate the need for greater transportation infrastructure investment.

We envision an extensive outreach effort, similar to that undertaken for ARRA funding, to identify the broad spectrum of transportation needs across the state.

The transportation sector needs to reach out beyond our traditional partners to advocate for greater transportation investment,

We are at the beginning of thinking through our strategy to meet the legislative requirement for a new program.

You have my assurance that the Department will continue to work cooperatively with the public transportation industry as move forward on all these activities.

Federal Funding is Key for Capital ProgramFederal Funding is Key for Capital Program

Federal funds comprise 50% of highway capital budgetFederal funds comprise 50% of highway capital budget

Federal funds comprise 25% of transit capital budgetFederal funds comprise 25% of transit capital budget

Decline in Purchasing Power of Motor Fuel Taxes(Based on Inflation since 1993)

0

10

20

30

40

50

60

70

80

90

100

Year

Per

cen

tag

e

Source: Federal Highway Administration

HTF / HA Receipts

25

27

29

31

33

35

37

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Year

$ B

illio

ns CBO Spring 2009

Current 2009 Trend

HTF / HA Outlays

25

30

35

40

45

50

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Year

$ B

illio

ns CBO Spring 2009

Current 2009 Trend

Highway Account of the Highway Trust Fund Cash Balanceas of May 15, 2009

10.05.3 5.5

2.5-1.1 -3.2 -3.4

-6.1-10.5

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

FY 2009 - 2010

$ in b

illion

s

FY 2009 Actual FY 2009 Estimate FY 2010 Estimate

Solvency of the Mass Transit Account

-$25.0

-$20.0

-$15.0

-$10.0

-$5.0

$0.0

$5.0

$10.0

2008 2009 2010 2011 2012 2013 2014

Fiscal Year

Bal

ance

- E

nd o

f Yea

r (B

illio

ns)

Source: The Fiscal Year 2010 Appendix of the Federal Budget

Reduced Highway Trust Fund-Supported Highway and Transit Program Levels Beyond 2009

36.9

41.039.6

44.1

8.6 9.9 9.0 9.5 10.37.1

36.3

5.0

0

5

10

15

20

25

30

35

40

45

50

2005 2006 2007 2008 2009 2010

($ b

illio

ns)

Highway Program (including FMCSA and NHTSA) Transit Program

The Future of Surface Transportation

The good and bad news

– The good news: a high priority given to infrastructure

– Authorization is underway and we have excellent Congressional leadership

– The bad news: The Highway Trust Fund is going broke

– There is no support for increasing user fees

– There are many competing goals at the national level

Needs

Nationally, meeting only about 1/3 of roughly $200 billion required each year to maintain and improve the system

At federal level, also meeting only about 1/3 of needs – we face a $400 billion federal funding gap over next 6 years under current policies and revenues

Financial Outlook - Challenges for 2011-2015Financial Outlook - Challenges for 2011-2015

No easily identifiable funding source to increase transportation No easily identifiable funding source to increase transportation resourcesresources

– Increase or index gas taxIncrease or index gas tax– Identify new tax/user fee revenueIdentify new tax/user fee revenue– Use General Fund revenueUse General Fund revenue

Structural Problem

The current path is unacceptable System demands are outpacing current investments Fuel tax-based funding approach is insufficient at current rates Sustainability of fuel taxes is eroding quickly and unlikely to follow

smooth path, with technology advancement and determination to address global climate change

In the short term, feasible options are limited

Future Revenue Collection

The current system relies on fuel taxes

We have seen a marked decline in revenues

Two National commissions have called for short and long-term solutions

VMT collection systems have come to the forefront of options to consider

29

National Surface Transportation Infrastructure Financing Commission

Short-term Recommendations

Maintain/strengthen integrity of the Highway Trust Fund

Increase existing HTF revenue sources:

– Modest increases in fuel taxes (10¢ for gas, 15¢ for diesel)– Increase (double) the Heavy Vehicle Use Tax (HVUT)– Maintain existing tractor/trailer sales tax and truck tire tax– Index motor fuels tax, HVUT, and truck tire excise tax

30

National Surface Transportation Infrastructure Financing Commission

Begin VMT Transition

Begin transition as soon as possible; 2020 as implementation goal

Set federal fee at level to fund federal share of needs (approx. 2¢ per mile for autos under current policies and estimates)

31

National Surface Transportation Infrastructure Financing Commission

Non-Federal Investment Options

Tolling and Other Direct User Fee Initiatives

Federal Assistance, Financing Incentives, Tax Policy

Private Sector Financial Participation (PPPs)

NYS Position - FundingNYS Position - Funding

Strong federal roleStrong federal role

Double federal funding to $575 billionDouble federal funding to $575 billion

– Highways- $375 billionHighways- $375 billion– Transit- $123 billionTransit- $123 billion– Freight- $42 billionFreight- $42 billion– Intercity Passenger Rail- $35 billionIntercity Passenger Rail- $35 billion

Diversified portfolio of revenueDiversified portfolio of revenue

NYS Position - Fix it FirstNYS Position - Fix it First

Bridge ProgramBridge Program Transit ProgramTransit Program CMAQCMAQ Projects of National and Regional SignificanceProjects of National and Regional Significance Interstate ReconstructionInterstate Reconstruction

NYS Position - TransitNYS Position - Transit

Retain Transit as a stand-alone programRetain Transit as a stand-alone program

Support APTA program consolidationSupport APTA program consolidation

– Simplifies Fixed Guideway programSimplifies Fixed Guideway program– Meets the needs of the oldest and largest systemsMeets the needs of the oldest and largest systems

NYS Position - CMAQNYS Position - CMAQ

Retain as a stand-alone programRetain as a stand-alone program

Continue emphasis on air qualityContinue emphasis on air quality

Extend time period to use CMAQ for operations beyond three Extend time period to use CMAQ for operations beyond three years, as long as net air quality benefit can be demonstratedyears, as long as net air quality benefit can be demonstrated

NYS Position - Policies NYS Position - Policies

Align Transportation, Energy, and Climate Change Policies Align Transportation, Energy, and Climate Change Policies

– NY has lowest per capita gas consumption of any stateNY has lowest per capita gas consumption of any state– Equity Bonus rewards gas consumptionEquity Bonus rewards gas consumption– Equity Bonus is now the largest highway programEquity Bonus is now the largest highway program– Need a new approachNeed a new approach

Questions…?

Ron Epstein, Director

Office of Finance

New York State Department of Transportation

50 Wolf Road

Albany, New York 12232

(518) 457-8362

repstein@dot.state.ny.us