What & Why? The Current State of California’s Transportation Funding

Therese W. McMillanDeputy Director, PolicyMetropolitan Transportation Commission

Transportation/Land Use/Environment Symposium University of California Los AngelesOctober 19-21, 2003 · Lake Arrowhead, California

TEA 21: ProgramsTotal 6 Years: $217.9 Billion

TEA 21: Federal HighwaysTotal 6 Years: $171.1 Billion

TEA 21: TransitTotal 6 Years: $41.0 Billion

0

0.5

1

1.5

2

2.5

3

3.5

4

Total Federal Total State

FHWA Funding$2.53

FTA Funding$1.00

State Fuel Taxes

$2.10

Weight Fees$0.70

FY 2003-03 California Federal and State Transportation Funding

(in $ billions)

What is the State Transportation Improvement Program (STIP)? State’s spending plan for state and federal funding. Comprised of 75% Regional Transportation

Improvement Program (RTIP) and 25% Interregional Transportation Improvement Program (ITIP).

Approved biennially and covers a five-year period.

State Funding

2 .25% M in im umIn terc ity R ail

12 .75% M axim umIR R S O u ts ideU rban A reas

15% of S TIP 10% of S TIP

I T I PIn terregional Transportation Im provem en t P rogram

40% N orthern C oun ties 60% S ou thern C oun ties

R T IPR egional Transportation Im provem en t P rogram

S T IP F unds25%

N/S Split

County Share Calculation:

75% county population

25% state highway mileage

CaltransRTPAs (i.e. MTC)

75%

State FundingSTIP Fund Allocation

The Current State Crisis

The state’s fuel tax has lost one-third of its value since 1964, adjusted for inflation.

State Transportation Improvement Program Also at Risk State Highway Account: Going, Going, Gone?

The Current State Crisis

2000-01 Governor Davis proposes TCRP/AB 2928 signed into law:$6.8 billion total statewide / $4.9 billion in projects$1.7 billion in San Francisco Bay Area

2001-02 Majority of funding for TCRP immediately deferred for two years: from FY 2001-02 until FY 2003-04

March 2002 Proposition 42 passed by voters; to protect and extend funding for TCRP projects, local streets and roads and transit elements

January 2003

Governor’s proposed budget proposes significant TCRP program reductions: TOTAL: $1.6 Billion Statewide

July 2003 Final Budget suspends majority of Prop 42 funds in FY 2003-04. Program losses statewide:•$489 million for TCRP projects•$187 million for local streets and roads•$187 million for the State Transportation Improvement Program•$93 million for public transitTOTAL: Almost $1 Billion

Traffic Congestion Relief Program: A Promise DeferredThe Current State Crisis

Why Should We Care?

TEA-21(in billions)

SAFETEA-Administration

Proposal(in billions)

% change from TEA-21

Highways $ 171.1 $ 192.5 12.5%

Transit $ 41.0 $ 45.8 11.7%

Other $ 5.8 $ 9.1 56.9%

Total $217.9 $247.4 13.5%

Feds to the Rescue?Federal Reauthorization: Sparklers, Not Fireworks

Compare: ISTEA to TEA-21 = 40%

Erosion of the Purchasing Power of the Federal Excise Tax on Gasoline Due to Inflation

Feds to the Rescue?

Bay Area’s Local Response:

Maintenance vs. Expansion Commitment

State/Federal vs. Local Funding

The Regional Transportation Plan Funding Distribution: $87.4 billion

In each of the five Bay Area

counties with a special

transportation sales tax in

place, the proceeds from

this levy exceed the county’s

share of funds from the

State Transportation

Improvement Program

(STIP).

Bay Area’s Local Response:Sales Taxes Outstrip the STIP

The Economy Strikes Back…

FY 2000-01(millions)

FY 2001-02(millions)

Percent Change

Alameda $113.2 $101.0 -10.8%

Contra Costa

$ 64.7 $ 65.6 1.4%

San Francisco

$ 77.5 $ 63.9 -17.5%

San Mateo $ 68.7 $ 58.6 -14.7%

Santa Clara $190.0 $149.9 -21.1%

Bay Area County ½ -Cent Transportation Sales Tax Receipts

…Maybe…

FY 2000-01(millions)

FY 2001-02(millions)

Percent Change

Los Angeles $1069.0 $1052.4 -1.6%

Orange $ 214.8 $ 209.1 -2.7%

Riverside $ 89.5 $ 94.4 5.5%

San Bernardino

$ 90.0 $ 94.5 5.0%

San Diego $ 189.8 $ 193.1 1.7%

Southern California ½ -Cent Transportation Sales Tax Receipts

FY 2000-01(millions)

FY 2001-02(millions)

Percent Change

Fresno $41.1 $41.6 1.2%

Sacramento $85.1 $85.6 0.6%

San Joaquin $32.7 $34.3 4.9%

Central Valley ½ -Cent Transportation Sales Tax Receipts

…Not?

1. Index State and Federal Fuel Taxes

Loss of purchasing power for the backbone of state and federal transportation funding has eroded its financial foundation—indexing or some

proxy is one way of restoring it.

2. Shed the Shackles of the Ballot Box:

Almost every state transportation revenue measure since 1990 has been subject to voter approval instead of direct legislative action. This

uncertainty severely hinders long range transportation investment planning and implementation.

3. Lower the voter threshold for special transportation taxes

Barring legislators making the tough decisions, at least let a simple majority of the electorate bring about difficult, but needed change.

4. Maintain and increase Funding Flexibility to respond to changing circumstances

- Rigid expenditure plans, particularly those that leave major projects partially funded, are particularly vulnerable to economic downturns

- Complex urban areas with their related diverse mobility challenges, need the ability to mix and match funds to different modes and different

functions.

5. Capital Investment must be matched with Operating Capacity

- Project capital planning must recognize attendant operating and maintaince requirements, and explicit provide the financial resources to meet

those needs.

The “Fix-It” Wish List: Stability and Accountability

3. Lower the Voter Threshold for Special

Transportation Taxes

Barring direct legislative action to enhance

transportation funding, at least let a simple

majority of the electorate bring about difficult, but

needed change.

The “Fix-It” Wish List: Stability and Accountability (contd.)

4. Maintain and Increase Funding Flexibility

- Rigid expenditure plans, particularly those that

leave major projects partially funded, are

particularly vulnerable to economic downturns.

- Complex urban areas, with their associated

diverse mobility challenges, need the ability to

mix and match funds to different modes and

different functions.

- Flexible federal and state funds have provided

that “packaging” capacity.

The “Fix-It” Wish List: Stability and Accountability (contd.)

5. Operating Capacity to Match Capital Investment

- Project capital planning must recognize attendant

operating and maintenance requirements, and explicitly

provide the financial resources to meet those needs.

6. Make Room for Innovation

-As demand for infrastructure increases, traditional

revenue sources can’t keep pace. Tolling and other

pricing mechanisms may have a future…

The “Fix-It” Wish List: Stability and Accountability (contd.)