1

Financing Transportation Improvements

Issues and Options

Transportation Strategy BoardNovember 17, 2010

2

Context

Unfunded Transportation Needs– System Preservation– Strategic Investments

Connecticut is Not Alone– Massachusetts– Rhode Island

Future Federal Support Uncertain

3

Context

Special Transportation Fund– Required to be balanced

Current Revenues vs Current Expenditures Debt Service Coverage Requirements

– Outlook FY 2012, Projected $ 37.7 million deficit FY 2013, Projected $ 12.0 million deficit Impact of General Fund Issues

– GF Transfers to STF– GRT Transfers to STF

4

FINANCING METHODS

5

Financing Methods

STF Appropriations– Currently primarily operating expenses and debt service– Long term cost less than bonding

STO Bonds– Limited Capacity without new revenue

GARVEE Bonds– Secured by future federal funds– Greatest benefit to state’s with limited ability to issue bonds.– Can be used to expedite projects– Reduces future federal funding

6

Financing Methods

Federal Funds– Currently about $650 million per year– State match requirements– Reauthorization

Current law has expired– Extended month to month– Gas Tax Dispute– Outlook unclear

Large funding increase appears unlikely

7

Financing

Federal Funds– Discretionary Funding

Various match requirements – Earmarks

Various match requirements

8

Financing Methods

Tolls– Specific Projects

Proceeds used to pay capital and operating costs– Congestion Mitigation

Proceeds used to pay operating and capital costs of mitigation and of transportation alternatives

– Revenue Proceeds used to support transportation programs

– Federal Rules and Restrictions– Timing

Five to seven years to implement

9

Financing Methods

Public Private Partnerships– Alternative Design and Construction Agreements

(Design/Build)– Alternative Design, Construction and Operation

Agreements (Design/Build/Operate)– Toll Facility Leases

10

PROJECT TIMING

11

Timing

Timing expenditures spreads cost over time, reducing the initial costs

Projects can be timed in at least three ways:– Based on the availability of funds

For example $20 million a year– Based upon the need for funds

Driven by project schedule– Combination of both methods

Bond Issuance and Debt Service Based upon Timing

12

REVENUE SOURCES

13

STF FY 2010 Revenue Sources

Motor Fuels Tax 44%

Sales Tax-DMV 6%

Oil Companies Tax 12%

Motor Vehicle Receipts19%

LPF Revenue 12%

Interest Income 1%

Transfers - Other Funds6%

14

Projected STF Revenues

Motor F

uels

Tax (b

)

Sales T

ax-D

MV (c)

Oil Com

panie

s Tax

(d)

Motor V

ehicl

e Rec

eipts

LPF R

even

ue

Intere

st Inc

ome

Transfe

rs - O

ther F

unds

-

100.0

200.0

300.0

400.0

500.0

600.0

STF Revenues 2010-2014

20102011201220132014

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Possible Sources of Revenue

Increased Gas Tax Inflation Responsive Gas Tax Transfer Gross Receipts Tax to STF Increase Gross Receipts Tax and Transfer Transfer Sales Tax on Motor Vehicles to STF Increase DMV Fees Vehicle Miles Traveled (VMT) Taxes Emissions Fees Local Option Taxes