Final Report
Commission to Study Future Sustainable
Revenue Sources for Funding Improvements
to State and Municipal Highways and
Bridges
HB 2, Chapter 144:291, I, Laws of 2009
November 1, 2010
1
Commission Charge
• HB 2, Chapter 144:291, I, Laws of 2009
established a commission to study future
sustainable revenue sources for funding
improvements to state and municipal
highways and bridges.
• The Commission met 18 times.
2
Membership
The Commission was made up of
members appointed by the Governor,
Senate President, House Speaker,
representatives of the Department of
Transportation and Department of Safety,
and the chairperson of the Governor’s
Advisory Commission on Intermodal
Transportation.
3
Membership (continued)
House
Senate
Rep. Candace Bouchard Sen. Lou D'Allesandro
Rep. W. Douglas Scamman Sen. Harold Janeway
Rep. David Campbell
Sen. Robert Letourneau
Department of Transportation
Commissioner George Campbell, Jr,
Governor
Kate Peters
Alice Chamberlin
Department of Safety
Assistant Commissioner Earl Sweeney
Governor’s Commission on Intermodal Transportation
Executive Councilor Raymond Burton, Chair
4
Past Legislative Efforts
The Commission is the latest in a long line
of recent highway funding study
committees/commissions.
5
Information Gathered
• The Commission collected information and consulted with a variety
of sources, including the New Hampshire Department of
Transportation, New Hampshire Department of Safety, State
Treasurer, Legislative Budget Assistant, Federal Highway
Administration, TRIP (A Washington, DC based national
transportation organization), JP Morgan, the Council of State
Governments, American Association of State Highway and
Transportation Officials (AASHTO), U.S. Energy Information
Administration, New Hampshire Motor Transport Association,
Brookings Institute, Associated General Contractors of New
Hampshire and AGC of America.
• Best case scenarios and detailed financial projections, other states’
experiences, and federal highway funding prospects were all
analyzed at length.
6
Focus on Sustainable
The Commission attempted to limit its work on
sustainable and equitable sources of funding while
recognizing the reality of what options are truly viable.
Sustainable sources include the traditional forms of
funding infrastructure needs, such as bonding, tolling,
gas tax (motor vehicle road tolls) and motor vehicle
registration fees. Unless long-term sustainable revenues
match defined infrastructure needs at levels that are
recognized as necessary these infrastructure needs will
go unmet and be deferred to more costly improvements.
As a small piece of the overall puzzle, the current decline
in gas consumption will continue to create a gap that is
not sustainable for funding projected needs.
7
Highway Fund:
Sources of Funding FY10-11
Estimated revenue projected to be available to NHDOT &
NHDOS and Betterment Fund for operating and capital
construction costs for FY11 is $376M
$127M from gas tax (15 cents of 18 cent total)
$ 99M from vehicle registration fees
$ 45M from registration surcharge
$ 9M from vehicle violation fines (to NHDOT)
$ 22M from federal aid indirect costs
$ 20M of Turnpike funds for the I-95 sale
$ 12M from federal aid retroactive Turnpike toll credits
$ 2M from the sale of surplus property
$ 25M from gas tax for Betterment Fund (3 cents of 18 cent total)
$ 15M from registration surcharge for Betterment Fund
Footnote: Revenue made available in 2010 was $365M
Toll revenues are not part of the Highway Fund
8
Stimulus Funds
• In 2009 the DOT received approximately $129.4M in federal
stimulus funds (ARRA), which was a one-time payment of additional
funds. The Department used the funds for paving, a section of the
I-93 widening project, the Manchester Airport Access Road, and
work on several bridges and transportation enhancement
projects. The funds enabled the Department to catch up on its
paving schedule, which had been reduced due to a lack of funds.
• It is important to maintain an adequate paving schedule in order to
prevent more costly repairs over time. While the Department should
pave at least 500 miles per year, the paving program had been
reduced to an average of 250 miles per year due to a lack of
revenue. In 2009, the Department was able to pave 750 miles of
roads per year. Without additional revenues in the next biennium,
the paving schedule will return to 250 miles per year.
9
Commission’s Task: Analyze Funding Problem and
Shortfalls for New Hampshire Highways & Bridges
• Revenues are needed for the DOT and DOS to carry out
their missions. The Highway Fund is lacking $124M in
the next biennium and will have a $1.2B operating and
capital shortfall by 2020.
• Additional revenues are needed to fund the combined
operational and capital deficit of the State’s highway and
bridge system.
• The 2011-2020 Ten Year Transportation Plan is under
funded by $1.2 billion.
The economic vitality and growth of our state along
with the safety of our citizens will be in jeopardy if
the funding shortfall is not reversed.
10
Highway Trust Fund
• The Highway Trust Fund revenue is critical to both the
Department of Transportation and The Department of
Safety’s budget. Part II, Article 6-A of the New
Hampshire Constitution requires all New Hampshire
Highway Trust Fund revenue to be used for roads, with
the exception being for traffic supervision and the cost of
collection of registration fees and operators license fees,
all responsibilities of the Department of Safety.
• The revenue includes the Road Toll (gas tax),
registration fees, and operators’ license fees. By law,
RSA 9:9-b currently restricts the Department of Safety to
not more than 30% of the total Highway Fund.
11
State Highway System
• New Hampshire’s highway and bridge system contains
over 4,000 miles of State maintained highway, and 2,129
state bridges.
• Included in the state bridge total are 142 red listed
bridges, meaning bridges in need of repair and/or
replacement.
• There are another 250 bridges, which are referred to as
pink listed bridges, that will soon be red listed bridges if
maintenance and/or repair problems are not addressed
soon.
• Nearly 15% of the state bridges are in need of
maintenance and/or repair based on their being on the
red list (state and local).
12
Standard Budgeting and
Reporting
Because both the Department of Safety
and the Department of Transportation
budgets rely on the Highway Trust Fund,
the Commission established a subcommittee that created a single standard
for budget reporting and forecasting
revenue for both departments. This
created transparency and fairness
between the two department budgets.
13
Highway Fund:
State Road Toll (Gas Tax)
• Currently at 18 cents per gallon for gasoline and
diesel fuel. New Hampshire has the lowest rate
in the northeast region.
• The State gas tax was last raised in 1992, when
the price of unleaded regular gas nationally was
$1.13, less than half the current level.
• Each penny of the road toll provides the
Highway Fund approximately $8.3M, of which
$7.3M is used by the State and 12% or
approximately $1M is used by municipalities.
14
Highway Fund:
State Road Toll (Gas Tax) (continued)
Proceeds are deposited to the Highway Fund, but must be used first
to pay debt service on bonds or notes on General Obligation bonds.
•
•
•
•
The State allocates the Road Toll (18 cent gas tax) in the following
programs:
12% is allocated as Block Grant Aid to cities and towns.
3 cents (less 12%) is allocated to the State Betterment Fund.
15 cents (less 12%) is for the Highway Trust Fund.
From the Highway Trust Fund, $8.5M per year is made available to
cities and towns through two programs:
– State Aid Bridge (SAB) $6.8M State with $1.7M (20%) local
match.
– State Aid Highway (SAH) $1.7M state with $0.85M (1/3) local
match.
15
Highway Fund:
State Road Toll (Gas Tax) (continued)
Pros:
• Fairness.
• Infrastructure in place for lowcost collection.
• Paid by residents and nonresidents.
• Revenue shared with
municipalities.
• Not a new tax or fee.
• Current tax lower than
neighboring states.
• Revenue dedicated to
highways and safety.
• Could be done incrementally.
Cons:
• Moderately regressive impact.
• Does not address long term
challenge from higher MPG
and alternative fuel vehicles.
16
Highway Fund:
State Road Toll (Gas Tax)-Option
OPTION: INDEXING THE GASOLINE TAX TO PRICE
Pros:
• Indexing is based on inflation
and or fuel consumption and
adjusted at regular intervals.
• Indexing allows revenues to
more closely align with costs.
• Rate changes can be
automatic without legislative
approval within a
predetermined cap.
Cons
• No direct correlation between
funding available and needs to
be addressed.
17
EXHIBIT 5
18
EXHIBIT 6
NH is 9.4% below the MA gas tax
and 8.2% below the MA diesel tax.
19
Highway Fund:
Motor Vehicle Registration Fees
Fees for passenger cars are as follows:
Registration Fees
Pre-7/01/09
7/01/09-6/30/11
0-3000 lbs.
3001-5000 lbs.
5001-8000 lbs.
$31.20
$61.20
$43.20
$73.20
$ 55.20
$100.20
Note: The table represents state fees. Local fees are based on the
age and the original list value of the vehicle. (For instance, a 3 year
old, $20,000 vehicle has a local fee of $180.00.)
An increase of $1.00 raises an additional $1.5 million dollars.
Vehicle Registration Surcharge raises $41M in FY10 and $45M
in FY11.
The surcharge sunsets June 30, 2011, leaving an $86M
shortfall in the next biennium.
20
Highway Fund: Motor Vehicle
Registration Fees (continued)
•
•
•
•
Pros:
All registered vehicles pay.
Captures non-gasoline fueled
vehicles to pay for their use of
roads.
Collection infrastructure in
place. There is no additional
collection cost associated with
the surcharge.
NH only collects registration
fees on vehicles. Other New
England states collect
registration fees plus high
sales tax fees when vehicles
are purchased.
Cons:
• Only paid by NH residents.
• Not based on vehicle miles
traveled or use of (damage to)
highways; it is assessed per
vehicle.
• Weight-related fees are
diminishing with the trend
toward smaller, lighter
vehicles.
21
Highway Fund: Motor Vehicle
Registration Fee Surcharge
The motor vehicle registration fee increase
established in HB 2, Chapter 144, Laws of 2009,
was a temporary, two year measure, which
sunsets on June 30, 2011.
The temporary fee surcharge will raise
approximately $86 million dollars in total, and
significantly, about $10 million dollars in
increased municipal Block Grant Aid (this is the
only area where overall aid to cities and towns
actually increased).
22
What the Loss of the Fee
Surcharge Means to the
Transportation System
The surcharge allows the capital construction
program to move forward, and covers operating
costs for servicing the highway system. The
State’s Betterment Program realizes a $15M
increase to expand the paving program and
accomplish more bridge work. Without some
replacement revenue after June 30, 2011, DOT
will be forced to drastically change its mission
and the State will fall behind again in basic road,
bridge and winter maintenance.
23
What the Loss of the Fee
Surcharge Means to DOS
The Department of Safety’s portion of the
registration surcharge loss that will need to
be made up by budget cuts would be
approximately $6,480,000. Cuts of this
magnitude could cripple both citizen
service and the safety of our citizens.
24
Highway Fund:
General Obligation Bonds
Pros:
• Project can be done
sooner.
• Minimizes construction
inflation increases.
• No fees, taxes or tolls are
directly raised.
Cons:
• Debt service burden
ultimately reduces capital
for future projects.
• The State’s AA rating
would be negatively
impacted by issuance of
a significant number of
additional bonds without
additional revenue.
25
Highway Fund: GARVEE Bonds
GARVEE Bonds (Grant Anticipation Revenue Vehicles) support
the FHWA program by which states can borrow (bond) revenue,
which in turn is paid off with a priority claim against future federal
highway revenue.
Pros:
Cons:
•Project can be done sooner.
•GARVEE bonds limit the amount
of federal funding available for
future projects.
•Minimizes inflation increases.
•No fees, taxes or tolls are
directly raised.
•No pledge of any other state
funds besides federal highway
funds received by the State.
•Not sustainable.
26
Highway Fund: GARVEE Bonds
Legislation
• The NH Legislature (RSA 228-A:2) approved the use of GARVEE
bonds for the I-93 widening ($195M total).
• In November 2010, the Treasurer will issue $80 million in GARVEE
Bonds for I-93 and another $115 million planned to be issued in Fall
of 2011.
• Bonds have a 15-year maturity limit.
• While GARVEE bonds are a claim against future federal funds, it is
important to note the legislative intent as stated in the 2004 Majority
Report findings:
“ Lastly, the Commission finds that the associated costs of bonding the
incremental dollars for an accelerated time frame can be offset by
the sale of surplus real estate purchased within communities along
Interstate 93 from Salem to Manchester.” (Final Report, SB 413,
Chapter 220:1, Laws of 2004, page 2)
27
Highway Fund: GARVEE Bonds
Legislation (continued)
The State Legislature also authorized an
additional $45 million in GARVEE bonds to
finance replacement and or repairs to the
Memorial and the Sarah Mildred Long Bridges in
Portsmouth. Match to be paid from the State Aid
Bridge Fund or Betterment Fund.
(RSA 240, The Ten Year Transportation Plan, HB
2010, Chapter 231:5, Laws of 2010)
28
Highway Fund: GARVEE Bonds Limits
• The maximum amount of GARVEE Bonds a
state issues in any one year should result in debt
service (principal and interest) being less than
33% of the state’s yearly allotment of federal
funds, or in New Hampshire’s case, less than
$50M ($155 x 33%).
• The Department has set an upper limit for itself
of $24M/year for the I-93 project.
29
Highway Fund: GARVEE BondsOption
OPTION: INDIRECT GARVEE
•
•
•
•
Pros
Uses either a fee, such as a
dedicated gas tax increase or
State credit, to offset the
interest allowing for
reasonable debt service rates.
Annual available federal funds
can support more debt.
Project can be completed at an
earlier date.
Minimizes construction
inflation increases.
Cons
• Requires an increase in state
revenue or pledging other state
security.
30
The Turnpike System
• The Turnpike System consists of 89 miles of
highway and 164 bridges.
• The Turnpike System is funded from the tolls
paid by the users and not the Highway Fund
Road Toll (gas tax) and registration fees.
• The authority for increasing tolls is with the
Executive Council while the authority for setting
toll discount rates is with the Legislature.
31
Turnpike: Tolls
•Tolls are utilized to fund the NH Turnpike System.
• In 2010 tolls raised approximately $116M.
Pros:
•
•
•
•
•
User-fee.
Imports out-of-state revenue.
New technology/convenience
Open Road Tolling.
Increases linked to needs.
Increasing rates do not require
additional collection expenses.
•
•
•
•
Cons:
Results in some traffic being
diverted onto other roads.
Residents near tolls feel they pay
more for roads due to paying gas
tax and tolls.
Unlike gas tax, no revenue
sharing with municipalities.
Collection and administrative
costs are relatively high.
32
Turnpike: Tolls-Option
OPTION: I-93 TOLL DEMONSTRATION
Federal Interstate Tolling Pilot Program for I-93:
• Participation in the federal Interstate System
Reconstruction & Rehabilitation Pilot Program would
authorize New Hampshire to toll I-93 in order to finance
completion of the I-93 widening project and enable the
Department to complete the project at an earlier date.
• The NHDOT financial plan for FHWA proposes the
project be completed by 2020, but without additional
funding the completion date is likely extended to 2030 or
later.
33
Turnpike: Tolls-Option (continued)
OPTION: I-93 TOLL DEMONSTRATION
•
•
•
•
•
•
Pros
Revenue will fill the gap needed to
fund expanding I-93 to 4 lanes.
Revenue will fund maintaining the
Salem-Manchester I-93 corridor.
Tolls appear to be more popular with
the public than gas taxes for now, but
that popularity may be tested with
continued and/or frequent increases
and/or expansion in the coming years.
True user fee.
Frees up revenue for the rest of the
Ten Year Plan.
Tolls to be removed when project is
completed.
•
•
•
•
•
•
•
•
•
Cons:
Federal regulation only allows funds to
be used on I-93 in the southern
corridor.
Toll collecting infrastructure not in
place.
No cash transactions.
Politically unpopular.
Residents near tolls feel they pay
more for roads due to paying gas tax
and tolls.
Unlike gas tax, no revenue sharing
with municipalities.
Enabling legislation needed
New fee.
Tolls to be removed when project is
completed.
34
Turnpike: Toll Credits
• Turnpike Toll Credits are a mechanism by which the State’s match
for Federal Highway Administration (FHWA) funds can be reduced in
recognition of the State’s capital investment into its highway system
using non-federal (toll) revenue.
• Non-federal capital dollars invested into portions of the state
highway system that supports interstate commerce can become in
effect a credit that reduces the amount of hard match monies the
State needs to provide in order to obtain federal highway funding.
• As a result, New Hampshire Highway Fund dollars that would
otherwise be needed for matching federal funds can be used to
address other expenses incurred by the NHDOT.
• On the flip side, the amount of funding available to support federal
aid projects is reduced by the value of the credit, and in essence the
amount of federal aid construction work for that year is reduced.
35
Turnpike: Revenue from Sale of
1.6 miles of I-95 to Turnpikes
•
The Highway Fund received $30M in FY2010
and $20M in FY2011 as part of the agreed
transfer of 1.6 miles of I-95 to the Bureau of
Turnpikes for a total of $120M.
•
Subsequent payments are scheduled at $5.9M
per year, until July 2029, or $12M in the next
biennium.
36
Other OPTIONS
Consolidation
•
Consolidation of portions of the interstate system with the Turnpike System is not an
asset transfer, but rather combines the systems, which will enable the Department to
treat portions of the interstates and limited access facilities as related facilities,
eligible for surplus Turnpike funds. Interstate maintenance and operation work would
not be performed by Turnpike staff, but the cost of maintenance and operation for the
related facilities would be paid from the Turnpike surplus after all other Turnpike
needs are met.
•
Consolidation differs from an actual asset transfer, which could negatively impact the
bond debt service coverage ratios. Utilizing the transfer from Turnpike surplus funds
to the Highway Fund, instead of an obligation under Turnpike operating expenses,
maintains those ratios to the benefit of the Turnpike System.
•
Consolidation may or may not require a toll increase.
•
Unlike aggregation of the entire Interstate System into the Turnpike System,
consolidation would look at closely related interstate sections, such as the section of
I-93 South from the state line to 293 in Hooksett or NH Route 101 from Hampton to
Manchester.
37
Other OPTIONS
Consolidation (continued)
Pros:
• Diverts previous Highway
Fund cost to the turnpike
system and turnpike users.
Cons:
• Diverts previous Highway
Fund cost to the turnpike
system and turnpike users.
• Politically unpopular.
• Requires enabling legislation.
38
Other OPTIONS
Public Private Partnerships (P 3’s)
A variation of privatization in which elements of a service previously run
solely by the public sector are provided through a partnership between the
government and one or more private sector companies. Unlike a full
privatization, P3’s are a risk sharing relationship between the public and the
private sector. The spectrum of contractual arrangements between the
Department and a private partner can vary from operation and management
contracts to leases, to the outright sale of an asset.
•
•
Pros
Provides cash from the long-term
lease of an asset. Example
leasing I-95.
Enables new projects to be
constructed that can’t go forward
due to lack of funding.
•
•
•
•
Cons
Financing tool with cost and risk
Trading future revenue for
immediate revenue.
Frequent toll increases may occur
under private management.
Enabling legislation needed.
39
Other OPTIONS
Vehicle Miles Traveled (VMT)
• Pay as you drive already in place for car insurance and
leasing charges.
• Self-reporting odometer or official odometer inspections;
MPG-rating based mileage systems; RFID tags with
filling station quarterly remittances; current OBDII
systems for on-board mileage monitoring combined with
cellular technology are all possibilities with a host of
challenges.
• States are waiting for the federal government to
determine a system for collecting the federal highway
trust fund revenues so they can piggy-back onto it. No
sooner than 2015 and probably beyond.
40
Other OPTIONS
Vehicle Miles Traveled (VMT)
(continued)
This is a fee assessed on miles traveled.
Pros:
• Equity - Users pay for actual
road usage.
• Provides long term solution to
depleting gas tax revenues
due to fuel efficient vehicles
and the increasing number of
alternative fuel vehicles.
Cons:
• Technology not yet available
for assessing.
• Infrastructure not in place for
assessing and/or collecting.
• Privacy concerns.
• New fee.
• Collection costs are high
compared to gas tax.
• Needs national solution.
41
Federal Sources of Funding and
Future Prospects
Federal Transportation
Authorizations
Federal Transportation Legislation identifies
levels of funding that could be made available to
states based upon expected federal revenues.
These funding levels, or authorizations, set the
benchmark for future funding and spending
levels. These authorizations are made or
modified through Federal Surface Transportation
Acts or other special federal legislation.
42
Federal Transportation
Authorizations
The Intermodal Surface Transportation
Efficiency Act (ISTEA) of 1991
established requirements for extensive
planning and flexibility of federal funds for
projects, including Transportation
Enhancement, Surface Transportation
Program, Bridge, and Congestion
Mitigation and Air Quality projects.
43
Federal Transportation
Authorizations (continued)
The NHS Designation Act of 1995
defined the National Highway System for
the United States. This highway network
was identified as being important for the
nation’s economy, defense and mobility.
The Act also made adjustments to funding
authorizations that exceeded those that
were set up in ISTEA.
44
Federal Transportation
Authorizations (continued)
The Transportation Equity Act for the
21st Century (TEA - 21) was signed into
law in 1998. This Act re-affirmed the goals
of ISTEA and provided increased funding
and flexibility to the states to provide safer
and more efficient transportation facilities
and networks.
45
Federal Transportation
Authorizations (continued)
The Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for
Users (SAFETEA-LU) was signed into law on
August 10, 2005 and expired as of September
30, 2009. The current authorization has been
extended 5 times to now end in December 2010.
If current Authorization is not reauthorized or
extended, the Federal Aid Transportation
funding shuts down (there was a brief shut down
in March 2010).
46
Federal Apportionments
• Apportionments are made annually by the Congress for
the Federal Fiscal year (from October 1 – September 30
of the following year). These apportionments break down
the general categories of funding identified in the
authorizing legislation. They identify the amount of
money available to specific funding categories on a
national and state level in Formula and Non-Formula
funding categories.
• These apportionments are made through two major
sources, Federal Highway Administration (FHWA) and
Federal Transit Administration (FTA). Typically, FHWA
funds are used for highway related projects and FTA
funds are used for transit related projects.
47
Formula Apportionments
vs.
Non-Formula Allocations
• Formula funding categories are those that are typically
defined through legislation and remain constant over the
life of that legislation. Categories include Interstate
Maintenance, National Highway System, Surface
Transportation Program, Bridge Program, Congestion
Mitigation and Air Quality, and Transportation
Enhancement.
• Non-Formula or allocations are made for special funding
categories. These categories include Scenic Byways
and Forest Highway Programs, where funding levels can
change substantially from year to year, and specific
congressionally designated projects such as the
Newington Dover Little Bay Bridge Project and Nashua
River Bridge, with a defined amount of money allotted to
them.
48
Obligational Authority
• The amount of federal money received from the Federal
Highway Administration that can be spent in a given
Federal Fiscal year (October 1 through September 30 of
the following year) is called the obligational
authority/limitation. The actual amount to be received
each year by the States is determined by annual
Appropriations Bills passed by Congress. The amount in
the Appropriations Bill usually does not match the
amount shown in the Transportation Act, and in most
years, the amount is less than in the Transportation Act.
As a result, states will end up with unobligated (leftover)
balances in certain funding categories at the end of each
fiscal year
49
Hard Match and Soft Match
Most of the Federal Funds come with a matching
requirement – i.e. part of the total cost requires a
state or local contribution, commonly called the
match. FHWA Funds typically require a 10% or
20% match amount. This match amount can be
a cash match, also known as hard match, or
operating budgets pledge, known as soft match.
For example, the Congestion Mitigation and Air
Quality (CMAQ) projects require a 20% match. A
public service announcement project selected
for CMAQ funding may pledge broadcast time as
a soft match.
50
Federal Aid Program Nationwide
2010
Highways / Bridges
Transit
$42 B / yr
$11 B / yr
$53 B / yr
Funding
Fed Gas Tax
Fed Diesel Tax
18.4¢ / gallon
24.4¢ / gallon
New Hampshire’s Share
Highways / Bridges
Formula Funds
Non Formula, Earmark, Redistribution
$ 140 M / yr
$ 15 M / yr
Transit
Formula Funds
Earmarks
$
$
11M/yr
1M/yr
51
Federal Aid Authorization – 6 yrs
of funding
ISTEA
1992 – 1997
TEA – 21
1998 – 2003 / 2004 extended
SAFETEA – LU 2005 – 2009
Current Authorization ended September 30, 2009.
Current Authorization extended 5 times to now end
December 31, 2010.
If current Authorization is not Reauthorized or extended by
December 31, 2010, Federal Aid Transportation funding
shuts down.
(There was a brief shut down in March 2010)
52
Federal Aid Program
(Highway/Bridge & Transit)
Revenue Projected to be available 2010 thru 2015
2010
2011
2012
2013
2014
$53B
$54B
$29B
$43B
$44B
2015
$44B
The Federal Highway Trust Fund Revenues have declined during the
current Authorization (SAFETEA-LU).
In response the Federal General Fund has transferred revenue
to the Trust Fund.
9/15/08
Transfer of $8B
8/7/09
Transfer of $7B
3/1/10
Transfer of $19.5B
Without another transfer, funds available will decrease by
46% in 2012.
53
The Federal Aid Program is
Uncertain
Lacks Adequate Funding
Lacks Direction
Lacks Unified Support
54
Federal Funding Discussion
Possible Revenue Sources Under Discussion
1.
2.
Increase fuel tax
Convert fuel tax from cents-per-gallon to percentage basis
Gasoline
Diesel
3.
4.
5.
18.4¢ to 8.4%
24.4¢ to 10.6%
Place importation fees on fuels.
Direct Carbon Tax / Cap & Trade Revenue to Trust Fund
Vehicle Miles Traveled fees
Other Possible Revenue Mechanisms Under Discussion
1.
2.
3.
4.
Infrastructure Bank
GARVEE Bonds
Toll highways
TIFIA financing
55
National Direction
Lacks Direction
What once was a very direct mission to build a first rate interstate
and primary highway system, the mission has become increasingly
fractured and marginalized, and its requirements increasingly more
onerous.
56
Use of Federal Funds Has
Expanded and Fractured
In the beginning…
1.
Fed Aid was for capital
construction.
2.
Fed Aid was pay-as-yougo, cash based
financing.
3.
4.
Fed Aid was managed by
USDOT and prioritized
and administered by
State DOTs.
Fed Aid earmarks were
purview of Congress and
individual members.
Now…
Fed Aid may be used for
maintenance and
operations.
Fed Aid may be used for
debt (bonding) financing.
Fed Aid via grants is
managed and prioritized by
USDOT.
Fed Aid grants are purview
of USDOT.
57
EXHIBIT 7
58
NH DOT 2012 – 2013 Budget
Highway Fund and Betterment Fund
Revenue Challenge
$30 Registration Fee Sunsets 6/30/11
loss of $85.6M
I-95 Sale Revenue Decrease from $50M to $11.8M
loss of $38.2M
Impact
Highway Fund Decreases by
Betterment Fund Decreases by
Block Grant Aid Decreases by
Total
$ 98.6M
$ 15.0M
$ 10.3M
$ 123.9M
59
Highway Fund Revenue Losses
Registration Fee Sunsets & Reduction in I-95 Payments
•
•
•
In accordance with legislation, the $30
Registration Surcharge will sunset on June 30,
2011, which equates to a loss of revenue of
approximately $86M for the next biennium.
Additionally, the revenue the Highway Fund
receives from the sale of I-95 will decrease
from $50M to approximately $12M, resulting in
a loss of revenue of $38M.
Therefore the net reduction in revenue for the
biennium is approximately $124M.
60
Projected Deficits:
I-93 Widening Project
• The Salem-Manchester I-93 widening project involves widening the
highway from 2 lanes to 4 lanes in each direction and rebuilding 5
interchanges. Due to environmental commitments regarding salt
intrusion in water bodies, the highway footprint will be constructed
for 4 lanes in each direction, but will only be paved to operate with 3
lanes in each direction. Once the State and local communities are
able to reduce salt intrusion to meet environmental standards, the
4th lane in each direction can be paved and operated.
• While the widening of I-93 remains the State’s highest priority,
funding is only available for the segment from Exit 3 south and for
Exit 5 at a cost of $380M. The remaining segment north of Exit 3
(estimated to cost $230M) remains unfunded.
• The projected deficit is underscored by the uncertainty and
inadequacy of federal funding.
61
Widening and Modernization of
I-93 Jeopardized
I-93 improvements are the State’s #1
priority project, as defined by law.
Completion by 2020, per record of
decision, will be in jeopardy without a
funding source and completion may be
delayed beyond 2030.
62
Expansion of I-93 as Highest
Priority
Chapter 273:1, Laws of 2000, Chapter 329:1, Laws of 2008
273:1 Priority Construction.
I. The commissioner of the department of transportation shall give very high
priority to the construction projects relative to the widening of Interstate 93
from Manchester to the Massachusetts border.
II. The commissioner of the department of transportation, excepting special
appropriations, shall use previously and subsequently apportioned federal
funds and previously and subsequently appropriated state funds for the
projects under paragraph I.
III. The commissioner of the department of transportation shall take all
necessary actions to ensure that the state of New Hampshire does not
lapse or lose the federal funds.
IV. Once work has commenced on any one of the various construction projects
that constitute the 18-mile widening of Interstate 93 from Manchester to the
Massachusetts border, the commissioner of the department of
transportation shall expedite all Interstate 93 construction projects within the
entire 18-mile corridor until their completion.
63
Expansion of I-93 as Highest
Priority (continued)
Chapter 231:5, Laws of 2010
(RSA 240, Ten Year Transportation Plan )
231:5 Interstate Route 93 Priority. Pursuant to 2000, 273:1, as
amended by 2008, 329:1, the general court reiterates that the state
of New Hampshire’s top priority is the reconstruction and widening
of Interstate Route 93 from the Massachusetts border to Interstate
Route 293 in Manchester to 4 lanes in both directions within the time
frame of New Hampshire Ten Year State Transportation
Improvement Plan. The general court further understands that the
projected revenue is presently inadequate to fully fund the entire
project, specifically, capacity improvements north of exit 3. To the
extent alternative or additional funding becomes available for the
reconstruction and widening of Interstate Route 93 from Salem to
Manchester, the expenditure of such funds is hereby authorized.
64
Projected Funding Needs:
Loss of Revenue from Manchester Airport
Access Road (MAAR)
• It is projected that the Turnpike System will lose $6 million in toll
revenue with the completion of the Manchester Airport Access Road
(scheduled to open in fall of 2011 or spring of 2012). The roadway
will enable travelers to the airport to avoid the Bedford tolls. No tolls
are proposed or currently planned at the entry ramps or the mainline
of the Access Road. The loss in revenue, if not addressed, will
burden the rest of the system with an inability to construct the
projects authorized under HB 391, Chapter 146, Laws of 2009 (i.e.,
Hooksett and Bedford ORT, Dover end of the Newington-Dover Little
Bay Bridge-Spaulding Turnpike widening project), as well as
address future capital needs on the Turnpike System that are under
study.
• Recapturing the projected loss of $6 million when the MAAR opens
may permit the ability to fund implementation of the open road tolling
projects authorized under HB 391 (Chapter 146, Laws of 2009).
65
Inflation/Cost of Material
• Inflationary cost of construction and materials is
currently stagnant due to the recession. Prior to
the recession, costs were 5 to 20% higher than
current costs. For planning purposes and in our
financial modeling, construction costs are
estimated to increase 3.2% annually and
operating costs increase 3.0% annually.
• In addition to 3% annual inflation factor on the
operating budget, the Department is preparing,
as directed by the Governor’s office, an
operating budget that is 95% of its FY11 budget
for the next biennium.
66
Projected Funding Needs:
Turnpike Capital Program
• The turnpike capital program is authorized to
spend $560M.
• Anticipated revenue with no further toll increases
can support $450M worth of construction in the
next 9 years.
• With a toll increase in Rochester, Hooksett, and
Bedford, the program could be increased to
$840M. The additional toll revenue would allow
the Department to complete projects in a timely
manner, thereby realizing savings by avoiding
inflationary costs of construction and materials.
67
Highway Fund: Transportation
Budget Shortfalls
If funding is not found to restore the
$124M reduction in revenue to the
Highway Fund and Betterment Fund, the
Department of Transportation will need to
make dramatic cuts in programs and
services:
68
Highway Fund: Transportation
Budget Shortfalls (continued)
DEPARTMENT:
Division of Operations - potential reduction of $22M/biennium.
Division of Project Development – potential reduction of
$34M/biennium.
•
•
The preceding possible cuts are in addition to $20 million in cost
savings and efficiencies made by the Department in 2009,
including: 42 positions unfunded; hedged fuel purchases;
increased use of Turnpike Toll Credits in lieu of hard match for
federal funds.
Since operational cuts only cover $56M of the $124M loss in
revenue, it will be necessary to look at reducing the Betterment
Program and Legislative Programs for Cities and Towns (i.e.
Block Grant Aid, State Aid Highway, State Aid Bridge) to address
the revenue shortfall.
69
Highway Fund: State Aid
Highway and Bridge Allocation
Shortfalls
• If the State Aid Highway Program was cut
over the biennium, there would be a
reduction of 7 projects.
• If the State Aid Bridge Program was cut
over the biennium, there would be a
reduction of 23 bridge projects.
70
Possible Legislative Cuts to
Account for Reduced Revenue
Requires Legislative Action
Legislative Programs for Cities and Towns
Eliminate all (or portions) of Block Grant Aid
Eliminate all (or portions) of State Aid Highway (SAH)
Eliminate all (or portions) of State Aid Bridge (SAB)
Total
$30.6M/yr
$ 1.7M/yr
$ 6.8M/yr
$ 39.1M/yr
Block Grant Aid is 12% of the total Highway Fund revenue (gas tax and registration fees
raised in a year) and is distributed to each of the state’s 234 municipalities based on road
mileage and population. A city like Concord receives approx. $740,000 (2010) and a town
like Bartlett receives approx. $90,000 (2010).
SAH funds are available for municipalities to improve state highways with the state paying
2/3, and the town paying 1/3.
SAB funds are available for municipalities to improve local bridges with the state paying
80% and the town paying 20%.
71
DOT: Consequences of Budget
Cuts
Legislative Programs for Cities and Towns
Reduce municipalities’ ability to address local transportation-related needs.
Miles of local roadways are 11,865 miles.
Number of local bridges in SAB Program is 106 bridges over a 10 year period.
Division of Operations
Further encroachment of foliage on highways resulting in safety issues, increased salt
usage, disrepair of ditch lines.
Less summer maintenance (ditching, culverts, guardrail, shoulder work).
Inability to address graffiti issue.
Less bridge preservation work.
Less ability to respond to bridge emergency work.
Less striping performed by private contractors, reducing funding for capital
construction.
Delay in repairing/replacing signs.
72
DOT: Consequences of Budget Cuts
(continued)
Division of Project Development
Delays development of capital projects.
Stifles workforce development and succession planning in engineering and
technical fields.
Reduces funding available to turnpike capital construction program.
Reduces funding available to Federal Aid capital construction program.
Betterment Program
Reduces yearly paving program to 250 miles or less ($18M to $12 M)
Reduces secondary highway construction
($ 6M to $ 2.4M)
Reduces culvert replacement program
($ 1.5M to $ 0.3M)
Reduces number of intersection improvements
($ 1.2M to $ 0.5M)
Reduces guardrail replacement
($ 1.8M to $ 1.2M)
73
DOT: Proactive Steps Taken
•
•
•
•
•
•
In terms of being proactive, the DOT is:
Pursuing LEAN principles to measure costs.
Coordinating with partners.
Utilizing design-build contracting.
Overseeing a pilot program for statewide fleet
management.
Securing statewide diesel and unleaded fuel
contracts at fixed prices.
Developing a financial forecasting model to
better manage the Highway Fund and the
Turnpike Fund.
74
Department of Safety
This is a “view from 30,000 feet”
• It is impossible to give a definitive “alternative
budget” at this early stage.
• The statutory portion of the Highway Fund “cap”
that applies to the Department of Safety is
calculated as a percentage of the total
appropriation of Highway Funds and the
Department does not know what the total
appropriation will be.
75
Department of Safety
(continued)
Split Funding Adds to the Cuts
• Because some Department of Safety operations
are “split funded”, i.e. 81% Highway/19%
Turnpike for the State Police Traffic Bureau, to
accomplish a cut of 25% in the Highway portion
the Department has to make a similar cut in the
19% portion to maintain the funding ratio. In the
Forensic Lab, which is funded 70%
Highway/30% Agency Income a similar
“additional cut” would be necessary.
76
Department of Safety
(continued)
Safety previously proactive to reduce use of
Highway funds.
• In order to reduce the Department’s draw on the Highway Fund
during the current biennium the Department took the Detective
Bureau off the Highway Fund (previously 70% Highway), defunded
22 positions in State Police and 12 in DMV.
• In addition the Department charged an internal indirect cost against
the self-funded Divisions (911, Safety Services, Homeland Security,
Fire Academy and Fire Marshal) to pay for services formerly
provided out of the Highway Fund.
77
Department of Safety
(continued)
Proactive Use of Hwy
Funds…(2)
• The Department budgeted no replacement State Police vehicles
during this biennium, so by FY 12-13 much of the fleet will be
significantly older with higher mileage, and thus repair costs and
safety considerations will be of concern.
• Lastly, the Department adjusted the fees charged by Criminal
Records so that all costs related to that Bureau could be fee funded.
This also resulted in previously Highway funded costs moving to
Criminal Records.
78
Department of Safety
(continued)
Current Vacancies
• The Department currently has 48 vacancies in State Police
(approximately 13% of the force). Some Troopers are currently
covering 2 and 3 patrols instead of one.
• The Department depended on efficiencies such as the online driver
license renewal system and the fact that all town and city clerks are
now online with DMV to accommodate the personnel reduction in
SFY10-11 at DMV while actually improving customer service.
79
Department of Safety
(continued)
Where cuts would likely come from
• Although the Department could realize some cuts from other
expenditures, to realize this type of savings the majority of cuts
would be from Salary and Benefits.
• Because State Police salaries and benefits are higher than those at
DMV the lion’s share of $’s would have to come in State Police.
• In the Division of Motor Vehicles the total personnel costs, with
benefits, of a Counter Clerk I will be $60,101 for SFY 2012.
• In the Division of State Police the total personnel costs, with
benefits, of a Trooper I will be $81,387 for SFY 2012.
• Obviously these would not be the only salary classifications
impacted but this gives you a feeling for the number of personnel
necessary to reach a cut of this magnitude.
80
DOS Mission Statement
The multi-faceted mission of the Department of Safety
encompasses protection of the lives and safety and
preservation of the quality of life of New Hampshire
citizens and visitors to our state on the highways, on the
waterways, and in their homes and businesses. We
enforce motor vehicle and highway safety laws, criminal
laws, commercial vehicle regulations, fire safety, building
and equipment safety laws and regulations, and boating
safety laws and rules. We also provide enhanced 911
emergency communications statewide, and are
responsible for homeland safety and emergency
management activities.
81
DOS Unable to Fulfill Mission?
• If the DMV Fees Sunset…
• And gas tax revenues remain static, there will be
$118.8 million less revenue to the Highway Fund
in the FY 12-13 biennium.
• If the Department of Safety had to absorb 25%
of this reduction it would mean a cut of $29.7
million in the Department’s budget, or $14.85
million per year.
82
DOS Unable to Fulfill Mission?
(continued)
Built-in Challenges for FY 12-13
• There are a number of built-in cost drivers that the
Department has little to no control over, including:
• The State’s cost of Gasoline is 70 cents higher than last
year. There will be a new contract for SFY 12 which the
Department won’t know the cost of until late SFY11.
• The Department’s share of Group II retirement has
doubled from 12.2% to 25% of Law Enforcement
salaries.
• SFY 12 has an additional payroll for a total of 27.
• Healthcare cost increases 11% for each of 12 & 13.
83
DOS Unable to Fulfill Mission?
(continued)
If the Department had to absorb a proportionate
share of Highway Fund revenue loss…
This would reduce funding for the Office of the
Commissioner, Division of State Police, Division of Motor
Vehicles and the Division of Administration combined by
about 18.5% of the SFY 2011 appropriation and the
impact would virtually cripple Department operations.
Cuts of this magnitude will have significant impact
on Public Safety, Quality of Life and Customer
Service to the Citizens of New Hampshire.
84
DOT Mission Statement
• Mission: Transportation excellence enhancing the quality
of life in New Hampshire.
• Purpose: Transportation excellence in New Hampshire
is fundamental to the state’s sustainable economic
development and land use, enhancing the environment,
and preserving the unique character and quality of life.
The Department will provide safe and secure mobility
and travel options for all of the state’s residents, visitors,
and goods movement, through a transportation system
and services that are well maintained, efficient, reliable,
and provide seamless interstate and intrastate
connectivity.
85
DOT Unable to Fulfill Their
Mission
NH DOT will not be able to fulfill their mission if;
• The motor vehicle registration surcharge, ending
June 30, 2011 is not renewed or replaced with
another funding source .
• Bedford Toll isn’t relocated to prevent loss of
$6M toll revenue.
• Cannot keep pace with inflation.
• Source of revenue is not found to replace
decreasing gas tax revenue.
• Federal funding remains uncertain.
86
Cumulative Effects
• I-93 widening and modernization completion delayed until 2030 or
later
• Ten Year Plan funding remains in a deficit
• Red Listed bridges
• Operational funds for NHDOT to meet repair and safety mission are
eroded and service levels will decline
• Reduction in road paving schedule - paving will return to 250 miles
per year instead of 500 miles
• There has been and continues to be a reduction in the construction
program. In the current biennium, increased indirect costs billed
against federal program dollars and aggressive use of turnpike toll
credits versus traditional hard match have reduced programmed
construction funding by almost $65M, or approximately 19% of the
traditional program. Future use of toll credits, soft match, and
indirects in lieu of hard match will continue to erode the Capital
Program.
87
Commission Recommendation
Vehicle Miles Traveled (VMT)
The Commission recognizes VMT fees are the
future and recommends the Departments of
Safety and Transportation monitor the progress
of VMT technology and plan for implementing a
collection and assessment system.
The Commission recognizes that a national
change may be required in order for New
Hampshire to implement a VMT system.
88
Commission Recommendation
Regular Toll Rate Review
• The Commission recommends that the
Executive Council regularly review the turnpike
system capital program and revenue needs. In
order to address capital construction needs
beyond the currently planned program, an
increase in tolls will be required.
• The Commission recommends the General
Court review toll locations for maximum
collection, i.e. the loss of approximately $6
million dollars to the F.E. Everett Turnpike when
the Manchester Airport Access road opens.
89
Commission Recommendation
Bonding – GARVEE Bonds Cap
The Commission recommends that the
Legislature cap GARVEE bonds at a rate it
deems appropriate.
90
Summary
The economic vitality and growth of our state along with the safety of our citizens will be in jeopardy if the
funding shortfall is not reversed.
•
Looking out 10-20 years without additional revenue, the projected shortfall for FY2020 (operating and capital) is
$1.2 billion
•
Inaction is not an option. The situation is at a breaking point.
•
The DOT has made cuts for efficiency and cost savings, doing more with less. For example, while the number of
daily Vehicle Miles Traveled statewide has increased significantly through the years, the number of Department
employees has decreased significantly.
•
Concerns regarding diversion of highway funds and turnpike funds have been addressed through prior legislation.
•
In terms of projects, even if the DOT’s current revenues were to continue at the same rate, additional revenues are
still necessary to fund the I-93 widening project and the rest of the Ten Year Plan.
•
The DOT’s current revenues will not be sustained in the next biennium due to the sunsetting of the registration
surcharge and the decreased revenues from the I-95 transfer.
•
It is necessary to bring in additional sustainable revenue.
91
HB 2010, Chapter 0231, Laws of 2010
STATE OF NEW HAMPSHIRE
•
•
•
•
•
•
•
•
In the Year of Our Lord Two Thousand Ten
AN ACT relative to the state 10-year transportation improvement program, authorizing the issuance of federal highway grant
anticipation bonds to finance the replacement of the Memorial Bridge in Portsmouth, New Hampshire, and establishing a
commission to study the F.E. Everett Turnpike.
Be it Enacted by the Senate and House of Representatives in General Court convened:
231:1 State 10-Year Transportation Improvement Plan. The legislature hereby adopts the plan known as the “State of New
Hampshire Ten Year Transportation Improvement Plan 2011-2020 Submitted by the House Public Works and Highways
Committee as Part of the Legislative Process Pursuant to RSA 228:99 and RSA 240 of the Laws of New Hampshire” and
encourages expeditious implementation of the projects shown therein.
231:2 Highway Fund Shortfall. The general court recognizes and appreciates the excellent work of our local communities, the
regional planning commissions, the department of transportation and GACIT in developing the State of New Hampshire Ten Year
Transportation Improvement Plan for 2011-2020. However, the general court recognizes that there is significant shortfall in the
highway fund that will not allow the completion of all the projects contained in the plan. This will, in the absence of additional
revenues, require the delay or elimination of many of the projects in this and future Ten Year Transportation Improvement Plans.
The general court desires that citizens recognize that this revenue shortfall exists and that many listed highway projects may be
significantly delayed or eliminated.
231:3 Turnpike Fund Shortfall. The department of transportation has informed the general court that in order to fully fund and
complete the projects listed under the New Hampshire Turnpike System, an increase in toll rates needs to be approved by the
governor and council. If a toll increase is not enacted, some of the listed turnpike projects will be delayed or eliminated, including
but not limited to open road tolling in Bedford and Hooksett, and the Spaulding Turnpike improvements north of Dover.
231:4 Federal Funding. Many of the highway, turnpike, aeronautic, mass transit, congestion mitigation and other projects listed in
the State of New Hampshire Ten Year Transportation Improvement Plan rely on differing amounts of federal funding, the receipt
of which is uncertain. Any reduction in the amounts of federal funds listed in this plan will require a dollar-for-dollar reduction in
spending and, accordingly, the delay or elimination of certain projects.
231:5 Interstate Route 93 Priority. Pursuant to 2000, 273:1, as amended by 2008, 329:1, the general court reiterates that the state
of New Hampshire’s top priority is the reconstruction and widening of Interstate Route 93 from the Massachusetts border to
Interstate Route 293 in Manchester to 4 lanes in both directions within the time frame of New Hampshire Ten Year State
Transportation Improvement Plan. The general court further understands that the projected revenue is presently inadequate to
fully fund the entire project, specifically, capacity improvements north of exit 3. To the extent alternative or additional funding
becomes available for the reconstruction and widening of Interstate Route 93 from Salem to Manchester, the expenditure of such
funds is hereby authorized.
231:13 Issuance of Revenue Bonds; Replacement of Memorial Bridge in Portsmouth. Amend RSA 228-A:2 to read as follows:
228-A:2 Issuance of Revenue Bonds. …. The bonds shall be issued by the treasurer in such amounts as the governor and council shall
determine, not exceeding $195,000,000 for Interstate 93 and $45,000,000 for the replacement or repair of the Memorial Bridge and
the Sarah Mildred Long Bridge. Debt service for federal highway grant anticipation bonds (Garvee bonds) for the bridges shall
be paid from a portion of future federal bridge funds. ….
92
Appendices
1. Gas taxes give us a break at the pump, Dennis Cauchon, USA TODAY, July
2, 2010
2. Moving New Hampshire Forward: The Condition and Funding of New
Hampshire’s Roads, Bridges & Transit Systems, TRIP, June 2010,
3. Presentation to the Financing Commission: Financing the I-93 Project,
NHDOT, J.P.Morgan, September 27, 2010
4. Transportation Funding, How Do You Pay For It? Presentation by Dennis
Lebo and Gannett Fleming, August 16, 2010
5. Paying Our Way, A New Framework for Transportation Finance, Report of
the National Surface Transportation Infrastructure Financing Commission,
February 26, 2009
6. Funding a Transformational Transportation Bill, Options for Discussion and
Principles, Brookings, November 2009
7. Highway Funding & Political Will, New Hampshire Highways, New
Hampshire Good Roads Association, October-December 2010
8. New Hampshire Highway Study Committees 1991-2008, House Committee
Research Office, October 4, 2010
93