Virginia Transportation Finance

A Primer

Presented by:

Tom Boyd

VDOT Asst Commissioner for Finance

Highway System

Total State Maintained Highway Sys. 56,700 mi.Total State Maintained Highway Sys. 56,700 mi.• State Highway SystemState Highway System 9,450 mi. 9,450 mi.

(Interstate and Primary Systems)(Interstate and Primary Systems)

• Secondary SystemSecondary System 47,250 mi. 47,250 mi. Urban System (Locally maintained) 10,200 mi.Urban System (Locally maintained) 10,200 mi.

Total Highway System includes almost 12,000 bridges, four Total Highway System includes almost 12,000 bridges, four under water and two mountain tunnels, toll roads and toll under water and two mountain tunnels, toll roads and toll bridges, and ferry servicesbridges, and ferry services

Transportation Finance 101

3 Ts of Transportation 3 Ts of Transportation FinanceFinance

Allocation Allocation RequirementsRequirements

FinancingFinancing

3 Ts of Transportation

FinanceTTaxesaxes

TTollsolls

TTake funding from someone or ake funding from someone or something elsesomething else

Taxes

Taxes of All Types

TaxesTaxes• Fuel Tax (Federal and State)Fuel Tax (Federal and State)• Vehicle Sales TaxVehicle Sales Tax• Sales TaxSales Tax• Special TaxesSpecial Taxes• Income TaxIncome Tax• General Fund TaxesGeneral Fund Taxes

Fuel Tax Rates

Both federal and state are based on an amount per Both federal and state are based on an amount per gallon soldgallon sold

Virginia 17.5 cents for gasoline/ 16.0 cents for Virginia 17.5 cents for gasoline/ 16.0 cents for diesel --- Federal 18.5 cents per gallondiesel --- Federal 18.5 cents per gallon

Regional Fuel TaxesRegional Fuel Taxes•NC - 21.2/21.2NC - 21.2/21.2•MD - 23.5/24.25MD - 23.5/24.25•WV - 23.35/23.35WV - 23.35/23.35

•KY - 16.4/13.4KY - 16.4/13.4•TN - 20.0/17.0TN - 20.0/17.0•PN – 25.9/30.8PN – 25.9/30.8

Motor Fuel Tax Receipts

$ millions million gallons$ millions million gallons

VA - VA - 778 778 4,5744,574 NC - NC - 1,0421,042 5,0355,035 MD - MD - 646 646 2,9132,913 WV - WV - 295 295 1,1031,103 KY - KY - 440 440 2,9032,903 TN - TN - 717 717 3,7513,751 PA - PA - 1,6961,696 6,3176,317

Taxes of All Types

$ million$ million

TaxesTaxes• Fuel TaxFuel Tax 784784• Vehicle Sales TaxVehicle Sales Tax 491491• General Sales TaxGeneral Sales Tax 386386• Special TaxesSpecial Taxes 41 41• Income TaxIncome Tax - -• General Fund TaxesGeneral Fund Taxes 86 86• OtherOther 204204

Federal Reimbursements

$ million$ million

Interstate/NHSInterstate/NHS 293.8293.8 Surface TransportationSurface Transportation 191.3191.3 Minimum GuaranteeMinimum Guarantee 74.1 74.1 BridgeBridge 94.4 94.4 CMAQCMAQ 38.4 38.4 OtherOther 283.2283.2

Tolls

State Owned Toll Facilities

$ millions$ millions

Dulles Toll RoadDulles Toll Road 39.739.7 Powhite ParkwayPowhite Parkway 9.8 9.8 Coleman BridgeColeman Bridge 4.7 4.7 Pocahontas Parkway Pocahontas Parkway open in FY 03open in FY 03

The Allocation Process

Allocations and Cash( Page 1)

Virginia Code requires that financial resources Virginia Code requires that financial resources be allocated as followsbe allocated as follows• “…”“…”allocation” shall mean a commitment to allocation” shall mean a commitment to

expend funds…” expend funds…” (Section 33.1-23.01 Code of Virginia) (Section 33.1-23.01 Code of Virginia)

• First allocation is an amount deemed First allocation is an amount deemed necessary for maintenance of roadsnecessary for maintenance of roads

• Next allocation is for administration and Next allocation is for administration and general expenses general expenses

Allocations and Cash(Page 2)

• After maintenance and G&A, After maintenance and G&A, allocations are to be made for the allocations are to be made for the match for federal fundsmatch for federal funds

• After any other “off-the-top” items, the After any other “off-the-top” items, the balance of funds are to be allocated:balance of funds are to be allocated: 40% to the Primary System40% to the Primary System 30% to the Urban System30% to the Urban System 30% to the Secondary System30% to the Secondary System

Allocations and Cash(Page 3)

Allocation CashYear 1 4,000 Year 2 4,000 Year 3 2,000 2,000 Year 4 1,000 5,000 Year 5 1,000 4,000 Year 6 1,000 Total 12,000 12,000

Take Away

Sources of Take Away

Federal “earmarks”Federal “earmarks” Legislatively DesignatedLegislatively Designated Off-the-TopOff-the-Top

How a Take Away Works

Before AfterFunds Available 3,000 3,000 Maintenance (1,200) (1,200) Gen'l & Admin (100) (100) Fed Funds (700) (700) Spcl OTT (150)

1,000 850 Formula Allocations

Primary 400 340 Urban 300 255 Secondary 300 255

Transportation Funding Flow

Estimated Revenues X,XXX,XXX,XXX

Current Project planned expenditures (XXX,XXX,XXX)

Debt Service (XXX,XXX,XXX)

Highway Maintenance (XXX,XXX,XXX)

Operations (XXX,XXX,XXX)

Available for new projects XXX,XXX,XXX

Building Blocks

Sound Cost Estimates

Revenue Projection

Development Pipeline

Project Delivery

Legislative Commitment

Impact of Inaccurate Building Block

Planned # Projects

Corrected for Cost Estimate

Corrected for Revenue

Reduction

Correct for Cost and Revenue

PlannedConstructon Funding of $1 billion 3,000 2,000 2,500 1,500

Innovative Finance (Debt)

Issued $375M in year 2000Issued $375M in year 2000 Restricted to PTF projectsRestricted to PTF projects

Budget AmendmentsBudget Amendments Allows issue of $317M to be allocated by Allows issue of $317M to be allocated by

formulaformula Allows rest to use on GF projectsAllows rest to use on GF projects Increases authorization to $1,200MIncreases authorization to $1,200M