Financial Planning Session E-1 The Metropolitan Transportation Planning Process.
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Transcript of Financial Planning Session E-1 The Metropolitan Transportation Planning Process.
Financial PlanningFinancial Planning
Session E-1The Metropolitan Transportation Planning Process
Session E-1 - Slide 2
Session ObjectivesSession Objectives
Explain the reasons for doing financial planning
Identify the sources and uses of transportation funds
List the steps in a financial analysis
Financial Planning and the Topics Covered in This CourseFinancial Planning and the Topics Covered in This Course
Session E-1 - Slide 3
ProblemIdentification
ProblemIdentification
Objectives& MOEs
Objectives& MOEs
Visioning &Goals
Visioning &Goals
Analysis &Evaluation
Analysis &Evaluation
AlternativesAlternatives
MonitoringMonitoring
Plan AdoptionPlan Adoption
ProjectDevelopment& Operation
ProjectDevelopment& Operation
ProgramDevelopment
ProgramDevelopment
Financial Planning
Session E-1 - Slide 4
Why do financial planning?Why do financial planning?
Ensure realistic plans and programs
Identify funding shortfalls and establish strategies to overcome shortfalls
Meet Federal requirements
Session E-1 - Slide 5
Fiscal Constraints and the Transportation PlanFiscal Constraints and the Transportation Plan
Include a financial plan demonstrating consistency with available and projected revenues
Identify proposed new revenue sources and strategies to ensure their availability
23 CFR 450.322(b)(11)
Session E-1 - Slide 6
Where Do Highway Funds Come From?Where Do Highway Funds Come From?
Federal Government 22.1%
State Government 52.7%
Local Government 25.3%
Source: FHWA (2000)
In the U.S., total funding for highways was $108 billion in 1999
Session E-1 - Slide 7
How are They Collected?How are They Collected?
Source: FHWA (2000)
User FeesTolls Fuel & vehicle tax
4.2%
58.7%
Bonds 9.6%
Investment income 5.7%
General fund appropriations
12.3%
Other taxes and fees 9.9%
Over 60% of highway revenues come from user fees
Session E-1 - Slide 8
How are Highway Funds Used?How are Highway Funds Used?
Source: FHWA (2000)
Capital outlay 48.4%
Maintenance and services
26.1%
Administration and miscellaneous
7.9%
Law enforcement and safety
8.7%
Interest 4.1%
Bond retirement 4.8%
Session E-1 - Slide 9
Where do Transit Funds Come From?Where do Transit Funds Come From?
Capital Operating
Federal Government
47.2% 4.1%
State Governments 10.8% 20.5%
Transit AgenciesTaxesFares
26.7% 17.4%
36.1%
Local Governments
15.5% 21.9%
Source: APTA (2002)
In the U.S., total funding for transit was $33.8 billion in 2000
Session E-1 - Slide 10
How are Transit Funds Used?How are Transit Funds Used?
CapitalInfrastructure & rolling stockRenovation & replacementPlanning & design
28.4%
OperatingSalaries & benefitsFuel & suppliesPurchased transportationInsurance & other
71.6%
Source: APTA (2002)
72% of all transit funds are used for operations and maintenance (O&M)
Federal Funding ProgramsFederal Funding Programs
Eligible ProjectsDollars per year (FY01)
Administering Agency
Program
Rural and urban roads on NHS System
Links to intermodal terminals
Transit improvements in NHS corridors
$6.2 BFHWANational Highway System (NHS)
Any Federal-aid highway
Transit
Enhancements
Safety
$7.2 BFHWA
(funds can be transferred to FTA)
Surface Transportation Program (STP)
Projects that reduce emissions$1.8 BFHWA/ (FTA)Congestion Mitigation and Air Quality (CMAQ)
Session E-1 - Slide 11
Federal Funding Programs …Federal Funding Programs …
Projects identified in TEA-21$1.8 BFHWAHigh Priority (Demonstration)
Resurfacing, restoring, rehabilitating and reconstructing Interstate routes
$5.0 BFHWAInterstate Maintenance
Replacement and rehabilitation of deficient highway bridges
$4.3 BFHWAHighway Bridge Replacement
Eligible ProjectsDollars per Year (FY01)
Administering Agency
Program
Session E-1 - Slide 12
Federal Funding Programs Federal Funding Programs
Investments of critical national importance
$2.2 B in credits
TIFIA Loan Program
Transit capital and operating assistance (only urbanized areas <200,000 population are eligible for operating assistance)
$3.3 BFTA
(funds can be transferred to FHWA)
Section 5307 Urbanized Formula Grants
Fixed guideway systems and extensions
Fixed guideway modernization
Bus improvements
$2.7 BFTASection 5309 Discretionary Grants
Eligible ProjectsDollars per Year (FY01)
Administering Agency
Program
Railroad capital improvements$0FRARRIF Loan Program
USDOT
Session E-1 - Slide 13
Session E-1 - Slide 14
$ 17 M$ 0 M$ 1 MSection 5307 Transfers to FHWA
$532 M$708 M$384 MSTP Transfers to FTA
$633 M$864 M$573 MCMAQ Transfers to FTA
FY 01 FY 00 FY 99
Use of Flexible FundsUse of Flexible Funds
Between 1992 and 2002, 55% of all CMAQ funds and 38% of allSTP fundswere transferred to FTA.
Source: FTA (2002)
Session E-1 - Slide 15
Traditional State and Local Funding SourcesTraditional State and Local Funding Sources
User fees (dedicated and non-dedicated)
Bonds (revenue and general obligation)
General revenues
Session E-1 - Slide 16
Innovative FinancingInnovative Financing
Public/private partnerships
Tolls – Congestion pricing, HOT lanes
Benefit assessment districts, joint development
COPS (Certificates of Participation)
Leasing and contracting out
Advance construction
GARVEE bonds and TIFIA loans
Session E-1 - Slide 17
Steps in a Financial Analysis Steps in a Financial Analysis
1. Estimate costs
2. Establish revenue baseline
3. Compare revenues with costs
4. Evaluate new revenue sources, if needed
Session E-1 - Slide 18
1. Estimating Costs1. Estimating Costs
Capital costs
Operating and maintenance costs
Replacement and rehabilitation costs
Session E-1 - Slide 19
2. Establishing the Revenue Baseline2. Establishing the Revenue Baseline
The “Baseline” refers to a projection of revenues from existing sources.
This might include: Grants and loans Government appropriations Tolls, fares, and other user charges Bonds and other financing mechanisms Private sector funding Implementing agency’s funding streams
Session E-1 - Slide 20
Cooperative Revenue ForecastingCooperative Revenue Forecasting
TEA-21 requires that the MPO and State cooperatively develop estimates of funds that will be available to support plan implementation
Session E-1 - Slide 21
Financial Guidance Working Group (FGWG) allocates funds among different parts of State
Focus is on 4-year STIPFGWG
Penn DOT
FHWAFTAEPA
14 MPOs
State Transportation Commission
Counties
Local Development
Districts
Pennsylvania Example:Process Re-engineeringPennsylvania Example:Process Re-engineering
Session E-1 - Slide 22
Arizona Example: The Casa Grande ResolvesArizona Example: The Casa Grande Resolves
ADOT established a Resource Allocation Advisory Committee (RAAC) that meets annually to negotiate revenue projections
RAAC includes representatives of Phoenix and Tucson MPOs, a rural COG, and Arizona DOT
Revenue allocation process for long range plan still being developed
Session E-1 - Slide 23
3. Comparing Revenues with Costs3. Comparing Revenues with Costs
Basic analysis identifies available revenues or shortfalls by comparing total costs and total revenues over the life of the plan
Cost of Plan Expected Revenues
Highway Capital
Highway O&M
Transit Capital
Transit O&M
Bike/Pedestrian
…
Session E-1 - Slide 24
Cash Flow Analysis of Costs and RevenuesCash Flow Analysis of Costs and Revenues
Year
1
Year
2
Year
3
Year
4
Year
5
… Year
N
OPERATING BUDGETSOURCES OF FUNDS
Source 1Source 2Source 3
USES OF FUNDSExpenditure 1Expenditure 2
BALANCECAPITAL BUDGETSOURCES OF FUNDS
Source 1Source 2Source 3
USES OF FUNDSProject 1Project 2
BALANCE
Use spreadsheet to identify and analyze sources and uses of funds by year
Positive balances each year show that revenues exceed costs
Session E-1 - Slide 25
4. Evaluating New Revenue Sources4. Evaluating New Revenue Sources
Statutory authority
Adequacy
Equity
Risk and uncertainty
Political acceptability
Ease of administration
Session E-1 - Slide 26
Fiscal Constraints and the TIPFiscal Constraints and the TIP
Be financially constrained by year
Demonstrate which projects can be implemented with current revenue sources
Identify strategies for ensuring the availability of new funding sources
In non-attainment/maintenance areas, only projects with available or committed funding can appear in first 2 years of TIP
Session E-1 - Slide 27
Financial Analysis for TIPFinancial Analysis for TIP
Cost
Sourc
e 1
Sourc
e 2
Sourc
e 3
Sourc
e 1
Sourc
e 2
Sourc
e 3
Project 1 $ $ $ $ $Project 2 $ $ $ $ $Project 3 $ $ $Project 4 $ $ $Total $ $ $ $ $ $ $
Year 1 Year 2
Projects matched with revenue sources on year-to-year basis
Session E-1 - Slide 28
Seattle TIP ExampleSeattle TIP Example
In 1999, Washington State voters enacted Initiative 695 which cut Seattle transportation funding by $9B thru 2020 (13%)
Session E-1 - Slide 29
Seattle TIP Example…Seattle TIP Example…
State and USDOT did not approve TIP
Puget Sound Regional Council (PSRC) reallocated funds and extended the TIP
State Blue Ribbon Commission identified new sources
PSRC is reflecting Commission proposals in plan update
Session E-1 - Slide 30
SummarySummary
Reasons for doing financial planning
Sources and uses of transportation funds
Steps in a financial analysis