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The Challenges

Th Ch ll for
f Financing
Fi i
Virginia’s Transportation System
Northern Virginia Transportation Alliance: Transportation Forum
Herndon VA
Herndon,
December 2, 2010
Gregory A. Whirley, VDOT Commissioner
John W. Lawson,, VDOT Chief Financial Officer
Current Challenges

 Aging highway infrastructure


 Increasing transportation demands
 Currently not meeting condition performance targets
 Maintenance
M i t needs
d greater
t than
th budget
b d t
 Transferring over $500 million annually from Construction Fund to the
Maintenance Fund
 No construction formula funding or funding for capacity improvements
 Improving and refocusing a downsized agency
 Improving business processes
 Must better leverage available resources
 Need long-term
g sustainable revenues for transportation
p

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The Commonwealth’s Highway System

A Transportation system that provides excellent mobility and


accessibility is the key to a strong economy and quality of life for
our citizens.

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Virginia's Highway System

 Virginia Maintains the Third Largest Highway System in the Country

 The 57,867-mile state-maintained system is divided into the following


categories:
 Interstate - 1,118 miles of four-to-
ten lane highways that connect
states and major cities.
 Target of no more than 18%
pavement rated deficient
 Currently, 20.1% rated deficient

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Virginia's Highway System

 Primary - 8,111 miles of two-to-six-


lane roads that connect cities and
towns with each other and with
interstates.
 Target of no more than 18%
pavement rated deficient
 Currently, 24.3% rated deficient

 Secondary - 48,305 miles of local


connector or county roads.
 Currently 31% rated deficient

 Frontage - 333 miles of frontage


roads.
roads
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Virginia's Highway System

 A separate system includes 10,561 miles of urban streets,


maintained by cities and towns with the help of state funds. Virginia's
cities are independent of its counties.

 Henrico County (1,279 miles) and Arlington County (359 miles)


maintain their own roads with VDOT funds.

 There is an additional 39 miles of toll roads maintained by others.

 Includes over 20
20,800
800 bridges and culverts
 Target of no more than 8.0% rated structurally deficient
 Currently, 8.5% are rated as structurally deficient

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Code of Virginia Statutory Requirements

 Section 33.1-13.02
 Requires
R i VDOT tto reportt by
b September
S t b 15th off each h odd-numbered
dd b d year on ththe
condition of and needs for maintaining the existing transportation system. This report
marks the second biennial assessment

 Section
S ti 33 33.1-23.1
1 23 1
 A. The Commonwealth Transportation Board shall allocate each year from all funds
made available for highway purposes such amount as it deems reasonable and
necessary for the maintenance of roads within the interstate system of highways, the
primary system of state highways,
highways the secondary system of state highways and for city
and town street maintenance payments made pursuant to § 33.1-41.1 and payments
made to counties which have withdrawn or elect to withdraw from the secondary system
of state highways pursuant to § 33.1-23.5:1.

 The Auditor of Public Accounts issued a report titled Review Of Transportation’s


Asset Management System and Maintenance Funding Practices in July 2010
stating “Transportation’s Asset Management System (AMS) is capable of
providing an accurate, independent, consistent assessment of the states
i f t t
infrastructure maintenance
i t needs.”
d ”
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Expected Maintenance Performance for the
FY 2011 – 2012 Biennium

 Maintenance funding will be focused first to support emergency


operations and then for system preservation.

 We will deliver emergency and safety services to efficiently operate


the system – this is our top priority
priority.

 Expected performance outcomes:


 Pavements:
 Anticipate meeting interstate pavement performance target of no more than 18
percent rated deficient
 Anticipate no more than 22 percent of primary pavements rated deficient
 Anticipate secondary pavement condition will continue to decline
 Bridges:
 Anticipate no more than 8.5 percent of bridges and culverts rated as
structurallyy deficient

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Financing the Highway System

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Key Virginia Transportation Revenues

 Transportation needs are funded by a combination of federal and


state resources.

 Federal revenues are the largest single source of funding.

 State revenues are largely provided from dedicated revenue sources,


not state general funds.

 Th
The majority
j it off allll transportation
t t ti revenues are generated
t d from
f taxes
t
and user fees.
 Motor Fuels Tax
 M t V
Motor Vehicle
hi l SSales
l and dUUse T
Tax
 Motor Vehicle License Fee
 State General Retail Sales and Use Tax

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Major State Revenue Sources
CTF
FY 2011 E
Estimate
ti t

State Motor Fuels Taxes (17.50 cents per gallon)


- HMOF 14.85 cents $726.8 mil.
- TTF 2.50 cents $114.5 mil.
$
- DMV 0.15 cents
Every 1 cent generates $48 million in revenue

Motor Vehicle Sales and Use Tax (3 percent)


- HMOF 2 percent $272.7
$272 7 mil
mil.
- TTF 1 percent $149.3 mil.
Every 1 percent generates $141 million in revenue

Motor Vehicle License Fee ($40.75)


- HMOF $26.00 $221.3 mil.
- TTF $ 3.00 $ 21.2 mil.
- DMV $ 4.00
- State Dept. of Health/Police/
Localities/Rescue Squad/
General Fund $ 7.75
Every 1 dollar generates $8.4 million in revenue

State General Retail Sales and Use Tax (5 percent)


- TTF 0 5 percentt
0.5 $488 6 mil.
$488.6 il

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Commonwealth Transportation Fund (CTF)

 The revenues are dedicated to specific funds within the CTF.


 The revenues for the Highway Maintenance and Operating Fund (HMOF)
support highway maintenance, operations and administration.
 The Transportation Trust Fund revenues are distributed by the Code of
Virginia.
 2.4% to the Airport Fund – managed by the Aviation Board .
 4.2% to the Port Fund – managed by the Virginia Port Authority.
 14.7% to the Mass Transit Fund to support transit operations, capital and
special programs – managed by the DRPT.
 78.7% to the Construction Fund – managed by VDOT and distributed through
the related allocation formulas for construction.
construction
o No funds were distributed through the construction allocation formula in FY 2010 or
FY 2011
o Largely due to the transfer of construction revenues to the HMOF

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Construction Fund Transfers to the
Highway Maintenance and Operating Fund

 Transfer of Construction Fund revenues to the HMOF began in


FY 2002
 The annual transfers for FY 2010 and 2011 exceeded $500 million
 State Construction Fund revenues for FY 2011 are approximately
$600 million, only $100 million more than the transfer amount.
 Must provide for state funded programs such as Revenue Sharing
 Must provide for federal match - $200 million needed
 Remaining state construction funds cannot provide for the needs
 The General Assembly authorized the issuance of Capital Projects
Revenue ((CPR)) Bonds in 2007 to p provide transportation
p funding,
g
including providing the state match for federal funds.
 In addition to the transfer of construction revenues, federal funds are
increasingly being used to support the maintenance program.

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State Construction Funds and Federal Funds
Planned to Support the Needs of the HMOF
(in millions)

T
Transportation
t ti
Trust Fund Transfer to Federal Funds
Fiscal Construction Maintenance Directed to
Year Share^ Fund Maintenance
2002 $549.9
$ $3.6 $
$ -
2003 534.9 147.2 -
2004 603.0 56.9 -
2005 613.9 244.6 -
2006 714.3 186.2 97.4
2007 699 1
699.1 286 3
286.3 178 2
178.2
2008 706.4 260.6 143.0
2009 617.2 364.8 199.6
2010 597.4 507.6 178.6
2011* 614.1 511.0 155.1
2012*
2012 633 8
633.8 522 0
522.0 192 3
192.3
2013* 658.9 537.1 214.5
2014* 685.5 560.4 238.4
2015* 714.2 584.4 263.3
2016* 736.6 612.0 305.2

^ - The 78.7% Highway share of the Transportation Trust Fund


* - Estimated 14
Commonwealth Transportation Fund (CTF)

 Proceeds from the sale of Capital Projects Revenue (CPR) Bonds,


authorized by Chapter 896 (HB 3202) of the 2007 General Assembly, are
used for transit and rail capital, matching federal funds, revenue sharing
and statewide and regional projects.

 The Priority Transportation Fund (PTF) revenues are dedicated to


support debt service on the Federal Highway Reimbursement Anticipation
Notes (FRANs) and the Commonwealth of Virginia Transportation Capital
Projects Revenue Bonds
Bonds.

 Federal revenues are used for their federally defined purposes and
support maintenance, construction and transit.

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Virginia Department of Transportation
FY 2011 Revenues By Source

 To support the budget, a large portion of the TTF – Construction


revenues are transferred to the HMOF.

(in millions)

Source HMOF Construction Total


Motor Vehicle Fuels Tax $726.8 $82.6 $809.4
Motor Vehicle Sales and Use Tax 272.7 117.5 390.2
Motor Vehicle License Tax 221.3 16.7 238.0
Retail Sales and Use Tax 0.0 384.5 384.5
Bonds 0.0 132.4 132.4
Other Sources 112 7
112.7 375 6
375.6 488 3
488.3
Federal 0.0 881.3 881.3
Transfer to HMOF 511.0 (511.0) 0.0

Total $1,845 $1,480 $3,324

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Funding Priorities

 Federal and state law as well as CTB guidance dictate the spending
priorities and distribution of VDOT’s budget.

 Debt Service
 Support to Other State Agencies
 Maintenance and Operations including Financial Assistance to Localities
 Administration
Ad i i i and
dOOther
h P Programs
 Highway Construction

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VDOT’s FY 2011 Budget
by Fund and Program

(in millions)

Percent of
Program Budget HMOF Construction Federal Bonds Other* Total
Environmental Monitoring and Evaluation
(514) 0.4% $ 12.5 $ - $ - $ - $ - $ 12.5
Ground Transportation Planning &
Research (602) 1.3% 4.1 19.3 18.3 - - 41.6
Highway System Acquisition and
Construction (603) 29.6% 35.2 111.9 695.4 132.4 9.0 983.9
Highway System Maintenance (604) 40.5% 1,190.2 - 155.1 - - 1,345.3
Commonwealth Toll Facilities (606) 1.5% - - - - 51.1 51.1
Financial Assistance to Localities (607) 11.0% 352.3 7.9 6.9 - - 367.1
Non-Toll Supported Transportation Debt
Service (612) 7.5% - - - - 248.2 248.2
Administrative and Support Services (699) 6.5% 211.1 - 5.6 - 0.7 217.4
VDOT Capital Outlay (998) 0.1% - 2.5 - - - 2.5
Support to Other State Agencies 1 3%
1.3% 39 1
39.1 26
2.6 - - 07
0.7 42 4
42.4
Support to Ports 0.0% - 0.5 - - - 0.5
Support to DRPT Programs 0.3% - 11.4 - - - 11.4
TOTAL 100.0% $ 1,844.5 $ 156.1 $ 881.3 $ 132.4 $ 309.7 $ 3,324.0

* - Other includes tolls, PTF, Route 58, Route 28, Oak Grove, and TPOF

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The Six-Year Improvement Plan

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Principles for the Draft FY 2011-2016
Highway SYIP

 With limited funding available for highway construction, the following


guiding principles have been employed:
 Fund deficits on underway project phases
 Maximize use of federal funds to meet federal strategy
 Fund underway project phases as well as project phases that start in
FFY 2011
 Fund deficient bridges and paving projects

 Starting in FY 2010, no funding has been distributed through the


construction allocation formula to the highway systems, districts and
localities.

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Six-Year Improvement Program is Limited to
Remaining Revenues

Approved Revised Approved Revised FY 2011-


2011
FY 2009- FY 2009- FY 2010- FY 2010- 2016
2014 2014 2015 2015 Program
Program Program Program Program

Highway
Construction $7.9 b $6.0 b $5.4 b $5.5 b $5.7 b

Rail & Public


Transportation $2.7 b $2.9 b $2.0 b $2.1 b $2.1 b

Total $10.6 b $8.9 b $7.4 b $7.6 b $7.8 b

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Highway SYIP History

Current SYIP is considerably smaller than the FY 2000 Program

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VDOT Audits

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Audits Conducted of VDOT Operations

 A review of the research program

 A program assessment of the Virginia Public-Private Transportation


Act program
p g

 A performance audit of operations and maintenance

 A JLARC review of VDOT’s planning and programming activities

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VTRC Audit

 A review of the Virginia Transportation Research Council resulted in


severall recommendations
d ti tto renew ffocus on conducting
d ti andd
implementing research to improve operations in all modes of
transportation.
 Research Council should directly report to the Commissioner.
Commissioner
 Focus attention on research implementation through pilot programs and other
incentives.
 Provide $10 million to encourage
g the implementation
p of research results.
 Expand work with universities through formal cooperative agreements and
seek research grants to improve transportation.
 Devote a research position to multi-modal studies and work more closely with
the Department of Rail and Public Transportation
Transportation.
 Rename the Research Council the Virginia Center for Transportation
Innovation and Research to signify the importance of innovation and
implementation of discoveries.

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Virginia Public-Private Transportation Act
Program Review

 A review of the PPTA program provided recommendations to improve


the partnership between the public and the private sector.
 Create a single office to promote PPTA opportunities for all modes of
transportation.
 Streamline and strengthen the PPTA business process.
 Hire a PPTA Director to manage the PPTA Program.

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Performance Audit

 A performance audit of operations and maintenance was conducted,


providing more than 50 recommendations
recommendations, many of which focus on
accelerating the spending of $1.4 billion in available balances and
resources to address Virginia’s critical transportation needs.
 Accelerate utilization of resources to maintain the infrastructure, reducing the
l
large maintenance
i t carryover b
balances.
l
 Utilize federal funds to move projects quickly and reduce the number of
projects deemed inactive by the federal government.
 Program excessive cash balances in the construction fund to initiate projects.
 Seek FHWA approval to use toll credits to serve as matching funds on federal
projects.
 Eliminate the practice of creating federal reserves and program all federal
funds on projects.
p j
 Develop effective plan to obligate all federal funds early in the federal fiscal
year.
 Improve and streamline business processes to more efficiently move projects
from planning to construction.

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Programming and Planning Audit

 The Joint Legislative Audit and Review Commission (JLARC) is


conducting an audit of the programming and planning process used
to develop the six-year improvement program.

 The audit has not been completed,


completed but VDOT has been working to
improve the programming and planning processes.
 Working to better integrate input from metropolitan planning
organizations localities and the road building industry into our planning
organizations,
activities.
 Meetings are scheduled with several MPOs to begin gathering their input
and engage them in our planning process
process.

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Conclusion

 Virginia faces significant transportation pressures. These include:


 Continuing challenges of adequate revenue,
 Identifying innovative solutions to accommodate future growth,
 Maintaining an aging transportation system, and
 Higher energy prices.

 Current revenues are insufficient to adequately address the maintenance


off the
th aging
i iinfrastructure
f t t and
d address
dd new construction
t ti tto reduce
d
congestion, improve access and enhance economic development.

 Operational
p audits have been conducted and improvements
p identified to
better utilize available resources.

 Without additional funding, VDOT cannot continue to provide the current


scope of services and the new construction needed
needed.
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Questions

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