The New Visions Fiscally-Constrained
Balanced Budget
The New
Visions plan's treatment of budget issues represents an important policy
shift. The budget comes to grips in a
flexible, policy-oriented manner with CDTC's perspective on relative priority
for funding within a constrained budget.
It also provides direction for exploration of additional funding.
Additionally, the completion of the New Visions effort concurrently with
developing CDTC's 1997-2002 Transportation Improvement Program (TIP) placed a
special burden on the New Visions
budget. It was required to provide some
guidance to hard decisions regarding TIP capital programming and scheduling.
CDTC follows a structured approach to the New Visions budget that establishes
policy, guides TIP decisions and provides flexibility to deal with changing
budgetary assumptions. The approach
described is built upon the following funding principles which are central to
the New Visions plan, having been
developed through CDTC's past practice, task force work and public response.
1. CDTC desires full implementation of
all plan elements.
For example, reducing the percentage of
deficient bridges to 20% (one element of the plan) and improving bike and pedestrian
accommodations on a priority network (another element) are both important, and
complete implementation success is desired for both.
2. Under constrained budgets,
preserving the existing transportation system has a higher priority than making
improvements or additions.
CDTC's
existing principles and the New Visions
effort have repeatedly emphasized the need to maintain what we currently have
as a priority.
3. Even under constrained budgets,
making some degree of progress with improvements is essential.
It is realistic and appropriate to assume
that some amount of highway or bridge improvement, bike accommodation or access
management redesign will be included in CDTC's and members' action agendas -- even
if budgets are reduced from historic levels.
4. Availability of funds dedicated to a
particular mode, system or purpose frees up "flexible" funds.
Sources with a tightly defined list of
eligible purposes are a reality. These
benefit specific purposes directly, and other purposes indirectly. Practically speaking, if CDTA receives a
discretionary Section 3 capital grant for bus replacement, or if State
Dedicated Funds for state highway projects are increased, this increase reduces
the load on other, flexible fund sources.
5. Priority for the use of flexible
funds is not to be based on ownership.
This
statement emphasizes CDTC's historic perspective, on funding, reaffirmed
through the New Visions effort --
funding availability and project design should be based on function and
location, not on issues of jurisdiction.
Based on these principles the New Visions adopted approach is based
upon the conclusions that:
·
Flexible funds can
be broadly targeted to specific project categories based on relative funding
need -- after accounting for the availability of dedicated funds and after
assigning extra weight to the funding requirements of preserving the existing
system; and,
·
Project priority
within a project category can be determined based on need, cost effectiveness,
urgency and other factors.
Following this approach, CDTC has used the cost of full implementation of
the consensus strategies and other New
Visions recommendations on a comparable basis. Careful distinction has been drawn between preserving the
existing investment and making improvements.
CDTC has
been well served in the effort to define a full implementation budget by extensive
effort to identify desired actions at a scale that is able to receive broad
support. As a result, consensus
strategies for transit, bike and pedestrian, arterial management, special needs
and other improvements defined by task force recommendations are roughly of
comparable scope and "reach".
The full implementation budget is not an unconstrained budget
which seeks to mitigate all congestion, address all infrastructure
deficiencies, retrofit the entire network with ITS components or make ideal pedestrian
and bicycle accommodations. Effort has
been made to keep the full implementation plan reasonable and plausible over
the 21-year
horizon.
Using New Visions budgets to
target funding to various project categories will be treated broadly during TIP
development, as a guide in developing a balanced program rather than a rigid
funding sub-allocation. Partly this
recognizes the fact that the full implementation budget estimates are imperfect
and will be refined in coming years.
Broad treatment will also keep this potentially valuable tool from
becoming a hindrance to CDTC's effective decision-making process. CDTC is not a project sponsor or
implementer, and flexibility is necessary to respond to those aspects of the
plan which are implemented.
The approach is policy-centered, focussing on CDTC's commitment to a wide
range of initiatives without being wedded to a single, inaccurate estimate of
costs and funding availability. It is
dynamic in its ability to handle changes in funding while also providing the
basis for any effort to increase levels of either dedicated or flexible
funds. It also places appropriate
attention on all elements of the plan because of their inter-relation with
regard to funding availability.
The following "Regional Transportation Plan Budget" is based on
the system preservation needs and full implementation budgets described
earlier and relate to three budget scenarios:
1. A Reduced Funding Scenario. This is an assumed 16% reduction (relative
to inflation) in state and federal funds used for capital purposes. Such a reduction could come about through an
inability of resources to keep pace with inflation or from a reduction in
anticipated federal or state funding.
(The proposed 2000 Transportation Bond is expected to provide about 16%
of highway and bridge capital resources, for example.) Under this scenario, most flexible funding
would cover system preservation needs, with only about $16 M available annually
to other purposes. Improvements would
be tied nearly totally to dedicated funds and other earmarks. This effectively eliminates CDTC's budget
goal to achieve steady progress in all areas.
Under this scenario, bridge and pavement conditions could be maintained
but major bridge projects may need to be deferred. Only a small portion of the desired improvements in local street
reconstructions, ITS, bike and pedestrian, congestion relief, and transit
improvements could be undertaken.
2. A
Steady-State Funding Scenario.
Adherence to the CDTC policy to make comparable progress across all
improvement initiatives, steady and reasonable progress is possible at current
funding levels -- if they keep pace with inflation. The degree of success is dependent upon total funding availability. Under levels of funding comparable to
current levels (the steady-state funding scenario), expected state, federal and
local funds would continue at current levels (adjusted for inflation) through
the 21-year
period, and all federal demo project funds and other anticipated
"exclusive" funding would be received.[1] This
budget level totals $460 M per year.
After accounting for funds earmarked for specific purposes, this budget
allocates $82.5 M annually to cover remaining system preservation needs,
leaving $43.5 M of $126 M per year in "flexible" funds for
improvements across all fronts. The
flexible funds combine with exclusive funds to allow the Capital District to
achieve about 2/3 of its desired set of $133 M in annual improvements.
This
scenario represents the "financially constrained" version of the
plan. The transportation system could
function at this funding level and a large number of improvements made, but goals could not be fully achieved.
3. A Full-Funding Scenario. An additional $38 M per year above the
steady-state funding scenario is sufficient to achieve full implementation of
the entire New Visions plan. Although $38 M represents an increment in
the annual transportation budget of less than 10% of the steady-state budget,
it represents a significant increase (31%) in "flexible"
funds available to the Capital District.
The full funding budget overall is a full 1/3 higher than the basic,
system preservation budget. ($501 M compared to $368 M.) The funding increase to move from the
steady-state level to full implementation could be provided simply by ensuring
that revenues are (1) adjusted for inflation and (2) track travel. The full-funding scenario calls for no more
funding than would be provided by increasing current revenues (from all
sources) 1% per year in real terms over the next 21 years -- a grow rate
approximately equal to expected travel growth.
In all three scenarios, intermodal facilities are assumed to have access
primarily to "exclusive" funding, such as passenger facility charges,
tenant rents and direct federal state and local grants. FTA funds are also defined as exclusive to
transit. FHWA earmarks for
Enhancements, and Safety and Rail projects are treated as exclusive fund sources,
as are FHWA Highway Bridge Rehabilitation and Replacement (HBRR) funds (assigned
to the Bridge Rehabilitation & Reconstruction category.) Demonstration funds, FHWA/FTA planning
funds, and private developer mitigation fees are also treated as exclusive
funds. Existing budgets for highway
operations at the state and local level are also treated as exclusive and not
available for use on capital projects.
"Flexible" funds, which could assigned to any of the competing
budget needs are limited to the sum total of federal and state funds, including
local match, not otherwise identified as exclusive. These funds include most of FHWA's Surface Transportation
Program, National Highway System, Interstate Maintenance and Congestion
Mitigation/Air Quality funds, along with State Dedicated Fund, State Bond and
other "100% State" funds.
Table 1 represents a summary of the funding levels possible
for each investment category for the steady-state funding and full
implementation scenarios.
Fiscal Constraint
Requirement
The TEA21 requires CDTC's plan to be fiscally or financially
constrained. That is, CDTC must not
raise expectations for facility and service improvements that are not
affordable under reasonable assumptions of funding availability. The New
Visions budget policy explicitly addresses the fiscal constraint
requirement. By following the stated
policy, CDTC at all times is able to judge the magnitude and extent of
improvements in any investment category that can be afforded at expected levels
of resources. Error!
Reference source not found. presents the fiscally constrained plan
developed using forecasts of a steady level of funding.
Figure 1 and graphically represent the average annual 20-year funding
levels for improvements by improvement category (aggregated somewhat for
display purposes from the categories in the preceding tables). System
preservation requirements (in 2000$) increase over time with increased truck
travel, averaging $368 M per year.
Similarly, if total funding tracks the growth in travel, it will grow
over time -- averaging $501 M per year -- and meet the New Visions full implementation requirements.
Overall
Budget Conclusions
On the whole, it appears that the revised plan's reach has increased beyond the previous New Visions' plan's reach. Better understanding of project costs, further identification of upcoming "extraordinary" bridge replacement needs and greater definition of intermodal projects have increased the full implementation budget roughly considerably. The new budget totals $501 M, or nearly 14% more than the full implementation budget adopted in 1997.
At the same time, experience has confirmed that system preservation needs remain at roughly the levels estimated in 1997. As a result, it has become clear that a good proportion of the full plan is composed of actions that constitute desired improvements -- not mere preservation of existing services and facilities. The Capital District is successfully implementing intermodal projects, congestion management projects, ITS projects, transit enhancements, and community-supporting streetscape, bike, pedestrian and freight access projects. The revised New Visions budget reflects the fact that these projects are not cheap and go far beyond merely holding our own.
It is very good news that the revised estimates of resources have also gone up, indicating that funding commitments to the plan have kept pace with the growth in funding needs, as called for in the original New Visions budget. The revised budget and resource estimates indicated that the Capital District can continue to achieve a good share of the desired set of improvements if current funding levels remain intact. A higher proportion of exclusive and flexible funding is available for improvements in the revised budget, as compared to the original New Visions' steady-state budget.
Three wild cards threaten this picture of steady, consistently refined progress. The first is the Transportation Bond referendum in November 2000 and related assumptions of state funding of the capital program. The second is reauthorization of the federal authorizing legislation, TEA-21, in 2003. The third is the very recent identification of renewed inflation in the highway construction industry.
Based on a simple calculation of the share of the five-year highway and bridge budget that is expected to come from bond proceeds (about 15/95 or 16%), failure to pass the bond would remove at least $20 M a year from the CDTC budget. If the bond fails, and the Governor and Legislature cannot agree on a comparably-funded alternative revenue source, the New Visions steady-state budget is seriously imperiled and full implementation funding much less likely to occur.
Similarly, reauthorization of TEA-21 in any manner that provides fewer financial resources the Capital District would seriously constrain the region's ability to achieve the desired improvements. Funding losses could result from a turnback of taxing authority from the federal government to the state, creation of new "equity" formulas that provide a lower percentage of funding to New York State, or other changes.
Further, any inflationary effect reduces the purchasing power of a static level of resources. It also seriously compromises the ability of elected officials to increase the funding levels to both meet the impacts of inflation and address the desire for increased funding in real terms.
In summary, the New Visions 2021 budget tracks well with CDTC's expectations when it adopted the New Visions plan three years ago. However, the budget threats and challenges remain at least as serious as those present in 1997. A summary of key differences between the previous plan's budget and the new budget is shown on the following page.
Summary of Budget Differences from
Previous New Visions Plan
|
Annual Funding Levels |
Previous New Visions Plan |
Draft New Visions 2021 Plan |
|
System Preservation
Needs |
$ 364.448 M |
$ 368.362 M |
|
Annual Cost of
Improvements |
$ 76.899 M |
$ 133.111 M |
|
Full Implementation
Budget |
$ 441.347 M |
$ 501.473 M |
|
|
|
|
|
Exclusive Funding
Level |
$ 293.175 M |
$ 336.669 M |
|
Flexible Funding
Level |
$ 107.600 M |
$ 126.100 M |
|
Total Steady-State
Resources |
$ 400.775 M |
$ 462.769 M |
|
|
|
|
|
Improvements Funded
Under Steady-State Funding |
$ 37.000M |
$ 59.700 M |
|
Percent Completion
of Desired Improvements |
48% |
71% |
|
Annual Funding Gap
Under Steady-State Funding |
$ 40 M |
$ 39 M |
Regional Transportation Plan Budget By Element
|
|
|
basic |
plus |
total |
|
Steady-state
Funding |
|
|
|
|
|
System Preserve |
Desired
Improve-ments |
Annual Average
Need |
Available
Exclusive Funds |
Comparable Progress Policy |
Full Implement-ation Scenario |
|
|
REGIONAL PROGRAMS[2] |
|
|
|
|
|
|
||
|
1 |
Intermodal Facilities |
10.638 |
30.457 |
41.095 |
39.600 |
40.392 |
41.095 |
|
|
2 |
Transit Infrastructure |
5.956 |
5.535 |
11.491 |
10.285 |
10.924 |
11.491 |
|
|
3 |
Transit Service |
38.000 |
3.860 |
41.860 |
41.860 |
41.860 |
41.860 |
|
|
4 |
ITS (Technology) and Traffic Infrastructure |
2.578 |
7.672 |
10.250 |
2.050 |
6.642 |
10.250 |
|
|
5 |
ITS (Technology) and Traffic Operations |
.715 |
1.825 |
2.540 |
0.375 |
1.682 |
2.540 |
|
|
6 |
Highway Rehab, Reconstruction and Redesign -- Priority Network |
55.960 |
31.845 |
87.805 |
7.790 |
72.829 |
87.805 |
|
|
7 |
Highway Rehabilitation & Reconstruction – Other |
15.000 |
0.250 |
15.250 |
15.250 |
15.250 |
15.250 |
|
|
8 |
Bridge Rehab & Reconstruction |
62.000 |
20.100 |
82.100 |
31.092 |
73.494 |
82.100 |
|
|
9 |
Highway and Bridge Maintenance |
171.800 |
2.500 |
174.300 |
174.300 |
174.300 |
174.300 |
|
|
10 |
Strategic Highway and Bridge Actions -- CMS-based
(capacity) |
|
10.277 |
10.277 |
1.341 |
6.074 |
10.277 |
|
|
11 |
Strategic Highway and Bridge Actions – Economic
Development /Community Compatibility |
|
8.712 |
8.712 |
4.315 |
6.644 |
8.712 |
|
|
12 |
Supplemental Goods Movement Accommodations |
|
3.665 |
3.665 |
1.971 |
2.868 |
3.665 |
|
|
13 |
Supplemental Bike & Pedestrian Accommodations |
0.275 |
2.343 |
2.618 |
1.2 |
1.951 |
2.618 |
|
|
14 |
Supplemental Access Management Actions |
|
0.500 |
0.500 |
0.500 |
0.500 |
0.500 |
|
|
15 |
Supplemental Safety Actions |
1.800 |
2.000 |
3.800 |
1.800 |
2.859 |
3.800 |
|
|
16 |
Demand Management |
0.240 |
1.360 |
1.600 |
0.300 |
0.989 |
1.600 |
|
|
17 |
Integrated
Planning & Outreach |
3.400 |
0.210 |
3.610 |
2.640 |
3.511 |
3.610 |
|
|
|
SUBTOTAL |
368.362 |
133.111 |
501.473 |
336.669 |
462.769 |
501.473 |
|
|
|
|
|
|
|
|
|
|
|
Figure
1: Steady
State Funding Program, Comparable Progress Policy
Figure 2: Full Implementation Program
(clockwise from top
center)
Figure 3:
New
Visions 2021 Annual Budget Implications
Funding Opportunities
Additional funding must be
found to fully implement the plan: $38
M per year plus any additional amount to advance major transit initiatives (beyond
Bus Rapid Transit) or major Northway actions. As shown in the Visions and Goals chapter, residents and
businesses of the region are rewarded with safety, time and other resource
savings far in excess of the cost of the improvements.
Assuming support for the
improvements, there are several broad options available. Information on these options is valuable to
the discussion of the New Visions
choices. It is not appropriate to
consider any of the consensus strategies or major transportation policy choices
identified by the New Visions Plan as
real commitments without consideration of where the financing will be obtained.
As identified in task force
discussions and in New York State Department of Transportation's "The Next
Generation... Transportation Choices for the 21st Century" (July 1995
draft), the following are the leading opportunities to fill holes in funding of
existing commitments and to underwrite new initiatives:
1. Retain
New York's share of transportation authorizations and appropriations in the
next TEA-21. As recommended in the
original New Visions plan, New York worked hard to secure an equitable share of
federal transportation resources in the TEA-21 legislation. In coming years, comparably-difficult work
lies ahead in both assuring that TEA-21’s successors maintain an equitable
share of resources for New York and maintaining TEA-21’s guarantees of
appropriation and release of authorized funds.
The gaps between appropriations and authorizations were a major
shortcoming of ISTEA.
2. Maximize efficiency in the use of existing
resources. As noted earlier, a
compelling argument for additional funding must begin with citation of existing
efficiencies. New Visions task forces and others have highlighted several
potential areas of efficiency:
·
Further coordinate and consolidate human service agency
transportationm expanding upon the success with Medicaid transportation
experience by CDTA’s subsidiary Access Transit since 1998;
·
further coordinate CDTA and State University of New York
at Albany (SUNYA) and other transit services, as initiated as a result of the
collaborative Washington / Western Ave. Urban Corridor Study in 1998-99;
·
better coordination
of or fully consolidate highway maintenance operations (towns, villages,
cities, counties, state) -- the over $100 M in annual local highway operations
budgets offers tremendous opportunities for cost-savings;
·
transfer
jurisdiction of highways to better align needs with personnel and financial
resources;
·
increase the use of
the private sector in service delivery;
·
engage in partnerships
with private construction contractors to reduce costs and increase longevity of
highway projects;
·
refine the "risk assessment" tradeoff analysis
used before committing to new highway or bridge capacity elements of a routine
infrastructure renewal project; and
·
further integrate transportation planning with land use
and development planning so that public or private investment maximizes the
"bang for the buck".
3. Consider greater use-based revenue
sources. As cited in NYSDOT's
"Next Generation" Plan, pricing "transportation based on usage
... could also help achieve other desirable transportation goals such as
congestion reduction, or energy and environmental goals (p. 89)." This notion has been supported by New Visions work and the public response
to the Workbook outreach. A shift of revenue sources to use-based
sources also makes it more practical to index revenues to use. Among the options available are to:
·
Provide authority
for an additional per-gallon fuel tax, perhaps on a local option
basis. Currently, local governments in
New York do not have authority to impose a use-based, dedicated fee.
·
Consider congestion
pricing on major facilities such as the Northway, with variable pricing by
time of day or type of vehicle to discourage peak-hour, single-occupant travel
while raising funds for desired initiatives.
·
Consider parking
pricing, either as part of a congestion pricing strategy (discouraging
single-occupant travel in congested areas) or as part of an overall transit marketing
and financing arrangement. (A $1/day
downtown parking fee would generate about $6 million per year. A $3/day fee was used by the Transit Futures
Task Force in testing fixed guideway applications.)
4. Consider dedicating a supplemental
portion of a broad-based tax.
Nationwide, it is typical for major local transportation initiatives to
include partial or primary financing through dedicating a portion of a
broad-based tax, such as a sales tax.
Few metropolitan areas in the nation undertake major highway upgrade or
fixed guideway transit system development efforts without a new local funding
stream. Generally these actions are
offered to the public on a referendum basis and often are part of a broad
package of both highway and transit initiatives. In California, the metropolitan TIPs include projects funded
through a local-option supplemental sales tax.
Boulder Colorado's initiatives have been funded with a 1/4 cent dedicated
sales tax. The entire budget requirement for full implementation of the plan of
$40 M (not counting any major Northway or transit projects) is approximately
equal to a one-half cent region-wide sales tax.
5. Explore additional private sector
opportunities to finance transportation improvements or services. CDTC's task forces have encouraged CDTC to
continue this region's successful process of public - private highway financing
through such mechanisms as mitigation fees.
These mechanisms help share costs of improvements equitably between
developers and the public. Additional
opportunities for private sector include:
·
Encourage employers
to contract directly with CDTA or other operators for transit services,
such as bus service that circulates through employment centers and feeds trunk
routes.
·
Develop new
transit pass programs that, similar to the "EcoPass" program in
Boulder, Colorado, provide for steep pass discounts to any employer that
secures passes for all employees.
·
Change state
legislation to allow NYSDOT to accept private funds directly (from
developers) to undertake a joint transportation improvement, and to allow the
private sector to accept public funds to undertake a joint transportation
improvement.
6. Examine all other possibilities. The following financing mechanisms are
suggested in NYSDOT's "Next Generation" report or are used in
neighboring states:
·
Establish a
regional infrastructure bank
(NYSDOT, p.89);
·
Privatize more
of the transportation system
(NYSDOT, p. 89);
·
Explore personal
property taxes as a substitute
for or supplement to other revenues. This
option has not been cited by NYSDOT or by any of CDTC's task forces but has a
particular advantage in being a deductible tax from federal income tax. For example, a 1% annual ad-valorem personal
property tax could raise approximately $27 million as a replacement for or
supplement to other taxes that are not deductible. Personal property taxes are used in other states.
Again, the purpose of exploration of new revenue streams is not to
increase transportation revenues significantly. Rather, it is primarily driven by the need to make revenue
mechanisms more equitable and to allow funding levels to keep pace with
inflation and travel growth. Adjusted
for inflation, if real revenues per mile of travel could be maintained at 1996
levels (levels authorized in federal, state and local legislation) through the
year 2015, the full implementation of CDTC's New Visions plan would be affordable.