1

FY2018 – FY2022 Tentative Highway Construction Program

Financial Plan

Arizona State Transportation Board January 31st, 2017

Prepared by: Kristine Ward, CFO

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Highway User Revenue Fund (HURF)

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Highway User Revenue Fund (HURF): FY2016 Revenues

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

$1,100

$1,150

$1,200

$1,250

$1,300

$1,350

$1,400

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

Annu

al C

hang

e

Reve

nue

($ in

Mill

ions

)

Revenue Annual % Change

FY 2015 Actual FY 2016 Actual Change FY 2016 Estimate ChangeTotal 1,290,439$ 1,356,752$ 5.1% 1,331,000$ 1.9%

4

Revenue in millions

Highway User Revenue Fund (HURF): FY2016 Sources

Fuel; Gasoline and Use Fuel, $688.1, 51%

Motor Carrier, $41.1, 3%

VLT, $396.0, 29%

Registration, $173.7, 13%

Other, $57.9, 4%

Total: $1,356.8 Million

5

2,728 2,746 2,871 2,849 2,652 2,633 2,649 2,645 2,608 2,645 2,723 2,841

$2.03

$2.56 $2.58

$3.02

$2.51 $2.61

$3.06

$3.50 $3.48 $3.36

$2.74

$2.17

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

2,500

2,550

2,600

2,650

2,700

2,750

2,800

2,850

2,900

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

Pric

e

Gal

lons

(in

Mill

ions

)

Gasoline Gallonage Gasoline Price Per Gallon

Highway User Revenue Fund (HURF): Gasoline Gallons Sold and Price Per Gallon

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Highway User Revenue Fund (HURF): Use Fuel Gallons Consumed and Price Per Gallon

815 890 889 882 747 737 763 766 753 745 783 812

$2.24

$2.82 $2.89

$3.64

$3.01 $2.91

$3.60

$4.11 $4.11 $4.02

$3.45

$2.58

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

200

300

400

500

600

700

800

900

1,000

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

Pric

e

Gal

lons

(in

Mill

ions

)

Use Fuel Gallonage Use Fuel Price Per Gallon

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Highway User Revenue Fund (HURF): VLT Revenue 12-Month Rolling Total

$310

$320

$330

$340

$350

$360

$370

$380

$390

$400Ju

n 05

Dec

05

Jun

06D

ec 0

6Ju

n 07

Dec

07

Jun

08D

ec 0

8Ju

n 09

Dec

09

Jun

10D

ec 1

0Ju

n 11

Dec

11

Jun

12D

ec 1

2Ju

n 13

Dec

13

Jun

14D

ec 1

4Ju

n 15

Dec

15

Jun

16

12-M

onth

Rol

ling

Tota

l ($

in M

illio

ns)

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Revenue in Millions

Highway User Revenue Fund (HURF): Revenue History and Forecast

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

FY 2

005

FY 2

006

FY 2

007

FY 2

008

FY 2

009

FY 2

010

FY 2

011

FY 2

012

FY 2

013

FY 2

014

FY 2

015

FY 2

016

FY 2

017

FY 2

018

FY 2

019

FY 2

020

FY 2

021

FY 2

022

Annu

al C

hang

e

Reve

nue

($ in

Mill

ions

)

Actual Revenue Estimated Revenue Annual % Change

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Sep. 15 Sep. 16Fiscal Official OfficialYear Forecast Forecast Difference2017 $1,378.5 $1,415.6 $37.12018 1,426.6 1,476.4 49.82019 1,474.7 1,532.8 58.12020 1,526.2 1,587.6 61.42021 1,580.9 1,640.2 59.32022 1,635.6 1,693.0 57.4

Total $9,022.5 $9,345.6 $323.1Ave. CGR 3.5% 3.6%

FY 2017-2026 Comparative Forecast(Dollars in Millions)

Highway User Revenue Fund (HURF): 2016 Revenue Forecast

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Regional Area Road Fund (RARF)

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-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

Annu

al C

hang

e

Reve

nue

($ in

Mill

ions

)

Revenue Annual % Change

Regional Area Road Fund (RARF): FY2016 Revenues

FY 2015 Actual FY 2016 Actual Change FY 2016 Estimate ChangeTotal 382,191$ 396,810$ 3.8% 401,000$ -1.0%

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Regional Area Road Fund (RARF): Retail Sales Tax Revenue 12-Month Rolling Total

$135

$150

$165

$180

$195

$210

$225Ju

n 05

Dec

05

Jun

06

Dec

06

Jun

07

Dec

07

Jun

08

Dec

08

Jun

09

Dec

09

Jun

10

Dec

10

Jun

11

Dec

11

Jun

12

Dec

12

Jun

13

Dec

13

Jun

14

Dec

14

Jun

15

Dec

15

Jun

16

12-M

onth

Rol

ling

Tota

l ($

in M

illio

ns)

13

20.2% 23.9%

14.0%

-10.6%

-29.0%

-38.2%

-3.3%

8.9% 7.0%

14.0%

-1.7% -5.7%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

$0

$10

$20

$30

$40

$50

$60

$70

$80

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

Annu

al C

hang

e

Reve

nue

($ in

Mill

ions

)

Revenue Annual % Change

Regional Area Road Fund (RARF): Contracting Revenues

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Regional Area Road Fund (RARF): Revenue History and Forecast

3.7%

6.1% 5.7% 5.6% 5.3% 5.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

$100

$200

$300

$400

$500

$600

Annu

al C

hang

e

Reve

nue

($ in

Mill

ions

)

Actual Revenue Estimated Revenue Annual % Change

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Regional Area Road Fund (RARF): 2016 Revenue Forecast

Sep. 15 Sep. 16Fiscal Official OfficialYear Forecast Forecast Difference2017 426.6 411.4 (15.2)2018 451.6 436.3 (15.3)2019 476.8 461.1 (15.7)2020 501.5 486.9 (14.6)2021 526.7 512.5 (14.2)2022 551.6 537.9 (13.7)2023 576.0 562.8 (13.2)2024 602.3 589.1 (13.2)2025 629.0 613.8 (15.2)

2026/1 382.7 374.9 (7.8)Total $5,124.8 $4,986.7 ($138.1)

Average CGR 4.9% 5.1%Note: /1 FY 2026 forecast reflects the expiration of the transportation excise tax extension on December 31, 2025

FY 2017-2026 Comparative Forecast(Dollars in Millions)

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Federal Funding

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Revenue in Millions

FAST Act Formula Funds: Apportionments & Obligation Authority (OA) Estimates

$666.8 $718.5 $735.0 $752.9

$74.1 $38.6 $39.5 $40.5 $740.9 $757.1 $774.5 $793.4

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

FY 2017 (Est.) FY 2018 (Est.) FY 2019 (Est.) FY 2020 (Est.)

$ in

Mill

ions

Obligation Authority Apportionments

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Revenue in Millions

FAST Act Formula Obligation Authority: State & Local Distribution (Estimated)

$523.3 $563.5 $584.0 $599.0

$143.5 $155.1 $151.0 $153.9

$666.8 $718.6 $735.0 $752.9

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

FY 2017 (Est.) FY 2018 (Est.) FY 2019 (Est.) FY 2020 (Est.)

$ in

Mill

ions

Statewide OA Local OA

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Financing Mechanisms

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Total Planned Debt Issuances: FY2018 – FY2022

$150

$300

$170

$50

$75

$80

$75

$125

$0

$100

$200

$300

$400

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

Reve

nue

($ in

Mill

ions

)

HURF Statewide RARF GAN

Total: $1,025.0 Million

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FY2018 – FY2022 Five-Year Transportation Facilities

Construction Program

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5 Year Program Development: Resource Allocation

Casa Grande Resolves (May 1999)

Regional Allocation of Available Funding

Off-the-top (per Resource Allocation Advisory Committee, 1999) Ports

Rest Areas

MAG Region: 37%

PAG Region: 13%

Greater Arizona: 50%

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Resource Allocation Process, aka. RAAC

FMS provides MPD

•Develops revenue figures for new 5th Year and other revenue modifications if needed.

•Queries actual 3 year sub-program obligations by region, Including Contingency.

MPD

•Reduces revenue figure by Statewide off-the-top items. •Remaining funds are divided according to RAAC, 50%/13%/37%.

ITD •Estimates total sub-program needs

MPD

•Weights sub-program 3 year rolling average by region •Subtracts each regions weighted sub-program average from their RAAC allocation •Remaining RAAC allocation is available for major projects in each region

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Tentative Program Funding

Dollars in Millions

FY2018 FY2019 FY2020 FY2021 FY2022 TotalSources:Beginning Balance: 5.0 5.0

SHF Discretionary 168.8 196.2 205.1 211.8 218.9 1,000.9 Debt Service (105.3) (105.8) (111.2) (117.1) (116.6) (556.0) Operating Cash Requirements - - - - - - HURF Swap (25.2) (25.2) (17.0) (17.0) (17.0) (101.4)

Net SHF 38.3 65.2 76.9 77.7 85.3 343.5

Federal Aid 574.4 594.9 609.8 609.8 609.8 2,998.8 FastLane Grant 54.0 - - - - 54.0 August Redistribution 35.0 35.0 35.0 35.0 35.0 175.0 Final Vouchers 25.0 20.0 20.0 20.0 20.0 105.0 Advanced Construction (61.5) 104.0 (31.8) 21.1 (111.9) (80.0) Loans and Agreements 0.2 (0.3) - - - (0.2) HURF Swap 27.7 27.7 18.7 18.7 18.7 111.5

Total Federal Aid 654.8 781.3 651.8 704.6 571.7 3,364.1 GAN Debt Service (18.7) (18.7) (18.7) (17.9) (17.9) (91.9)

Net Federal Aid 636.1 762.6 633.1 686.7 553.8 3,272.2

Financing Mechanisms 64.0 (11.0) 63.5 53.0 233.5 403.0

State and Federal Aid Available 743.4 816.8 773.5 817.4 872.6 4,023.7 General Fund Appropriation 30.0 25.0 - - - 55.0 Inflation Adjustment (16.5) (34.6) (52.6) (71.6) (90.8) (266.2)

Total Sources: 756.8 807.1 720.9 745.8 781.7 3,812.4

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FY2018 FY2019 FY2020 FY2021 FY2022 TotalUses:

5 Year Construction ProgramStatewide Program 445.9 453.8 412.8 478.8 775.0 2,566.3 PAG Program 41.0 53.9 83.9 48.4 - 227.2 MAG/RTP major projects 180.5 177.4 162.0 151.1 - 671.0

667.4 685.1 658.7 678.3 775.0 3,464.5

Modifications to FY17-21 Program 84.0 85.0 80.0 75.0 - 324.0 Total Uses: 751.4 770.1 738.7 753.3 775.0 3,788.5

Ending Balance: 23.9 23.9

Tentative Program Funding: FY2018-2022

Dollars in Millions

26

Assumptions and Risks • Legislative Actions: State Budget shortfalls

• Executive budget holds HURF & SHF harmless

• Legislative proposal not yet known

• Extension beyond FY2018 of Special Distributions ($30M) to

cities and counties

• Fund Transfers and diversions

• New administration & Congressional Actions (or inaction) – FAST

expires in 2020

• Economic conditions

• 5-7 year recessionary cycle

• Inflation and Federal Reserve actions

• South Mountain

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Questions