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MAXIMIZING PUBLIC INVESTMENTMAXIMIZING PUBLIC INVESTMENTOhio Department of TransportationOhio Department of Transportation

Highway Funding OverviewHighway Funding Overview

Julie Ray, Deputy Director Division of Finance & Forecasting

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Overview

• Funding Philosophy• Primary Funding Sources• Department of Transportation Financial

Forecast• Departmental Approaches to Saving Money• Assistance/Guidance from the Committee• Funding and Finance Spectrums

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Funding Priorities

1. Debt Service 2. Operating3. Pavement and Bridge Programs4. Safety5. Statewide Programs6. Local Programs7. Major New

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Ohio Department of TransportationPrimary Funding Portfolio

FY 07 - $3.2 Billion

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State Funding

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State FundingFY 07 - $1.26 Billion

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Revenue & Tax Rate History

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Revenue Tax Rate (left axis)

STATE OF OHIO MOTOR FUEL TAXRevenue and Tax Rate History

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Gas Tax Rate Adjusted for CPI and Highway & Street Construction Index

BHWY CCI is the highway and street construction cost index per the producer price index

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MFT Revenue Adjusted for CPI and Highway & Street Construction Index

BHWY CCI is the highway and street construction cost index per the producer price index

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Ohio Motor Fuel Price History

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Revenue & Consumption History

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Revenue Consumption (right axis)

STATE OF OHIO MOTOR FUEL TAXRevenue and Consumption History

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Gasoline & Diesel Fuel Consumption in Ohio

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Population & Fuel Consumption in Ohio

Annual VMT All Roads and Fuel Consumption in Ohio

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Ohio Motor Fuel Tax28¢

1¢ = $64 M to the State

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Federal Funding

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Federal Funding OverviewFederal Funding Overview• 6 Year Authorization Bill provides:

– Allocates Apportionment Balances for 6 years• Allocation is based on a States Rate of Return• Rate of Return equates to Donor/Donee Issue• Ohio’s Rate of Return = 92%

– OB limit (cash) estimate established which states use to develop a forecast

– Earmarks• Annual Appropriation Bill provides:

– Appropriations normally mirror reauthorization numbers– Appropriators will determine the OB Limit (cash) to be

received– Earmarks

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Federal FundingFY 2007

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Federal Highway - User Tax Rate

• 1¢ = $57 M• $57 M x 92% = $52 M• Last Federal Gas Tax Increase was 4.3 ¢ in 1993

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Ohio Share of Federal Highway Trust Fund Contribution

* 2009 is based on preliminary FHWA statistics. Will be revised when final numbers are provided.Note: Each states percent share is based on a combination of revenue collected and motor fuel consumption. The revenue is 2 years behind and the motor fuel consumption is 3 years behind. For instance 2009 percent share is based on 2007 revenues and 2006 gallons.

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Federal Donor/Donee States - Highway

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Use of Ohio’s Federal Trust Fund - FY 07

$634 Million (35.0%)

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Federal Funding FY 07 - $1.4 Billion

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Ohio Share of Federal Highway Trust Fund Contribution

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Ohio Department of Transportation MPO & Large City

Federal Funding Allocations

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Bonds

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Bond Background

• Terms – 10 years• Average Interest Rate the past few years:

– 3.5% to 4%

• Forecast – 4.5%• For every $100 borrowed it costs ODOT $125• Bonds issued for Construction, not Preliminary

Development or Right-of-Way

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State Bond Background

• Constitutional Limit: Total outstanding Principal at any one time - $1.2 b– Current principal outstanding: $837.5 m

• Authorization to issue: $220 m per year plus unused carry-forward– Current authorized amount not yet issued: $475 m

• Backed by Highway User Receipts• ODOT Policy: No more than 20% of our State Revenue is

dedicated to paying debt

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Federal “Garvee” Bond Background• Grant Anticipated Revenue Vehicles - Garvee• Bond Documents: “Official Statement”

– Debt Service must be no more than 20% of the average of the last 3 years of actual federal reimbursed receipts

– Debt Service of Revenue as of FY 07: 8% of 20%• Future

– Expanded the use of Federal Bonds in FY 08 & FY 09 to fund the Major New Program because it cost less to borrow than construction cost inflation

– Future Debt Service of Revenue for FY 2011: 15.10% of 20%• ODOT Policy:

– No more than 20% of our Federal Revenue is dedicated to paying debt

% Debt Service of State Revenue

% Debt Service of Federal Revenue

% Debt Service of Federal and State Revenue

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Total Outstanding Debt

2006 2007 2008 1 2009 1 2010 2011 2012 2013 2014 2015

Revenue SourcesState Revenue $1,258 $1,263 $1,246 $1,248 $1,261 $1,262 $1,264 $1,265 $1,266 $1,267State Revenue used to pay debt service ($170) ($191) ($206) ($213) ($212) ($203) ($193) ($199) ($192) ($185)Total State Revenue net of other agency draws & earmarks $1,089 $1,072 $1,040 $1,035 $1,049 $1,059 $1,071 $1,066 $1,073 $1,082

2Federal Revenue $1,231 $1,404 $1,304 $1,312 $1,308 $1,321 $1,334 $1,347 $1,361 $1,374Federal Revenue used to pay debt service ($76) ($92) ($112) ($135) ($149) ($147) ($141) ($148) ($155) ($164)Total Federal Revenue Available for ODOT Programs $1,155 $1,312 $1,193 $1,178 $1,159 $1,174 $1,193 $1,200 $1,205 $1,210

State and Federal Bonds $271 $536 $547 $482 $165 $128 $129 $166 $193 $217

Prior Year Savings $176 $100 $57 $85 $53 $40 $40 $72 $70 $79

Total Revenue Sources $2,690 $3,019 $2,836 $2,780 $2,426 $2,401 $2,433 $2,504 $2,542 $2,589

Program UsesOperating (Payroll grown at 5%, non payroll grown at 2%) $715 $730 $753 $771 $801 $829 $857 $887 $920 $955Pavement Preservation Program (adjusted for Business Plan inflation) $524 $545 $581 $628 $661 $714 $750 $770 $796 $807Bridge Preservation Program (adjusted for Business Plan inflation) $258 $230 $247 $267 $283 $287 $293 $321 $294 $288Total Fix it First Programs $1,496 $1,505 $1,581 $1,666 $1,745 $1,830 $1,900 $1,978 $2,010 $2,050

Safety Program (not adjusted for inflation) $71 $75 $71 $72 $69 $70 $71 $73 $74 $76Statewide ODOT Program (not adjusted for inflation) $263 $246 $174 $174 $159 $146 $150 $155 $158 $157Local System Preservation Program (not adjusted for inflation) $253 $280 $301 $300 $268 $270 $273 $275 $278 $281Total Safety, Statewide, and Local Preservation Programs $587 $601 $545 $547 $496 $486 $494 $503 $510 $513

3Resources Remaining for the Major New Program $607 $838 $710 $566 $154 $28 $26 $23 $22 $25

Necessary Carryforward to Future Years $0 $75 $0 $0 $31 $57 $13 $0 $0 $0

Total Program Uses $2,690 $3,019 $2,836 $2,780 $2,426 $2,401 $2,433 $2,504 $2,542 $2,589

Major New Budget Compared to Commitments3

Resources Remaining for the Major New Program, excluding earmarks (current year budget) $672 $533 $127 $0 $0 $0 $0 $04

Major New Carryforward $3125 Most current cost estimates to complete Major New (adjusted for Business Plan inflation) $868 $762 $505 $631 $676 $817 $640 $230

Major New Balance / (Shortfall) $116 ($229) ($378) ($631) ($676) ($817) ($640) ($230)Cumulative Major New Balance / (Shortfall) $116 ($114) ($492) ($1,123) ($1,799) ($2,616) ($3,255) ($3,485)

1 Ohio Legislative earmarks in House Bills 67 and 119 in the amounts of $34 million in 2008 and $29 million in 2009, reduced revenues and existing ODOT programs.

2 The Federal Highway Trust Fund is forecasted to have a shortfall in 2009. Therefore, federal revenues for 2009 and beyond could be reduced.

3 Approximately $20 - $30 million per year is dedicated to Major New Earmarks.

4 Carryforward appropriation supports FY07 Major New projects to be sold in FY08.

5 In the Statewide Program there is $106 million in federal Appalachia Funds dedicated to the Major New Portsmouth Bypass project.

Ohio Department of TransportationHighway Funding and Program Forecast (in Millions)

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Approaches by ODOT in FY 2008 and FY 2009 to save

• Operating Savings

Extended Hiring Control Process $1,150,000

Held Vacancies for further review $1,650,000

Reduction of Administrative Budgets $4,000,000

Held Non-Payroll OperatingFlat – FY 2009

$4,570,000

Total Estimated Savings $11,370,000

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Approaches by ODOT in FY 2008 and FY 2009 to save

CapitalChange Order Process Improvements:– Redefined Districts approval authority

• Gain Consistency

– Higher level of accountability• To determine need and extent of change

– Requires evaluation of the overall change order impacts relative to original scope

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Approaches by ODOT in FY 2008 and FY 2009 to save

• Additional Revenue Sources– LOGO

• Redefining this program to generate “new” revenues– Starting at $2m and hoping to grow to $11m

– Holding Contractors and Consultants Financially Accountable

– Bridge Painting settlements» $23 m collected to date out of a potential $36 m

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Assistance/Guidance from the Committee

• Identify new revenue sources• Identify “other” financial tools for

consideration by ODOT• Opportunities to increase existing revenue

sources• Identify potential opportunities to maximize

private investment

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Funding/Finance Spectrum