Nn Transp Subcommittee On Approps
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House Appropriations Subcommittee on Transportation February 10, 2009
Director Kirk T. Steudle, P.E.
Overview • MDOT Brief Background • Winter Maintenance • Transportation Funding Crisis • American Recovery and Reinvestment Act of 2009
“Providing the highest quality integrated transportation services for economic benefit and improved quality of life.”
State Transportation Funds • Michigan Transportation Fund – majority of the funds are divided four ways: – – – –
State Trunkline Fund Comprehensive Transportation Fund County road commissions Villages and cities
• Aeronautics Fund
Michigan Transportation Fund (MTF) • Collector fund for all motor fuel tax and registration revenues • Revenues are distributed by formula per PA 51 of 1951 • Recipients of the revenue include: – – – –
State Trunkline Fund Counties, Cities & Villages Comprehensive Transportation Fund Other • Local Bridge Fund • DNR Recreational Improvement Fund
State Trunkline Fund (STF) • Fund provides for construction and maintenance of state highways and bridges • Includes Economic Development program • Includes the Local Bridge Fund • Includes the Blue Water Bridge Fund • Major revenue sources include – MTF distribution – Federal aid – and Local match
Aeronautics Fund (Aero) • Functions include airport development and capital improvements • FY 2009 Proposed Airport Program $167.5 million • Major revenue sources – Aviation fuel taxes – Federal aid – Local Match – Airport Parking Tax
Comprehensive Transportation Fund (CTF) • Created for the purpose of planning, developing and funding public transportation systems within the state • Major revenue sources include – MTF distributions – Portion of sales tax applied on motor vehicle related sales
• Programs include funding local bus operations, capital assistance and rail and safety services
Winter Operations
Snowfall Chart
Winter Maintenance Expenditures • Heavy snowfall statewide has produced first quarter winter maintenance expenditures 60% higher than first quarter costs last year • Our historical winter budget = $85 million • 2008 = $103 million – $18 million shortfall
• This winter could cost $117 million – Based on first quarter expenditures of $37 million and assuming winter costs are similar to 2008 for January through May
• A potential shortfall of $32 million
Winter Maintenance Expenditures • Labor hours are up significantly over the three year averages. – Regular hours are 59% above average and – Overtime hours are 34% above.
• Fuel expenditures on par with the same period in 2008. – fuel usage has actually increased by 22% – offset by a 20% decrease in the cost per gallon.
• Salt use statewide is up by 32.5% over 2008 – 300,000 tons year-to-date.
• Sand use is up by 156% over 2008 – 67,000 tons year-to-date.
Tough Times For Transportation Funding Declining gas tax revenues Declining state revenues for aviation, highways and transit Uncertain federal revenue + Increasing costs =
Uncertainty
Click to Continue
Michigan is Experiencing a Transportation Funding Crisis At current funding levels, the condition of Michigan’s transportation infrastructure will decline.
Click to Continue
Where Does the Money Come From? Michigan’s primary sources of transportation funding are the state gas tax and vehicle registration fees. - Michigan's gas tax is 19 cents per gallon. Michigan's gas tax has not been increased since 1997. - Registration fees have been declining due to motorists purchasing fewer new vehicles
Click to Continue
What’s the Average Cost? .7 $1
lion l i M
Replacing a bridge deck - $1.7 million (5-lane deck)
00 $3,0
Winter maintenance – $3,000 per lane mile (plowing and salting)
, 00 0 0 8 $
0
Resurfacing asphalt - $800,000 (2 lanes for one mile)
TO 0 p U ,00 00 $5
Urban transit bus – $300,000 to $500,000
Michigan’s Transportation System Is Important on a Global Scale 27% of North American land-based trade goes through Michigan 37% of North American rail trade moves through Michigan Detroit Metropolitan Wayne County Airport (DTW) is the 10th-busiest airport in North America and the 20th-busiest airport in the world
Click to Continue
Where Do We Rank? Since the 1960s, Michigan has been in the bottom 10 states for state and local transportation funding.
Click to Continue
Our Funding Doesn't Go as Far as It Used To Due to Inflation, the 19 cent state gas tax is now only worth 14.7 cents.
State Gas Tax has dropped in value 22.6%
Now Then Click to Continue
Gas Tax Revenue Is No Longer the Answer New fuel efficient vehicles and hybrids have further cut gas tax revenue. Michigan gas tax revenue has decreased $100 million in the past five years.
Click to Continue
Inability to Match Federal Aid MDOT Highway and Maintenance Program State Revenue Shortfall and Federal Aid Lost
* Resulting program amount with declining state revenues and inability to match federal aid.
Click to Continue
Travel Is Affecting Funding As Americans drive less, they purchase fewer gallons of fuel, and thus fuel tax revenue declines.
Click to Continue
Road Construction Costs Keep Growing Asphalt costs are up 32.4% from 2002 to 2006.
Concrete costs are up 21% from 2002 to 2006. Click to Continue
Older Roads and Bridges Require More Maintenance Michigan roads and bridges are aging, and carry higher volumes of traffic than all but eight other states.
Click to Continue
Winter Weather Is Harsh on Our Roads Roads in Michigan are exposed to severe weather and harsh freeze/thaw cycles.
Click to Continue
2010 Is the Last Year We Will Be Able to Fully Match Federal Funding
If Michigan Can't Match Federal Funding, the Federal Gas Tax Collected in Michigan Will Go to the Other States
Click to Continue
Level of Service at Risk Limited funding means MDOT cannot adequately maintain the reliable transportation system Michigan’s economy needs or provide the level of service the public expects.
Click to Continue
Positive Gains Made in Road Conditions Are at Risk In 1996, only 64% of state highways were in good condition. In 2007, Michigan’s goal of 90% of all state highways in good condition was achieved. By 2014, these gains will be lost.
Click to Continue
How Does This Affect Me? Time lost in traffic, wasted fuel, and crashes costs Michigan drivers $7 billion each year. That’s $1,671 per driver.
Click to Continue
Jobs Would Be Lost in All Sectors of the Economy At the current funding level, Michigan will lose jobs. The decline in buying power of MDOT's funding from 2006 to 2010 would mean a loss of more than 12,000 jobs.
Click to Continue
American Recovery & Reinvestment Act of 2009
New Economic Recovery Package: Not the Cure •
Federal government is working on a one-time economic recovery package
•
Package = 1 year’s worth of typical federal monies
•
Monies would not support maintenance and other services
•
Recovery package funding does not solve long-term transportation funding problems
Not the Cure For Michigan’s Transportation Funding Ills
Click to Continue
House & Senate Proposals • American Recovery and Reinvestment Act of 2009 • Aggressive timetable for implementation • Generally distributes funds utilizing existing statutory formulas • No match requirements • No specific earmarks • Ensures transparency and accountability
Program
House Bill
Senate Bill
Competitive surface transportation grants
--
$5.5 B
Aviation Facilities & Equipment
--
$200 M
$3 B
$1.1 B
$30 B
$27 B
Intercity passenger rail
$300 M
$250 M
Amtrak capital grants
$800 M
$850 M
--
$2 B
Transit formula grants
$6 B
$8.4 B
Transit rail modernization
$2 B
--
Transit new starts
$1 B
--
--
$100 M
$20 M
$7.7 M
$43.1 B
$45.4 B
Airport improvement grants Highways & Bridges
High-speed rail corridors
Assistance to small shipyards Office of Inspector General
Total - USDOT
Use-it-or-lose-it Requirement House 50% obligated within 90 days, per amendment Sub-allocated funding → 50% obligated within 75 days; balance redistributed for states to obligate within 15 days Funds not obligated are redistributed to other states
Senate 50% obligated within 180 days; sub-allocated funds not subject to redistribution Remaining 50% to be obligated within 1 year
Funds not obligated are transferred into discretionary competitive grant program
Priority Projects • House Bill – Priority should be given to projects that: • Can award contracts within 120 days • Are included in approved State or Metropolitan Transportation Improvement Program (S/TIP) • Are projected for completion within 3 year time frame • Are located in economically distressed areas
• Senate Bill – Priority on projects that can be completed in 2 years, except for discretionary program
Contingencies… • Existing Federal requirements will not be waived – Environmental requirements – Consultations required with • MPO’s • Rural Task Force • Tribal Government – Contracting & bidding requirements, including the Brooks Act – Permitting requirements – DBE requirements
Governor’s Mission Statement • Maximize job creation opportunities • Identify “shovel-ready” projects – Short-term → Preserves & creates job opportunities – Long-term → Improves Michigan’s economy and infrastructure
Governor’s Statewide Efforts • Established interdepartmental teams to coordinate priorities & monitoring • Developing preliminary inventory of Michigan’s needs – – – – –
Infrastructure Schools Information technology & broadband Buildings Greening
• Sharing information with stakeholders • Developing strategies to train workers • Identifying partnership opportunities
MDOT’s Efforts •
Monitoring House/Senate proposals – Policy & potential legislation – Modeling various scenarios for Michigan impacts – Participating with AASHTO on conference calls and providing required information
• Barrier Busters Team – Key MDOT staff – Identifying and addressing barriers so projects can flow more readily – Opportunity to identify quantum leaps in efficiencies – Identifying job training opportunities
Opportunities • Save or create thousands of jobs in Michigan • Economic benefit from increased investment in transportation • Incredible progress on projects that might not be funded for years • Demonstrates our ability to effectively invest taxpayers funds • Turns economic stimulus package into an argument for future transportation investment
Questions
Director Kirk T. Steudle, P.E.
Overview • MDOT Brief Background • Winter Maintenance • Transportation Funding Crisis • American Recovery and Reinvestment Act of 2009
“Providing the highest quality integrated transportation services for economic benefit and improved quality of life.”
State Transportation Funds • Michigan Transportation Fund – majority of the funds are divided four ways: – – – –
State Trunkline Fund Comprehensive Transportation Fund County road commissions Villages and cities
• Aeronautics Fund
Michigan Transportation Fund (MTF) • Collector fund for all motor fuel tax and registration revenues • Revenues are distributed by formula per PA 51 of 1951 • Recipients of the revenue include: – – – –
State Trunkline Fund Counties, Cities & Villages Comprehensive Transportation Fund Other • Local Bridge Fund • DNR Recreational Improvement Fund
State Trunkline Fund (STF) • Fund provides for construction and maintenance of state highways and bridges • Includes Economic Development program • Includes the Local Bridge Fund • Includes the Blue Water Bridge Fund • Major revenue sources include – MTF distribution – Federal aid – and Local match
Aeronautics Fund (Aero) • Functions include airport development and capital improvements • FY 2009 Proposed Airport Program $167.5 million • Major revenue sources – Aviation fuel taxes – Federal aid – Local Match – Airport Parking Tax
Comprehensive Transportation Fund (CTF) • Created for the purpose of planning, developing and funding public transportation systems within the state • Major revenue sources include – MTF distributions – Portion of sales tax applied on motor vehicle related sales
• Programs include funding local bus operations, capital assistance and rail and safety services
Winter Operations
Snowfall Chart
Winter Maintenance Expenditures • Heavy snowfall statewide has produced first quarter winter maintenance expenditures 60% higher than first quarter costs last year • Our historical winter budget = $85 million • 2008 = $103 million – $18 million shortfall
• This winter could cost $117 million – Based on first quarter expenditures of $37 million and assuming winter costs are similar to 2008 for January through May
• A potential shortfall of $32 million
Winter Maintenance Expenditures • Labor hours are up significantly over the three year averages. – Regular hours are 59% above average and – Overtime hours are 34% above.
• Fuel expenditures on par with the same period in 2008. – fuel usage has actually increased by 22% – offset by a 20% decrease in the cost per gallon.
• Salt use statewide is up by 32.5% over 2008 – 300,000 tons year-to-date.
• Sand use is up by 156% over 2008 – 67,000 tons year-to-date.
Tough Times For Transportation Funding Declining gas tax revenues Declining state revenues for aviation, highways and transit Uncertain federal revenue + Increasing costs =
Uncertainty
Click to Continue
Michigan is Experiencing a Transportation Funding Crisis At current funding levels, the condition of Michigan’s transportation infrastructure will decline.
Click to Continue
Where Does the Money Come From? Michigan’s primary sources of transportation funding are the state gas tax and vehicle registration fees. - Michigan's gas tax is 19 cents per gallon. Michigan's gas tax has not been increased since 1997. - Registration fees have been declining due to motorists purchasing fewer new vehicles
Click to Continue
What’s the Average Cost? .7 $1
lion l i M
Replacing a bridge deck - $1.7 million (5-lane deck)
00 $3,0
Winter maintenance – $3,000 per lane mile (plowing and salting)
, 00 0 0 8 $
0
Resurfacing asphalt - $800,000 (2 lanes for one mile)
TO 0 p U ,00 00 $5
Urban transit bus – $300,000 to $500,000
Michigan’s Transportation System Is Important on a Global Scale 27% of North American land-based trade goes through Michigan 37% of North American rail trade moves through Michigan Detroit Metropolitan Wayne County Airport (DTW) is the 10th-busiest airport in North America and the 20th-busiest airport in the world
Click to Continue
Where Do We Rank? Since the 1960s, Michigan has been in the bottom 10 states for state and local transportation funding.
Click to Continue
Our Funding Doesn't Go as Far as It Used To Due to Inflation, the 19 cent state gas tax is now only worth 14.7 cents.
State Gas Tax has dropped in value 22.6%
Now Then Click to Continue
Gas Tax Revenue Is No Longer the Answer New fuel efficient vehicles and hybrids have further cut gas tax revenue. Michigan gas tax revenue has decreased $100 million in the past five years.
Click to Continue
Inability to Match Federal Aid MDOT Highway and Maintenance Program State Revenue Shortfall and Federal Aid Lost
* Resulting program amount with declining state revenues and inability to match federal aid.
Click to Continue
Travel Is Affecting Funding As Americans drive less, they purchase fewer gallons of fuel, and thus fuel tax revenue declines.
Click to Continue
Road Construction Costs Keep Growing Asphalt costs are up 32.4% from 2002 to 2006.
Concrete costs are up 21% from 2002 to 2006. Click to Continue
Older Roads and Bridges Require More Maintenance Michigan roads and bridges are aging, and carry higher volumes of traffic than all but eight other states.
Click to Continue
Winter Weather Is Harsh on Our Roads Roads in Michigan are exposed to severe weather and harsh freeze/thaw cycles.
Click to Continue
2010 Is the Last Year We Will Be Able to Fully Match Federal Funding
If Michigan Can't Match Federal Funding, the Federal Gas Tax Collected in Michigan Will Go to the Other States
Click to Continue
Level of Service at Risk Limited funding means MDOT cannot adequately maintain the reliable transportation system Michigan’s economy needs or provide the level of service the public expects.
Click to Continue
Positive Gains Made in Road Conditions Are at Risk In 1996, only 64% of state highways were in good condition. In 2007, Michigan’s goal of 90% of all state highways in good condition was achieved. By 2014, these gains will be lost.
Click to Continue
How Does This Affect Me? Time lost in traffic, wasted fuel, and crashes costs Michigan drivers $7 billion each year. That’s $1,671 per driver.
Click to Continue
Jobs Would Be Lost in All Sectors of the Economy At the current funding level, Michigan will lose jobs. The decline in buying power of MDOT's funding from 2006 to 2010 would mean a loss of more than 12,000 jobs.
Click to Continue
American Recovery & Reinvestment Act of 2009
New Economic Recovery Package: Not the Cure •
Federal government is working on a one-time economic recovery package
•
Package = 1 year’s worth of typical federal monies
•
Monies would not support maintenance and other services
•
Recovery package funding does not solve long-term transportation funding problems
Not the Cure For Michigan’s Transportation Funding Ills
Click to Continue
House & Senate Proposals • American Recovery and Reinvestment Act of 2009 • Aggressive timetable for implementation • Generally distributes funds utilizing existing statutory formulas • No match requirements • No specific earmarks • Ensures transparency and accountability
Program
House Bill
Senate Bill
Competitive surface transportation grants
--
$5.5 B
Aviation Facilities & Equipment
--
$200 M
$3 B
$1.1 B
$30 B
$27 B
Intercity passenger rail
$300 M
$250 M
Amtrak capital grants
$800 M
$850 M
--
$2 B
Transit formula grants
$6 B
$8.4 B
Transit rail modernization
$2 B
--
Transit new starts
$1 B
--
--
$100 M
$20 M
$7.7 M
$43.1 B
$45.4 B
Airport improvement grants Highways & Bridges
High-speed rail corridors
Assistance to small shipyards Office of Inspector General
Total - USDOT
Use-it-or-lose-it Requirement House 50% obligated within 90 days, per amendment Sub-allocated funding → 50% obligated within 75 days; balance redistributed for states to obligate within 15 days Funds not obligated are redistributed to other states
Senate 50% obligated within 180 days; sub-allocated funds not subject to redistribution Remaining 50% to be obligated within 1 year
Funds not obligated are transferred into discretionary competitive grant program
Priority Projects • House Bill – Priority should be given to projects that: • Can award contracts within 120 days • Are included in approved State or Metropolitan Transportation Improvement Program (S/TIP) • Are projected for completion within 3 year time frame • Are located in economically distressed areas
• Senate Bill – Priority on projects that can be completed in 2 years, except for discretionary program
Contingencies… • Existing Federal requirements will not be waived – Environmental requirements – Consultations required with • MPO’s • Rural Task Force • Tribal Government – Contracting & bidding requirements, including the Brooks Act – Permitting requirements – DBE requirements
Governor’s Mission Statement • Maximize job creation opportunities • Identify “shovel-ready” projects – Short-term → Preserves & creates job opportunities – Long-term → Improves Michigan’s economy and infrastructure
Governor’s Statewide Efforts • Established interdepartmental teams to coordinate priorities & monitoring • Developing preliminary inventory of Michigan’s needs – – – – –
Infrastructure Schools Information technology & broadband Buildings Greening
• Sharing information with stakeholders • Developing strategies to train workers • Identifying partnership opportunities
MDOT’s Efforts •
Monitoring House/Senate proposals – Policy & potential legislation – Modeling various scenarios for Michigan impacts – Participating with AASHTO on conference calls and providing required information
• Barrier Busters Team – Key MDOT staff – Identifying and addressing barriers so projects can flow more readily – Opportunity to identify quantum leaps in efficiencies – Identifying job training opportunities
Opportunities • Save or create thousands of jobs in Michigan • Economic benefit from increased investment in transportation • Incredible progress on projects that might not be funded for years • Demonstrates our ability to effectively invest taxpayers funds • Turns economic stimulus package into an argument for future transportation investment
Questions
