Key Issues in Transportation Programming (2008)

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30 BREAKOUT SESSION Untangling the Purse Strings Funding, Distribution, and Allocation Stevan Gorcester, Washington State Transportation Improvement Board Ashby Johnson, Houston–Galveston Area Council Rachel Falsetti, California Department of Transportation WASHINGTON STATE TRANSPORTATION IMPROVEMENT BOARD Stevan Gorcester Stevan Gorcester discussed the mission, role, and grant programs of the Washington State Transportation Improvement Board. He described the development and use of the board’s performance management system and covered the following points in his presentation. • The Washington State Transportation Improve- ment Board receives 3 cents of the state gasoline tax per gallon. This revenue is distributed to local agencies through a series of grant programs. The Washington State Transportation Improvement Board is a small, sep- arate state agency with 12 staff members. The board awards and manages state investments in local street and sidewalk programs. • The tax structure in Washington State is somewhat unique. Washington is one of the few states in the coun- try without a state income tax. The state legislature con- trols all tax fields, so local governments have little power to raise revenues. As a result, local agencies, especially small agencies, are not able to generate the revenues needed for local streets and sidewalks. The board’s grant programs provide an important source of funds for local agencies. This role also makes the board a major partner in the federal and the state transportation programs. • The board is currently funding approximately 400 projects; some 250 of those also have state funding. The board’s programs focus almost exclusively on capital projects, with 98.5% of the funding allocated to capital projects. The board’s role in these projects focuses on fis- cal management and problem solving. The board is not the owner or operator of any transportation element. That role is the responsibility of the Washington State Department of Transportation, local governments, and other agencies. The board’s overall goal is to achieve fully funded and completed projects. • The board administers six funding programs. The Urban Corridors Program focuses on meeting economic development objectives. It is a growthmanagement invest- ment program. The Urban Arterial Program and the Small City Arterial Program are two subprograms under the Safety and Preservation Investment Program. There is also a separate Sidewalk Program. In 2005, the state legislature approved a 9.5-cent increase in the state gasoline tax. This legislation created a new program for the board called the Small City Preservation Program. Currently, the board is a major source of funding for small agencies with respect to implementing their capital improvement programs and maintaining their street systems. • The board has a sophisticated performance man- agement system that uses software developed in house. The software accesses the project database and produces performance statistics on projects. The results are dis- played graphically and in tables on the agencies’ intranet site. The first page, called the “Bell Weather,” displays project data in real time. The system has helped ensure that the board does not overcommit on funding, which has happened in the past. Previously, it took 2 to 3 days to manually generate summary information on active projects. 60627_TRB_S1_A:01-CP43 11/17/08 10:15 AM Page 30

• Developing and implementing a performance man- agement system does not happen overnight. It took about 2 years to develop, test, and fully integrate the current performance management system. The system provides data by project phases, financial status, and other mea- sures. The system provides alerts on high project balances and low project balances. The board uses the balanced scorecard strategic planning method developed at Har- vard University, which is required by the state. This method produces a summary chart that shows the status of all the strategies in the strategic plan. The system iden- tifies whether the performance targets are or are not being met, including on-time payments and meeting project budgets. The project inventory can be mapped by county. Projects not meeting performance targets are displayed in yellow or red. Detailed information on each project, including a map, can also be displayed. • To better identify the economic outcome of a proj- ect, a new database was developed. Data on the assessed valuation of property served directly by a project are obtained before and after the project is completed. Simi- lar data are collected for the community as a whole. The system examines whether the assessed valuation of the property served increased at a faster rate than for the community as a whole. The results of this monitoring program show that investments in the projects do pro- vide an economic return to a community. TRANSPORTATION PROGRAMMING IN THE HOUSTON–GALVESTON REGION Ashby Johnson Ashby Johnson discussed the transportation improve- ment plan (TIP) and project programming process at the Houston–Galveston Area Council (H-GAC). He described the characteristics of the metropolitan area, the TIP development process, and recent activities related to toll facilities and hurricane evacuation plan- ning. Ashby covered the following points in his presentation. • The metropolitan transportation planning area covers an eight-county region. The eight counties include Brazoria, Chambers, Fort Bend, Galveston, Harris, Lib- erty,Montgomery, andWaller. Houston, which is located in Harris County, is the largest city in the metropolitan area. The eight-county region covers approximately 8,300 square miles. The current population is about 5.2 million. The population is forecast to increase to 8 million by 2025. • The H-GAC long-range regional transportation plan is a $77 billion multimodal plan. Approximately $12 million is allocated for ports and airports, $46.7 bil- lion for roadways, $17.9 billion for transit, and $0.4 bil- lion for bike and pedestrian facilities. Approximately 60% of the funding is local, with state and federal pro- grams accounting for approximately 40%. • The 2006–2008 TIP includes $4.0 billion in proj- ects. Roadway projects account for $2.5 billion, and transit projects for $1.0 billion. A total of $0.5 billion is provided in local matching funds. The process used to develop the TIP is similar to the process used at many other metropolitan planning organizations (MPOs). A subcommittee of the H-GAC Technical Activities Com- mittee develops the criteria to be used in evaluating and ranking projects. Historically, the key criteria addressed safety and congestion. This approach resulted in road- way projects being ranked the highest, with few transit, bicycle, and pedestrian projects. A new approach was implemented, with projects evaluated and ranked by cat- egories. This approach provides a better mix of selected projects. • Safety, and more recently, emergency evacuation, are also important criteria. Harris County has one of the highest crash rates and driving-under-the-influence rates of any county in the country. H-GAC established a Regional Safety Council, as a subcommittee of the Policy Board, to address these issues. Available crash data were geocoded and mapped. Local agencies are now request- ing crash data from H-GAC, along with technical assis- tance to analyze high-crash locations. The Safety Council has also made a number of recommendations for improving safety in the region. • Hurricanes Katrina and Rita brought a renewed focus on emergency management and evacuation plan- ning in the region. H-GAC and other transportation agencies in the region have addressed numerous issues related to evacuation planning and operations. Freeway and roadway bottlenecks have been identified, and improvements programmed and constructed. • One recent issue facing H-GAC and transportation agencies is increases in project costs. In the past, these increases have been absorbed in future TIPs. The cost increase on a few recent projects has been significant, how- ever, including the expansion of the I-10West (Katy) Free- way, which increased from $650 million to $1.2 billion. New policies have been proposed in reaction to project cost increases. • The proposed policies for the 2008 TIP include a 5% per year project cost increase. Sponsors must request the 5% increase and provide a justification for it. Proj- ects are not eligible for the adjustment if the cost increase is the result of a scope change or if a project in a previ- ous TIP has not advanced. Other proposed policies for the 2008 TIP include recompeting any project that has not advanced by the third time it is in the TIP. A final proposed policy would make cost overruns the responsi- bility of the project sponsor. 31UNTANGLING THE PURSE STRINGS 60627_TRB_S1_A:01-CP43 11/17/08 10:15 AM Page 31

• Toll projects are somewhat outside of the pro- gramming process, as toll authorities are not using fed- eral funds. Toll roads have been in operation in Houston since the early 1980s. Currently, there are some 530 lane miles of toll roads in the area. By 2025, the region is forecast to have almost 2,300 lane miles of toll facilities. The area cannot meet air quality conformity or fiscal constraint requirements without the toll facilities. Tolls roads may be formed in the H-GAC area at the county level. The Harris County Toll Road Authority (HCTRA) is the oldest and the largest toll authority in the area. Fort Bend County also formed a toll road authority in the late 1990s. Finally, the Texas Depart- ment of Transportation (TxDOT) has a toll road divi- sion, the Texas Turnpike Authority Division, which also has the ability to develop, own, and operate toll facili- ties. TxDOT is pursuing toll roads in other parts of the state using a variety of approaches, including compre- hensive development agreements. There are still a num- ber of questions concerning how excess revenues will be used, the relationship with the MPO process, and the relationship between TxDOT and the toll authorities. Air quality conformity is the primary link to the MPO planning process. The development of a regional toll policy is under way, but it has been difficult to gain con- sensus among the public agencies and the toll authorities. • The potential sale or long-term lease of the HCTRA toll network was considered in 2006. H-GAC currently generates approximately $225 million per year in excess revenues. The Harris County judge, who is the county administrator, advocated sale of the toll network. The estimated net present value of the toll system was $6 billion to $8 billion. The county conducted a study, which indicated that the excess revenues will continue to increase. The county commissioners recently decided not to sell the toll roads by a unanimous vote. CALIFORNIA DEPARTMENT OF TRANSPORTATION FUNDING Rachel Falsetti Rachel Falsetti described elements of the programming process at the California Department of Transportation (Caltrans). She discussed the funding estimation process, the programming process, the allocation of funds, and the approach used with inactive obligations. Rachel cov- ered the following points in her presentation. • California uses a Fund Estimate in the program- ming process. The Fund Estimate is an estimate, in annual increments, of all federal and state funds reason- ably expected to be available for programming over a specified 5-year period. As required by state statute, every 2 years Caltrans produces a Fund Estimate that incorporates long-term projections. The Fund Estimate forecasts resources for the next 5 years. There is a 3-year overlap between consecutive Fund Estimates. The Fund Estimate also accounts for cash flow for current pro- gram commitments and determines the amount of resources available for programming. • A number of revenue sources are used to fund transportation in California. The State Highway Account includes revenues from the motor vehicle fuel license tax, the use fuel tax, truck weight fees, the federal trust fund, the general fund, and the sales tax on fuels. The State Highway Account funds local streets and roads, the state highway system, and state and local pub- lic transportation. The Transportation Investment Fund is supported by the state general fund. The governor has discretion authority over the Transportation Investment Fund. If there is a fiscal crisis in the state, the governor can decide to withhold the funds in this account from Caltrans. The Transportation Deferred Investment Account is generated in this situation and contains the funds from the state. Revenues from the sales tax on fuels go both to the General Fund and to the Public Trans- portation Account. The Public Transportation Account is used to fund transit systems in the state. • The Fund Estimate is prepared and adopted by the California Transportation Commission (CTC) every 2 years, in the odd years. The Fund Estimate allocates resources for Caltrans maintenance, administration, and operation of the State Highway Operations Protection Plan (SHOPP), which operates projects; and local Assis- tance Funding. The remaining funds, which are primar- ily state funds, go into the State Transportation Improvement Program (STIP). Funding in the STIP is split 25% to the Interregional TIP (ITIP) and 15% to the Regional TIPS (RTIPS). The CTC holds hearings on the recommended STIP, which is adopted by the CTC in even years. A bond measure, Proposition 1B, was recently approved by voters in the state. The CTC will be going through a similar process for the STIP augmentation to include projects funded by Proposition 1B. • The Federal Statewide TIP is a rollup of the STIP funds, the SHOPP funds, all the other federal funds, and the other state funds. The federal funds are filtered through the Fund Estimation vehicle and are not identi- fied by program category until the allocation process. • Caltrans projects revenues and expenditures of existing commitments to determine cash available for projects on a monthly basis. Allocation capacities are developed based on the cash flow of proposed projects. To operate, Caltrans requires approximately $2 million a month. • Caltrans uses innovative management of federal funds. This includes advance construction, partial con- 32 KEY ISSUES IN TRANSPORTATION PROGRAMMING 60627_TRB_S1_A:01-CP43 11/17/08 10:15 AM Page 32

version of advance construction, tapered match, and flexible match. Advance construction allows a state or local agency to begin a project even if the agency does not currently have sufficient obligation authority to cover the federal share of project costs. Partial conver- sion of advance construction allows a state or local agency to convert an advance construction project to a federal-aid project in stages rather than all at once. Tapered match is the nonfederal matching requirement applied to the aggregate cost of the project rather than on a payment-by-payment basis. Flexible match allows a state or local agency to substitute private and other donations of funds, materials, land, and services for the nonfederal share of funding for transportation projects. • Addressing inactive obligations is an important area for Caltrans, based on new federal regulations. Cal- trans has been using quarterly monitoring to identify and respond to inactive obligations. There are still areas of the new regulations to be worked through. • The process flows from the Fund Estimate to the STIP programming capacity to the programming of proj- ects. Based on the annual budget authority, the cash fore- cast is developed. The allocation capacity is determined based on the cash forecast. The programming and alloca- tions are finalized and program expenditures are made. The process begins again with the Fund Estimate. Stevan Gorcester moderated this session. 33UNTANGLING THE PURSE STRINGS 60627_TRB_S1_A:01-CP43 11/17/08 10:15 AM Page 33