Transcript HIGHWAY PROGRAM FINANCE COURSE - MTPA

BASICS of HIGHWAY
PROGRAM
FINANCING
INTRODUCTION
Course Objectives
At the end of this course you will be able to
describe:
 Scope and content of the Federal-aid Highway Program
 Congressional actions
 Funding process
 Budgetary effects
 Correct terminology
Characteristics of the Federal-Aid
Highway Program
 Federally assisted, State administered
 Funding tied to specific systems
 Requires States to have highway agency
 States pay for maintenance
 Matching requirements
Contract authority
Functional Classification
Eligibility for Federal Financial Assistance
All U.S. Roads
Rural
Urban
Arterials
Collectors
Arterials
Major
Local
Local
Minor
Principal
Principal
Collectors
Minor
Minor
Interstate
Interstate
Other Principal Arterial
Other Freeway and Expressway
Other Principal Arterial
Functional Classification
Eligibility for Federal Financial Assistance
Federal, State and Local Relationship
Federal Responsibilities
 Review and approve State proposals
 Develop regulations and guidance
 Promulgate guidance
 Provide technical assistance
 Distribute line of credit
 Reimburse States their eligible expenses
Federal, State and Local Relationship
State and Local Responsibilities
 Conceive, plan, design, initiate and
construct projects
 Maintain and operate highways
HIGHWAY TRUST
FUND
Highway Trust Fund
Federal-aid Highway Act of 1956
 Provided authorizations for FY 1957 – 1969
 Established Trust Fund to collect revenues
to pay for authorizations, FY 1957 – 1972
SAFETEA-LU
 Extended authorizations for FY 2005 – 2009
 Extended Trust Fund through FY 2011
Federal Gasoline Tax
0.1 cent
18.4 cents
L.U.S.T.
Trust Fund
15.44 cents
Highway Account
Effective October 1, 1997
2.86 cents
Mass Transit Account
In cents per gallon
Federal Diesel Tax
0.1 cent
24.4 cents
L.U.S.T.
Trust Fund
21.44 cents
Highway Account
Effective October 1, 1997
2.86 cents
Mass Transit Account
In cents per gallon
Federal Tax on 10% Gasohol
0.1 cent
18.4 cents
L.U.S.T.
Trust Fund
15.44 cents
Highway Account
Effective January 1, 2005
2.86 cents
Mass Transit Account
In cents per gallon
Fuel Distribution System
Federal Truck User Taxes
Truck Sales:
12% of retail price for trucks over 33,000
lbs. or trailers over 26,000 lbs. GVW
Truck Use:
Up to 55,000 lbs.
Over 55,000 lbs.
Tires:
9.45 cents for each 10 lbs. exceeding 3500
lbs. maximum rated load capacity (4.725
cents for bias-ply or super single tire)
Effective January 1, 2005
No tax
$100 + $22/1000lbs.
$550 maximum
Highway Trust Fund
Net Highway Account Income – FY 2010
Diesel - $7.1
Truck Use - $0.9
Tires - $0.3
Truck Sales - $1.6
Gas & Gasohol $20.3
Other - $14.7 (Includes
GF Transfer)
Total = $44.9 Billion
Highway Trust Fund Operation
Highway Account – FY 2010
Balance, beginning of FY 2010
Gross Receipts
Transfers to other funds
Tax Refunds
Net Income
Transfers to Mass Transit Account
Transfers from Mass Transit Account
Disbursements
Income less disbursements
Balance, end of FY 2010
In millions of $
$ 8,881
46,527
-1,065
- 569
= 44,893
-1,052
+28
32,007
= 12,886
$20,743
Status of the Highway Account
March 2011
Byrd Amendment
Keeps the Highway Account Out of the Red
Highway
Fund
AUTHORIZATION
ACT
Authorization Acts
Congressional Continuations of Federal-aid Highway Program
Some Notable Acts
1956
1982
1991
1998
SAFETEA-LU
2005-2009
1921
Highway Authorizing Committees
112th Congress
House
Senate
Transportation &
Infrastructure Committee
Environment & Public Works
Committee
• John Mica (FL)
Chair
• Barbara Boxer (CA)
• Nick Rahal (WV)
Ranking Member
• James Inhofe (OK)
Highways, Transit &
Pipelines Subcommittee
Transportation &
Infrastructure Subcommittee
• John Duncan, Jr. (TN)
Chair
• Max Baucus (MT)
• Peter DeFazio (OR)
Ranking Member
• David Vitter (LA)
Safe, Accountable, Flexible, Efficient,
Transportation Equity Act: A Legacy for Users
(SAFETEA-LU)
 Highways, highway safety, transit
 5-year legislation – 2005-2009
 Signed into law August 10, 2005 (P.L. 109-59)
 $252.6 billion authorized over 5 years
- Highways - $193.6 billion ($201.6 – $8.5 B rescission + $0.500 ER $)
- Transit - $45.2 billion
- Highway & Motor Vehicle Safety - $5.8 billion
Authorizations 2005 – 2009
(Before $8.5B rescission)
Research - $2.3
High Priority
Projects - $14.8
IM - $25.2
Equity Bonus - $40.9
NHS - $30.5
Fed Lands - $4.5
Bridge - $21.6
Other Programs - $13.2
Appalachia - $2.4
HSIP - $4.1
(4 years)
STP - $32.5
CMAQ - $8.6
Total =
$201.6 billion
SAFETEA-LU
Technical Corrections Act of 2008
 Amends apportionment formula for the HSIP to base factors
on all roads included within “Federal-aid Highways”
 For FYs 2008 & 2009, SHRP2 Program will be funded from a
deduction of up to 0.205% from the six core Programs
 Allows States to obligate up to 15% annually for projects on
roads classified as minor collectors from their STP amounts
sub-allocated for areas of 5,000 and under
 Allows any State to use sliding scale for projects in sections
1301, 1702, & 1934
 Technical corrections to High Priority Projects, projects in
sections 1301 & 1934 and various other projects
 FY 2009 rescission is increased to $8.7B to offset Contract
Authority provided throughout the bill
Reauthorization of the
Federal-Aid Highway Program (FAHP)




Expiration of SAFETEA-LU – Sep 30, 2009
FAHP extended thru Oct 31, 2009 (1st CR)
FAHP extended thru Dec 18, 2009 (2nd CR)
FAHP extended thru Feb 28, 2010 (Dept. of Defense
Appropriations Act, Sec. 1008)
 FAHP extended for 30 days
March 2, 2010)
(Temporary Extension Act,
Reauthorization of the
Federal-Aid Highway Program (FAHP) cont’d
 FAHP extended thru Dec 31, 2010
(STEA Act of 2010, P.L.
111-147, March 18, 2010)
 FAHP extended thru Mar 4, 2011 (4
th
CR, P.L. 111-322, Dec
22, 2010)
 H.B. 662 (STEA of 2011) extended FAHP thru
Sep 30, 2011 (P.L. 112-5 Mar 4, 2011)
Surface Transportation
Extension Act of 2011
 Funding for FY 2011 is at the FY 2009 level (w/out FY 2009
rescissions)
 FY 2009 requirements, authorities, conditions,
eligibilities, etc. continue
 Previously earmarked funds distributed among all
apportionments
 “Additional” funds also distributed among all
apportionments
 SAFETEA-LU title V research programs extended
 Authority to make expenditures from HTF extended
FY 2010 vs FY 2011
FY 2010
FY 2011
 Funding at FY 2009 level
 Funding at FY 2009 level
 Previously earmarked
funds distributed among
the core programs
(w/o FY 09 rescission)
 “Additional” funds
distributed among the
core programs
 Previously earmarked
funds distributed among
all apportionments
 “Additional” funds
distributed among all
apportionments
Fiscal Procedures
Distribution of Funds
Apportionments
Allocations
(STP, NHS, IM, CMAQ, etc.)
(IM Discretionary, Ferry Boats, etc.)
 Distributed by formula
specified in law
 No method specified in
law
 Distributed on October 1
 Distributed throughout
year
 Withdrawn only by law
All eligible States are
recipients
 Discretionary grants
may be withdrawn by
administrative action
 Only some States are
recipients
Apportioned Programs
Interstate Maintenance
National Highway System
Bridge
Surface Transportation
Congestion Mitigation &
Air Quality Improvement
Highway Safety
Improvement
Recreational Trails
Appalachian Development
Highway
Metropolitan Planning
Railroad Grade Crossing
Coordinated Border
Infrastructure
Safe Routes to School
Equity Bonus
Mandatory Setasides
Category
State Planning
& Research
IM
2%
NHS
2%
STP
2%
CMAQ
2%
BRIDGE
2%
HSIP
2%
Off System Transportation
Bridges
Enhancements
15%
The greater of
10% of the
State’s STP
apportionment
or the dollar
amount of the
TE setaside in
FY 2005
Availability of Funds
Good Through:
Funds For:
FY08
FY09
FY10
FY11
08
09
10
11
09
10
11
12
10
11
12
13
11
12
13
14
Transferabilities
Between Program Categories
Up to 100%
NHS
Up to 50%
HSIP
IM, Bridge, CMAQ, HSIP, Rec
Trails
Up to 50%
IM, NHS, STP, CMAQ,
HSIP, Rec Trails
Up to 50%
NHS, STP, Bridge,
CMAQ, HSIP, Rec Trails
Up to 50%
IM, NHS, STP, Bridge,
CMAQ, Rec Trails
Bridge
IM
STP
Suballocation of the FY 2010 STP
and Equity Bonus Funds
STP
Amount transferred equals
Equity Bonus
Apportionment + EB – 2% SPR
= STP Apportionment
STP share of State’s E.B. funds
Distributed to
6 Core Programs
Distributed according to
Sec. 133(d)3
37.5%
Flexible*
* Penalties deducted
TE
10% or FY 2005 dollar amount
(greater of)
62.5%
Distribution
by population
5,000 & under
200,000 & under
Areas over 200,000
TMAs
Obligations
 State request, Federal approval
- Commits State’s line of credit
- Commits Federal Government to reimburse
State
 Based on estimates
 Protects funds from lapsing
 Traditional point of budgetary control
Federal Share
NHS
STP
Bridge
Metro Planning
Borders
Interstate
Maintenance
Federal Lands
Emergency Relief
CMAQ*
90%
80%
100%
Matching Share
Matching Share
No Match
*For FYs 2008 & 2009, the Federal share for any CMAQ funds
obligated may be up to 100%
Reimbursement
Contractor does work
State pays contractor
State submits voucher to FHWA
FHWA sends to Treasury
Treasury sends check to State
EQUITY BONUS
The Final Apportionment
Equity Bonus
Guaranteed Return on Contributions
COMMON MISCONCEPTION
State’s apportionments and high priority projects will
be not less than 92% of the State’s contributions to the
Highway Account of the Highway Trust Fund
State apportionments
>
=
92%
State contributions
Equity Bonus
Guaranteed Return on Contributions
THE REAL STORY
State’s share of apportionments and high priority
projects will be not less than 92% of the State’s share
of its contributions to the Highway Account of the
Highway Trust Fund
State apportionments
U.S. apportionments
>
=
92%
However………
State contributions
U.S. contributions
Equity Bonus
Distribution to the States
Total Amount Distributed to State
Equity Bonus
(First $2.639 B)
State’s Portion of $639 M
+
State’s Portion of $2 B
Core Programs
(After first $2.639 B)
Remainder Distributed to
the Six Core Programs
IM
STP
NHS
Bridge
CMAQ HSIP
2% State Planning &
Research (SPR)
APPROPRIATIONS ACT
and
GUARANTEED
FUNDING
Federal Budget Process
OMB
FHWA
DOT
Congress
Budget
Committee
President’s
Budget
Budget
Resolution
House Appropriations Comm.
Transportation Subcommittee
Senate Appropriations Comm.
Transportation Subcommittee
Conference
President
Appropriations Committees
112th Congress
House
Senate
Committee on
Appropriations
Committee on
Appropriations
• Hal Rogers (KY)
Chair
• Daniel Inouye (HI)
• Norman Dicks (WA) Ranking Member • Thad Cochran (MS)
Transportation, HUD,
and Related Agencies
Subcommittee
• Tom Latham (IA)
• John Olver (MA)
Transportation, HUD,
and Related Agencies
Subcommittee
Chair
• Patty Murray (WA)
Ranking Member • Susan Collins (ME)
Contents of FHWA Budget
 Obligation Limitation
 General Operating Expense Obligation
Limitation
 Liquidating Cash Amount
 Budget Authority (permission to obligate)
 Revenue Aligned Budget Authority (RABA)
amount
Federal Spending
FY 2010 Outlays
Mandatory (61%)
Discretionary(39%)
 Social Security
 Defense
 Medicare
 Highways
 Entitlements
 Education
 Interest
 Agriculture
 Etc.
$3.6 Trillion
Federal Spending
Discretionary – FY 2010
Defense
Transportation
Other
Total
$1.4 Trillion
FY 2011 Appropriations Process
 1st Continuing Resolution (CR), Oct 1, Dec 3, 2010 (P.L. 111-242, Sep 30, 2010)
 2nd CR, thru Dec 18, 2010 (P.L. 111-290, Dec 4, 2010)
 3rd CR, thru Dec 21, 2010 (P.L. 111-317, Dec 18, 2010)
 4th CR, thru Mar 4, 2011 (P.L. 111-322, Dec 22, 2010)
FY 2011 Appropriations Process




5th CR, thru Mar 18, 2011 (P.L. 112-4, Mar 4,2011)
6th CR, thru Apr 8, 2011 (P.L. 112-6, Mar 18, 2011)
7th CR, thru Apr 15, 2011
8th CR, thru Sep 30, 2011
FY 2011 – Final CR
 Obligation Limit and ob limit on LAE for FHWA
continued at FY 2010 level
 No earmarks of FY 2011 funds
 Extends provisions of FY 2010 Appropriations
Act (and other listed approps acts) thru Sep 30,
2011
 Funds available to the extent and same manner
as in FY 2010
FY 2011 – Final CR cont’d
 Same requirements, authorities, conditions,
limitations, and other provisions of FY 2010
Approps Act apply
 No funds may be used for any activity
prohibited in FY 2010
 FY 2010 earmarks will have no effect on FY
2011 funds - §186 does not apply
 Across-the-board cut of 0.2% of budget
authority does not apply to FHWA ob limit
FY 2011 – Final CR cont’d
 Provides $528M for TIGER II program – No
funds for planning, preparation or design of
eligible projects
 No new FY 2011 funds for Surface
Transportation Priorities (earmarks) or Highway
Infrastructure (grants)
 Rescissions
FY 2011 – Final CR
Rescissions
 Unobligated balances of earmarks from ISTEA
and prior authorization acts
 TEA-21 high priority projects (§1602) if less than
10% of the amount authorized has been
obligated
 SAFETEA-LU high priority project funds that
were not earmarked (approx. $8 million)
 $2.5B apportioned under Chapter 1 of Title 23,
excluding safety programs & STP funds
suballocated according to population – States
given maximum flexibility
FY 2011 – Final CR
Exempted from Rescission
 Exempted from rescission
-Rail/Highway Crossing Program
-HSIP
-STP safety setaside prior to SAFETEA-LU
-NHTSA’s Safety Incentives to Prevent Operation of a
Motor Vehicle by Intoxicated Persons
 Apportioned programs not subject to rescission
-Appalachian Development Highway System
-Safe Routes to School
-Coordinated Borders
OBLIGATION
LIMITATION
Obligation Limitation
What is it?
 A budgetary mechanism to control Federal
spending
Who does it?
 Congress – through legislation
Why?
 To be responsive to current budget policies
Obligation Limitation
Characteristics
State-by-State Limit
Oct 2007
1
Sep 2008
30
Good for 1 Year
Applies to
Total Program
FY 2010 Obligation Limitation
Federal-aid Highway Program
Ceiling is $41,107,000,000
Exempt Programs:
- Emergency Relief
- Equity Bonus ($639 million per year)
- Formerly exempt programs
(ISTEA, STURAA, STAA’82)
Equity Bonus
FY 2009
EQUITY BONUS
$0.639 B
$2.0 B
Core
Programs
Exempt from
limitation
100%
No-Year limitation
1-Year
limitation
QUESTIONS!!
Internet Resources
Financing Federal-Aid Highways
http://www.fhwa.dot.gov/reports/financingfederalaid/index.htm
A Guide to Fed-aid Program & Projects
http://www.fhwa.dot.gov/federalaid/projects.cfm
Status of Highway Trust Fund
http://www.fhwa.dot.gov/highwaytrustfund/index.htm
THANK YOU!!