BLUE RIBBON TASK FORCE TO EVALUATE NEVADA DEPARTMENT OF TRANSPORTATION LONG-RANGE PROJECTS

Transcription

1 STATE OF NEVADA BLUE RIBBON TASK FORCE TO EVALUATE NEVADA DEPARTMENT OF TRANSPORTATION LONG-RANGE PROJECTS December 5, 2006

2 Task Force Members Phillip C. Peckman Task Force Chairman Leroy Goodman Task Force Vice-Chairman Lyon County Board of Commissioners Paul Enos Chief Executive Officer Nevada Motor Transport Association Timothy Cashman President The Cashman Companies Bruce Woodbury Clark County Commissioner Chairman, RTC of Southern Nevada John Ellison Commissioner Elko County Board of Commissioners Michael Geeser Media/Government Relations AAA Nevada Kathryn Landreth State Director The Nature Conservancy Robert Hadfield Interim Executive Director Nevada Association of Counties John Mayer Sparks City Councilman Chairman Washoe County RTC Terry Murphy President Strategic Solutions Irene Porter Executive Director Southern Nevada Home Builders Association Rossi Ralenkotter President/CEO Las Vegas Convention and Visitors Authority Mark Russell VP-General Counsel Mirage Casino-Hotel Tom Skancke President The Skancke Corporation John Madole Executive Director, Nevada Chapter Associated General Contractors Carol Vilardo President Nevada Taxpayers Association 2 E-2

3 Table of Contents Executive Summary Page 4 Introduction Page 7 Task Force Findings Page 11 Task Force Recommendations Page 16 Policy Funding Task Force Formation Page 22 Background / Objectives Membership Leadership Meetings Nevada Department of Transportation System Overview Page 23 Nevada Department of Transportation Funding/State Highway Fund Overview Page 29 Nevada Department of Transportation Pavement and Bridge Preservation Program Page 33 Nevada Department of Transportation Super and Mega Projects Page 36 Other Projects Page 40 Funding Shortfall Page 44 Bonding and Cash Flow Scenarios Page 47 Miscellaneous Issues Page 48 Right-of-Way Nevada Department of Transportation Administrative Costs Road Transfers Tax and Spending Control (TASC) Initiative People s Initiative to Stop the Taking of Our Land (PISTOL) Public-Private Partnerships Managed Lanes Potential Funding Sources Page 55 Appendices Page 59 3 E-3

4 Executive Summary Nevada faces many challenges in the coming years. Growth of unprecedented proportions in population, housing, economic development, and virtually every other facet of life in the state is predicted to continue into the foreseeable future. Travel demand is growing even faster than the population, and highway revenue sources have not kept up with inflation. Consider these statistics: From 1990 to 2003 Nevada s population grew by 92 percent, the fastest rate of growth in the nation. During the same time period, the vehicle miles of travel on all of Nevada s streets and highways more than doubled from 9 billion to billion, also the fastest rate of growth in the nation. Nevada s population is expected to grow to 2.8 million people by 2010, and vehicle travel in Nevada is expected to increase by 80 percent by 2010, to 35 billion miles of travel annually. Nevada s per capita highway travel has increased 6.8 percent and per capita fuel use has declined 8.3 percent since the state s fuel taxes were last raised in Ultimately, Nevada s highways are being traveled more heavily, using less fuel per capita, and at a tax rate that does not account for 14 years of inflation. The rate of inflation in the highway construction industry has risen nearly 44 percent in the past three years, greatly exceeding general inflation. The cost of fuel to operate vehicle and equipment has also increased sharply. And consider the impacts of this and future growth: The average daily two-way traffic volumes on I-15 south of Sloan Road are forecast to nearly quadruple from 42,000 vehicles in 2003 to 156,000 by The average daily two-way traffic volumes on I-15 north of Blue Diamond Road are forecast to increase more than six-fold from 67,000 vehicles in 2003 to 420,000 in The average daily two-way traffic on I-15 from Tropicana Avenue to just south of Sahara Avenue is expected to more than double from 230,000 vehicles in 2003 to 500,000 in The average daily two-way traffic on I-15 at Lamb Boulevard is expected to more than quintuple from 23,000 vehicles in 2003 to 123,000 by A major foundation recently concluded that Las Vegas is the 10 th most congested city in the United States, and that unless major steps are taken, by 2030 driving times during peak travel hours will be far worse than even present-day Los Angeles. The 4 E-4

5 same report also concluded that Reno s driving times during peak travel hours will increase 680 percent in 25 years. Portions of I-15 and I-515 in Las Vegas are already at level of service (LOS) F, which represents a traffic jam, during peak hours. Without improvements, by 2015 additional Las Vegas area freeways will descend to LOS F, including I-15 from Cheyenne Avenue to Craig Road; I-515 from Eastern Avenue to Russell Road; US 95 from Rainbow to the Centennial; and portions of the Bruce Woodbury Beltway. By 2030, with the exception of a short segment of the northeastern Beltway, all other freeways in Las Vegas will fall to LOS F. Further, the Boulder City Bypass will be needed to address truck traffic on US 93 with the 2009 completion of the Hoover Dam Bypass. In the Reno area, the LOS on I-80 and US 395 area will deteriorate significantly without improvements. Also, Pyramid Highway corridor improvements are needed to address worsening congestion and safety issues on State Route 445, which serves the growing north valleys of Sparks and Washoe County. The Task Force unanimously supports construction of the Nevada Department of Transportation s ten Super and Mega Projects, pavement and bridge preservation projects, two-lane highway widening projects, and intelligent transportation system projects planned for This would require, at a minimum, an additional $3.8 billion in revenue, which, if bonded, would be about $280 million per year for 24 years. Project estimates are based on 2006 costs and do not account for inflation. A more immediate concern, however, is the impending shortfall of funds to carry out NDOT s current program of projects. NDOT has projected that the State Highway Fund will go into deficit by July 2008 without additional revenue sources. NDOT had initially projected that a one-time reduction in funding for its pavement preservation program for FY06 would restore cash balances in the State Highway Fund. However, with highway construction costs and right-of-way acquisition prices continuing to rise, the Department has delayed another $70 million in State-funded projects, mostly for pavement preservation, beginning in late FY2006. Similar reductions in the Department s pavement preservation program are likely in FY08 and 09. This prolonged reduction in the Department s pavement preservation program will significantly increase the backlog of highways needing pavement overlays and will have serious consequences in future costs. In summary: Increased highway funding must be addressed now. Nevada s current highway revenue structure will not meet the pressing funding needs. Solutions to Nevada s highway funding challenge will require non-traditional highway revenue sources. State highway system needs by 2015 are $11 billion, with a projected shortfall of $3.8 billion, without accounting for inflation. The Nevada Department of Transportation s proposed Super and Mega Projects are needed to address congestion and safety. 5 E-5

6 The Blue Ribbon Task Force strongly suggests that the Governor, members of the Nevada Legislature, and the general public seriously consider with a sense of urgency the following recommendations for funding the shortfall, as well as the other findings and recommendations. Unless action is taken now to substantially increase funding for and hasten construction of the State highway system, the safety, quality of life, and economy of Nevada and its residents and businesses will suffer for years to come. 6 E-6

7 Introduction Mobility of people and goods in and through the State of Nevada will greatly influence the State s future. Transportation is the common element that will ensure Nevada s steady and prudent course in dealing with these issues. That course will require significant investment in transportation facilities in both Clark and Washoe counties. Yet funds are limited and the needed projects expensive. As Nevada continues to look for ways to grow and diversify its economy and preserve its quality of life, however, maintaining and improving the State s highway system has become a priority issue. The State of Nevada continues to lead the nation in population growth with increases projected to be approximately 60 percent between now and This growth is a consequence of the desirable business climate, high quality of life and many other attractive features. With this growth comes a collateral requirement to provide infrastructure to service the mobility needs of all Nevadans as well as the millions of visitors each year who spend time in both Clark and Washoe counties. Congestion continues to be a major issue in both urban areas. Each year the lengths of time motorists spend in traffic continues to grow. In its 2005 Urban Mobility Report, the Texas Transportation Institute noted that congestion costs travelers in Las Vegas $380 million in This is a 325 percent increase over the cost to motorists just a decade earlier in More recently, the Reason Foundation concluded that Las Vegas is the 10 th most congested city in the United States, and that unless major steps are taken, by 2030 driving times during peak travel hours will be far worse than even present-day Los Angeles. The same report also concluded that Reno s driving times during peak travel hours will increase 680 percent in 25 years. Against this backdrop, the State Transportation Board, which is chaired by Governor Kenny Guinn, established the Blue Ribbon Task Force to Evaluate Nevada Department of Transportation Long-Range Projects on June 21, Nevada is not alone in its concern about future highway funding shortfalls. However, Nevada s needs are perhaps unique because of its tremendous growth. Governor Guinn and the State Transportation Board have exhibited foresight and leadership in creating the Blue Ribbon Task Force to evaluate the Department of Transportation s future funding needs. The three objectives of the Blue Ribbon Task Force are to: (1) review the need for future NDOT projects, including impacts to congestion relief, State highway system serviceability and safety, and the quality of life and economy of our state; (2) review project costs and revenue projections; and (3) evaluate funding options. The Task Force has analyzed the 10- year planning period from 2006 to The Nevada Department of Transportation s February 2005 State Highway Preservation Report indicates that at the beginning of fiscal year 2005, there was a $399 million backlog of preservation work on the State highway system $286 million for pavement and $113 for bridges. NDOT will need to spend $1.5 billion between 2008 and 2014 on preservation projects to avoid increasing the backlog of pavement and bridge maintenance needs. 7 E-7

8 NDOT is also in the planning and design phases for new capacity projects to address congestion relief and provide additional access that could be ready for construction beginning in The preliminary cost of these projects total $4.8 billion and include two Mega Projects exceeding $1 billion each: Widening I-15 from Tropicana Avenue to the Spaghetti Bowl, and Widening I-515/US 95 from the Spaghetti Bowl to Foothill Boulevard In addition, there are eight new Super Projects which exceed $100 million each: Southern Nevada Widening I-15 from the Spaghetti Bowl to Apex The Boulder City Bypass Widening US 95 from Craig Road to Kyle Canyon Widening I-15 from St. Rose Parkway to Tropicana Avenue, and Beltway interchanges at US 95, I-15, and Summerlin Parkway Northern Nevada Widening I-80 from Robb Drive to Vista Boulevard Widening US 395 from the Spaghetti Bowl to Stead, and Improvements to Pyramid Highway. The Task Force acknowledged the need for all of the projects recommended by NDOT to the extent that funding is available, and accepted the Department s plans for implementing the Super and Mega Projects. NDOT has identified a $3.8 billion shortfall (in 2006 dollars) for the period 2008 to This shortfall will surely rise with inflation. However, the more immediate concern is the impending shortfall of funds to carry out NDOT s current program of projects. NDOT has projected that the State Highway Fund will go into deficit by July 2008 without additional revenue sources. NDOT had initially projected that a one-time reduction in funding for its pavement preservation program for FY06 would restore cash balances in the State Highway Fund. However, with highway construction costs continuing to rise because of inflation and right-of-way acquisition prices increasing, the Department has delayed another $70 million in State-funded projects, mostly for pavement preservation, beginning in late FY2006. Similar reductions in the Department s pavement preservation program are likely in FY08 and 09. This prolonged reduction in the Department s pavement preservation program will significantly increase the backlog of highways needing pavement overlays and will have serious consequences in future costs. Timely proactive maintenance and rehabilitation projects minimize the need for costly repairs. The Task Force heard presentations regarding alternative forms of transportation, most notably transit, as well as ways to reduce the number of vehicles on the State s highways, such as carpooling and the implementation of high occupancy vehicle (HOV) lanes. While transit in the Las Vegas and Reno metropolitan areas is administered by the Regional Transportation Commission of Southern Nevada and the Washoe County Regional 8 E-8

9 Transportation Commission, respectively, the Task Force supports the RTCs and encourages the Department of Transportation to continue its cooperative effort to facilitate the expansion of transit as an alternative transportation mode. The implementation of Bus Rapid Transit in Las Vegas is an innovative approach to providing flexible and cost-effective transit. The Task Force also supports other transportation demand measures such as carpooling and HOV lanes to reduce the number of vehicles on the State s freeways, and encourages the Department of Transportation to work with the RTCs in implementing these areas. While transit and transportation demand measures will not forestall the need for significant highway improvements, they will provide needed alternatives and make incremental improvements. It is evident, based on research and data presented to the Task Force, that substantial funding increases are necessary to address both current and future transportation needs. These include maintaining the existing highway infrastructure while addressing congestion relief, access and traffic safety. Recognizing that it is not easy to raise taxes or fees, the Task Force focused on methods to address this substantial funding shortfall, including utilizing and redirecting existing resources as well as innovative financing. The last comprehensive evaluation of State highway system needs, completed in 1990, was the State of Nevada Citizen Advisory Committee on Transportation Report on Funding the Highway Transportation Needs of the State of Nevada , and it reported significant funding challenges. The Citizen Advisory Committee (CAC) identified a $3.1 billion State shortfall for highways and concluded that Nevada s total street and highway needs were so extensive that road user fees alone could no longer be considered a viable solution to the funding dilemma. The CAC also concluded that benefits from the State highway system extend to those who do not drive in the form of lower prices on consumer goods and better employment opportunities. Consequently, the CAC recommended a broad-based tax structure to fund transportation, which included raising vehicle registration and motor carrier fees, the taxes on gasoline and special fuel, and increasing the privilege tax, the state sales tax, and property taxes. In 1991 the Legislature approved additional funding from traditional sources, including a five-centper-gallon increase in the gasoline and special-fuel tax, and a $10 increase in registration, title, and driver s license fees. State highway taxes and fees have not been raised since, nor have other General Fund revenues been allocated to any substantial degree for highway projects. Between 1991 and 2005 NDOT undertook an extensive program to construct projects. NDOT is underway with its largest highway construction program, including the construction of five Super Projects to address highway congestion and safety in Las Vegas and northern Nevada. Bonding has allowed NDOT to accelerate completion of the Super Projects while taking advantage of historically low interest rates. While there is little doubt that issuing $1 billion in bonds to fund needed projects was a smart business decision, the fact is that the bond service has become a major NDOT expenditure for many years to come. At the time the State Transportation Board created the Blue Ribbon Task Force to Evaluate Nevada 9 E-9

10 Department of Transportation Long-Range Projects in June 2005, funding was projected to be available for projects in NDOT s three-year capital program, which is also known as the Statewide Transportation Improvement Program (STIP). Funding had not been identified for long-range projects beyond the three-year STIP time frame. Since that time, increasing inflation in highway construction materials has significantly affected NDOT s projects to the point where there will not be enough funding to implement the three-year program in place in June From 1990 to 2003 Nevada s population grew by 92 percent, the fastest rate of growth in the nation. During the same time period, the vehicle miles of travel on all of Nevada s streets and highways more than doubled from nine billion to 19.5 billion, also the fastest rate of growth in the nation. Nevada s population is expected to grow to 2.8 million people by 2010, and vehicle travel is expected to increase to 35 billion miles of travel annually an increase of 80 percent by The state s tourism industry continues to grow with 39 million people visiting Las Vegas in 2005, and significant new development planned for the future will place even more demands on Nevada s highways. Fifty-three percent visitors to Las Vegas arrived by automobile or bus. Also, Nevada is expected to experience a significant increase in truck traffic: Interstate-80 and Interstate-15 are already among the busiest truck freight corridors in the nation. 10 E-10

11 Findings Task Force Objective 1: Review the need for future NDOT projects, including impacts to congestion relief, State highway system serviceability and safety, and the quality of life and economy of our state. Nevada s population and vehicle miles traveled will continue to grow. Nevada s population is projected to grow to 2.8 million people by 2010 and to 3.4 million by Despite increases in transit use, carpooling and other transportation alternatives in Las Vegas and Reno, highway travel in Nevada is expected to increase 80 percent by An increase in freight movement will further affect the State highway system. Nevada is a bridge state : commercial trucks comprise up to 40 percent of the traffic on rural I-15 and I-80, and 80 percent of these trucks have an origin and destination outside of the state. A large increase in truck traffic related to expansion of the ports in Oakland and Long Beach, as well as just-in-time delivery, will occur on Nevada s Interstate and National Highway System routes. The State highway system is essential to Nevada s economy and quality of life. A well-functioning State highway system is vital to Nevada s economy, and improvements to the system are needed to support Nevada s economic development and diversification efforts. This is true in the urban areas of Las Vegas and Reno as well as the rural areas of the state. While comprising only 21 percent of all improved roads in Nevada, the State highway system carries 59 percent of all traffic and 89 percent of the heavy truck traffic. Many outof-state tourists arrive via automobile or otherwise travel on Nevada s highways during their stay. Commerce and industry also depend heavily on the State highway system. Nevada residents use the State highway system for work, educational, social, and leisure trips. Mobility and access are important quality-of-life issues and consistently rank as priorities for Nevada residents. The Nevada Department of Transportation s policy that it budget to preserve the state s highway and bridge system so as not to increase the backlog of maintenance needs is a cost-effective and prudent strategy. On the interstate highways and principal arterials, Nevada s pavement and bridges are in very good condition. The remaining State roads have average pavement condition and very good bridges. NDOT s proactive pavement management approach is innovative and results in higher quality service to the public. NDOT has a good bridge program in place and should not vary in a significant way from the course it is on. The resulting higher quality of service to the public, when funded, results in measurable savings over years. 11 E-11

12 The Nevada Department of Transportation s proposed Super and Mega Projects are needed to address congestion and safety. Traffic engineers gauge congestion using level of service (LOS), with level of service A being free-flow conditions and LOS F representing a typical traffic jam. Portions of I-15 and I-515 in Las Vegas are already at LOS F during peak hours. Without improvements, by 2015 additional Las Vegas area freeway segments will descend to LOS F, including I-15 from Cheyenne Avenue to Craig Road; I-515 from Eastern Avenue to Russell Road; US 95 from Rainbow to the Centennial; and portions of the Bruce Woodbury Beltway. By 2030, with the exception of a short segment of the northeastern Beltway, all other freeways in Las Vegas will fall to LOS F. Furthermore, the Boulder City Bypass will be needed to address truck traffic on US 93 with the 2009 completion of the Hoover Dam Bypass. In the Reno area, the LOS on I-80 and US 395 in the Reno area will deteriorate significantly without improvements. Also, Pyramid Highway corridor improvements are needed to address worsening congestion and safety issues on State Route 445, which serves the growing north valleys of Sparks and Washoe County. The Nevada Department of Transportation s proposed Super and Mega Projects are being planned to maintain an acceptable level of service for 20 years. NDOT has established LOS D (little driver freedom at tolerable operating speeds, approaching unstable flow) as its minimum objective for planned improvements. This is a common minimum standard used by many state departments of transportation and reflects a realistic expectation that better levels of service are not economically feasible for designing 20 years into the future. A number of roads are no longer appropriate for inclusion on the State highway system. The State Transportation Board of Directors has determined that the State s highway system should consist of high-volume and high-speed, controlled- and limited-access highways, such as interstate highways, National Highway System (NHS) routes, and super-arterials that are strategic to the state s defense and economy, as well as State routes that connect the NHS routes, population centers, state and national parks, and airports. The Board has also expressed concerns that the Department should not be in the business of deciding local development by virtue of its control of access along local streets. NDOT currently maintains 5,449 centerline miles of roads in Nevada, of which perhaps 840 miles no longer warrant being on the State s highway system because they serve low traffic volumes, or are local streets, or otherwise do not provide regional mobility or connectivity. The Department spends about $23 million annually to maintain these 840 miles of roads. Projects in the Nevada Department of Transportation s proposed ten-year, work program are needed to preserve the existing highway system. Of the $8.6 billion proposed for NDOT projects, $6.2 billion is for congestion relief and safety, and $2.4 billion for preservation of the highway and bridge infrastructure. This 12 E-12

13 allocation of funding strikes a good balance between addressing the needs to expand system capacity while managing one the state s most important assets. Highway safety is an important issue that must be addressed. Last year 427 motorists, motorcyclists, pedestrians and bicyclists were killed on Nevada s streets and highways. Nevada has the seventh worst highway fatality rate in the nation at 2.04 fatalities per 100 million vehicle miles traveled, versus the national average of Engineering, education, enforcement, and emergency response are the four key elements in reducing fatalities and serious injuries related to motor vehicles. Additional funding will allow NDOT to design and maintain highways to the highest safety standards possible. Task Force Objective 2: Review project costs and revenue projections. State highway system needs by 2015 are $11 billion, with a projected shortfall of $3.8 billion, without accounting for inflation. Funding needs for preservation of the existing highway system infrastructure and projects to improve safety and relieve congestion by 2015 will be $11 billion. This includes ten Super and Mega Projects which are preliminarily estimated to cost $4.8 billion, but will need further analysis to refine their costs. Project costs are based on 2006 estimates and do not consider inflation. In addition to NDOT s highway needs, other State Highway Fund agencies the Department of Motor Vehicles and Nevada Highway Patrol will need $2 billion for their operations. With $9.2 billion in revenues projected for the State Highway Fund by 2015, there will be a $3.8 billion shortfall. Nevada s current highway revenue structure will not meet the pressing funding needs. The state s cent per gallon fuel tax has not increased since Meanwhile, highway construction prices rose 99.7 percent nationally. Registration fees ($33 per auto) and driver s license fees ($19.50) have not increased since Furthermore, Nevada s per capita highway travel has increased 6.8 percent and per capita fuel use has declined 8.3 percent since the state s fuel taxes were last raised in Ultimately, Nevada s highways are being traveled more heavily, using less fuel per capita, and at a tax rate that does not account for 14 years of inflation. Recently, highway construction inflation has greatly exceeded general inflation. From 2003 to 2005, the Consumer Price Index increased just 6.1 percent, while the Federal-Aid Highway Construction Price Index rose 40.2 percent. At the federal level, the Highway Trust Fund is projected to go into deficit by 2010 if current spending levels continue without additional revenues. Future reliance on federal funding to address Nevada s shortfall is not realistic. 13 E-13

14 Right-of-way acquisitions will increase project costs. Right-of-way costs, especially in Las Vegas and Reno, are escalating much greater than general inflation. Preliminary estimates are that 20 percent of Super and Mega Project costs are for right-of-way. Right-of-way may ultimately become too expensive, resulting in a reduced scope for certain projects or making some infeasible to complete. The Tax and Spending Control (TASC) and the People s Initiative to Stop the Taking of Our Land (PISTOL) petition initiatives will negatively impact the cost and schedule of future highway projects. Even though State highway fund moneys are excluded from TASC s definition of total state revenue and hence excluded from the spending limit, NDOT would be required to seek voter approval of any increase in taxation that exceeds the previous year s taxation. (Note: Although TASC was removed from the 2006 general election ballot, the analysis holds true if it surfaces in the same form in the future.) NDOT also would be required to seek voter approval to issue bonds, even though no tax increase is being proposed to fund the bonds. Currently the Legislature, State Transportation Board, and State Board of Finance authorize the sale of highway construction bonds. The People s Initiative to Stop the Taking of Our Land addresses perceived government abuses in the taking of private property, including takings for redevelopment, such as the subject property in the recent U.S. Supreme Court ruling in Kelo v. New London, which upheld the Connecticut City of New London s controversial condemnation of private property for redevelopment. However, NDOT is not in the redevelopment business. The State Transportation Board, which is chaired by the Governor and includes the Lieutenant Governor, Attorney General and State Controller, recommends condemnation of private property for the uses and purposes set forth in NRS , which are directly related to highways. The Transportation Board must also comply with pertinent federal law governing property acquisition for highway purposes. According to the Federal Highway Administration, Section 11 of the initiative is in direct conflict with 23 CFR (d) requiring agencies to charge fair market value for disposal of property acquired with federal highway funds. If the initiative is passed and the Nevada Constitution amended, Section 11 will be in direct violation of the Code of Federal Regulations, which will jeopardize federal highway funding to NDOT. (Note: Voters passed PISTOL in November 2006, but it must be approved again in 2008 for it to become law.) NDOT administrative costs and salaries appear reasonable. NDOT s administrative costs are five percent of its overall budget for State Fiscal Year However, the most recent State Department of Personnel salary survey conducted in 2004 indicated that significant disparity existed when comparing certain classifications of Nevada Department of Transportation employees to similar jobs with other Nevada employers. NDOT is one of the largest employers of engineers in the state, and often has difficulty filling vacant engineering positions. Engineers, transportation planners, and right-of-way 14 E-14

15 agents are paid significantly less than their counterparts in Las Vegas and Reno. NDOT utilizes the private sector to perform much of its work. Highway construction contractors perform over 90 percent of the construction work on highways. In addition, NDOT utilizes consulting engineers to augment its design and inspection services. Consultants perform about half of the project designs. NDOT also utilizes contractors for right-of-way appraisals, and more recently for right-of-way acquisitions. Task Force Objective 3: Evaluate funding options. Increased highway funding must be addressed now. Given the staggering needs identified for State highway projects, the shortfall is a challenge that cannot be left to the future. The Super and Mega Projects will require many years to complete, and funding decisions must be in place before the Department of Transportation can move forward on right-of-way acquisition, design, and construction. If the Legislature takes decisive action in 2007, additional revenue sources will be available in fiscal year 2008 that could be used for bonding part of the shortfall and NDOT will have the ability to consider additional construction options (i.e., public-private partnerships). By then, there will have been a period of 15 years whereby revenue from fuel taxes and highway-user fees have not kept pace with increased needs or increased construction costs due to inflation that is considerably greater than the Consumer Price Index. Solutions to Nevada s highway funding challenge will require non-traditional highway revenue sources. The State of Nevada has for many years relied on traditional fuel taxes and motor vehicle fees to fund its highway needs. But, as demand and needs increase and circumstances change, it is apparent that non-traditional solutions can and should contribute in a large way to fill the looming transportation funding gap. 15 E-15

16 Policy Recommendations The Nevada Department of Transportation should pursue advance right-of-way acquisitions for projects, including Super and Mega Projects, as soon as possible, contingent on funding. The State of Nevada should utilize General Fund surpluses to fund highway projects and consider redirecting existing revenue sources for one-time expenses, including advance right-of-way and highway construction contracts. If the People s Initiative to Stop the Taking of Our Land is approved by voters again in 2008, it will limit NDOT s ability to acquire advance right-of-way, potentially affect federal funding, discourage the settlement of eminent domain cases, create unlimited liabilities, and substantially increase the cost of the estimated $1.2 billion in right-of-way needed for highway projects to be constructed in the next nine years. An assessment for State highways should be authorized for future land sales through the Southern Nevada Public Land Management Act. NDOT should provide information to the State Transportation Board regarding how the requirement for voter approval to issue highway construction bonds as contained in the Tax and Spending Control (TASC) petition will add a cost to the bonds, and possibly delay projects. (Note: TASC was removed from the 2006 general election.) The State should provide non-traditional highway revenue sources for highways. However, sound fiscal policy dictates that taxes and fees that have the greatest nexus to highway maintenance and construction should be given priority consideration. Highway fund revenue sources should respond to inflation, when practicable. The Nevada Department of Transportation should continue to work in a cooperative manner with counties and cities to transfer the responsibility for maintenance on roads that are no longer appropriate for inclusion on the State s highway system. Individuals and businesses from within and without Nevada rely on our highway system. Any new taxes for highway maintenance and improvements should be fairly allocated to those who benefit from the use of the highways, whenever possible. Preservation of the existing highway system is important and should not be reduced, even temporarily, to free up money for new projects. Highway investments should be based on prioritizing projects, while recognizing the importance of equity in providing services throughout the state. The Nevada Department of Transportation should recognize the importance of the tourism and gaming industry to the state s economy in implementing projects. 16 E-16

17 Funding Recommendations The Blue Ribbon Task Force met 12 times during the past year and, after having considered comprehensive and detailed information regarding transportation needs, NDOT projects, and funding, concluded that it is not feasible to increase traditional State Highway Fund revenues to make up the $3.8 billion shortfall projected by To do so would require raising the State s gasoline and diesel taxes by 17 cents per gallon, plus indexing them to inflation. In lieu of such an increase in motor vehicle fuel taxes, the Task Force recommended redirecting existing general fund revenues and adjusting depreciation schedules for the valuation of vehicles, both of which have a strong nexus to highways and a strong relationship to inflation. In addition, the Task Force recommended indexing the State gasoline and diesel tax to inflation, as well as other innovative financing tools. Specifically, the Task Force unanimously recommended: That NDOT continue to pursue construction of its ten Super and Mega Projects, pavement and bridge preservation projects, two-lane highway widening projects, and intelligent transportation system projects planned for Adjusting the depreciation schedules used to establish the governmental services tax as depicted in the exhibit provided by NDOT (see Table 1), which was projected to raise an additional $96 million in fiscal year 2008, and direct those funds to the State Highway Fund to be used exclusively by NDOT for design, right-of-way acquisition, and construction of State highway improvements. The Task Force also recommended tougher enforcement of the requirement for people to register their vehicles when they move to Nevada from out-of-state. (Projected vehicle registration fee increases are depicted in Table 2.) Redirecting the entire 2 percent state sales tax on vehicles and vehicle repairs to the State Highway Fund, which was projected to raise $170 million in fiscal year 2008, to be used exclusively by NDOT for design, right-of-way acquisition, and construction of State highway improvements. Appropriating a minimum of $170 million in fiscal years general fund surplus to highways, and any future general fund surpluses above the legislative expenditure cap for one-shot expenditures for State highways. Indexing State gasoline and diesel taxes to inflation in a manner consistent with current Nevada Revised Statutes authorizing county motor fuel indexing with a maximum increase of 4½ percent annually. Increasing by $20 the fee for all drivers licenses, with the money going to the State Highway Fund. It was the intent of the Task Force that the increase offset the cost to the Department of Motor Vehicles for instituting a national identification card program, with the remainder of the revenue generated used by NDOT. 17 E-17

18 Table 3 represents the estimated revenues from the above recommendations for fiscal years Table 4 represents the portion of revenues by county and the estimated fiscal year 2008 cost per capita, per driver, per vehicle, and per household, and from which highway user group the revenues will be generated. Giving NDOT authority to implement user fees, including toll roads, high-occupancy toll lanes, and congestion pricing, and the authority to enter into public-private partnerships for the financing, design, construction, maintenance, and operation of transportation facilities. Expanding the use of tax-increment financing to allow local entities to contribute to improvements of the State highway system. Again, if the People s Initiative to Stop the Taking of Our Land is approved by the voters a second time in 2008, it will limit NDOT s ability to acquire advance right-of-way, potentially affect federal funding, discourage the settlement of eminent domain cases, create unlimited liabilities, and substantially increase the cost of the estimated $1.2 billion in right-of-way needed for highway projects to be constructed in the next nine years. The Task Force also considered other revenue-generating concepts, including raising the State gasoline and diesel taxes, but they were not recommended. Table 1 18 E-18

19 Table 2 19 E-19

20 Table 3 20 E-20

21 Table 4 21 E-21

22 Task Force Formation Background / Objectives Governor Kenny Guinn recognized the need to address Nevada s highway needs, and on June 21, 2005, the State Transportation Board of Directors, chaired by the Governor, created the Blue Ribbon Task Force to evaluate funding for future highway projects. The three objectives of the Blue Ribbon Task Force were to: (1) review the need for future NDOT transportation projects, including impacts to congestion relief, State highway system serviceability and safety, and the quality of life and economy of our state; (2) review project costs and revenue projections; and (3) evaluate funding options. The Task Force has analyzed the 10-year planning period from 2006 to Membership The State Transportation Board created the Task Force to include a broad-based membership with consideration of the chairman of the Southern Nevada Regional Transportation Commission (RTC), chairman of the Washoe County RTC, chairman of a rural county RTC, Nevada Taxpayers Association, Nevada Motor Transport Association, highway construction industry, business/gaming/tourism, Petroleum Association, Nevada League of Cities, Nevada Association of Counties, home builders, chambers of commerce and environmental interests. Members of the Task Force were Timothy Cashman, president, The Cashman Companies; John Ellison, commissioner, Elko County Board of Commissioners; Paul Enos, chief executive officer, Nevada Motor Transport Association; Michael Geeser, media/government relations, AAA Nevada; Leroy Goodman, chairman of the Lyon County Board of Commissioners; Robert Hatfield, interim executive director, Nevada Association of Counties; Kathryn Landreth, state director, The Nature Conservancy; John Madole, executive director, Nevada Chapter, Associated General Contractors; John Mayer, Sparks city councilman and chairman, Washoe County RTC; Phillip C. Peckman, chief executive officer of The Greenspun Corp.; Irene Porter, executive director, Southern Nevada Home Builders Association; Rossi Ralenkotter, president/chief executive officer, Las Vegas Convention and Visitors Authority; Mark Russell, vice president-general counsel, MGM-Mirage; Carol Vilardo, president, Nevada Taxpayers Association; and Bruce Woodbury, Clark County commissioner and chairman of the RTC of Southern Nevada. At its Oct.12, 2005, meeting, the Transportation Board of Directors approved adding two members to the Task Force. It was the intent of the Board that the existing Blue Ribbon Task Force select the at-large members. It was felt that the Task Force would have insight into individuals who could bring alternate points of view regarding future transportation projects and funding. The appointed members were asked for recommendations, and based on that NDOT recommended Tom Skancke, president of Skancke and Associates, and Terry Murphy, president of Strategic Solutions. The Task Force members approved the addition of the at-large members at their Oct. 27, 2005, meeting. It should be noted that two Task Force members, John Madole and Bob Hadfield, were also on the CAC that produced the 1990 State of Nevada Citizen Advisory Committee on Transportation Report on Funding the Highway Transportation Needs of the State of Nevada E-22

23 Leadership Governor Guinn selected Phillip C. Peckman to be the chairman of the Task Force and Leroy Goodman to be vice-chairman. Meetings Oct. 27, 2005 Feb. 23, 2006 May 25, 2006 Aug. 24, 2006 Dec. 2, 2005 March 23, 2006 June 22, 2006 Sept. 14, 2006 Jan. 26, 2006 April 27, 2006 July 27, 2006 Nov. 29, 2006 Ten of the Task Force meetings were conducted in Las Vegas: the initial meeting was at the Clark County Commission Chambers and nine at NDOT s District I complex at 123 Washington in Las Vegas. The nine meetings at NDOT s District I Complex were videoconferenced to NDOT s Headquarters Building in Carson City and District III Complex in Elko. The Jan. 26, 2006, meeting was at NDOT s Headquarters Building in Carson City with video-conferencing to Las Vegas and Elko, and the April 27, 2006, meeting was at NDOT s District III Complex in Elko with video-conferencing to Las Vegas and Carson City. These public meetings were conducted in accordance with Nevada s Open Meeting Law. Meeting agendas and meeting minutes are attached. Nevada Department of Transportation System Overview The State highway system consists of 5,449 centerline miles, which includes the federal-aid highway systems and other improved roads (see Figure 1). The federal-aid highway system is classified as either National Highway System (NHS) routes or Surface Transportation Program (STP) roads. The NHS includes the 560 miles of interstate highways (I-15 and I-80) and 1,545 miles of National Highway System routes such as US 95, US 50, US 395, US 6, US 93, McCarran Boulevard in Reno and Tropicana Avenue in Las Vegas. There are 2,674 miles of STP roads that are functionally classified as principal arterials, major collectors, and urban collectors. Generally, these roadways link other improved roads to the NHS, collector roads or higher. There are 670 miles of other improved roads on the State highway system. These are generally classified as local or rural minor collectors that provide access to the NHS and STP roads. On the NDOT maintained system these roads include access, frontage and state park roads. Figure 2 is a breakout of the various categories of roads on the State s highway system. Figure 1 23 E-23

24 Sixteen percent of all Nevada s roads are on the State-maintained system. However, this 16 percent carries 59 percent of the total vehicle miles of travel. The remaining 41 percent of travel is on systems maintained by county, city or other governmental agencies. The State-maintained system also carries 82 percent of all truck traffic and 89 percent of the heavy truck traffic in the state. Figure 2 As the seventh largest state, there are vast distances between NHS routes in Nevada (Figure 3). An estimated 86 percent of Nevada lands are public lands that must be traversed and can t be taxed. Also, more than 40 percent of traffic on our rural interstates is truck traffic, of which 80 percent does not have an origin or destination in Nevada. As mentioned above, one important aspect of Nevada transportation system is that it serves as a bridge to other states. I-80 and I-15 in Nevada, including the portions through Las Vegas and Reno, are among the heaviest freight corridors (ton-miles) in the nation. Nevada is expected to experience one of the largest increases in truck traffic in the nation over the next 15 years, due in large part to the expansion of the seaports in both northern and southern California and growth in just-in-time deliveries. Figure 3 24 E-24

25 The Department of Transportation s maintenance program is implemented by three district maintenance headquarters in Las Vegas, Reno and Elko, three sub-district operations in Winnemucca, Ely and Tonopah, and 45 maintenance stations (Figure 4). Figure 4 Some 79 percent of NDOT s road miles are in the non-urban counties (Figure 5). Figure 5 25 E-25

26 Figure 6 details the NDOT-maintained and locally maintained roads in each county, while Figure 7 breaks out the vehicle miles traveled on NDOT roads and local roads. Figure 6 Figure 7 26 E-26

27 Figure 8 shows the regionally significant roadways in the Las Vegas urban area, including the major freeways I-15, US95 and US93, and the various State routes that are arterials, such as St. Rose Parkway, Lake Mead Parkway, Tropicana Avenue, and Charleston Boulevard. NDOT has relinquished a number of local streets to local government entities in recent years and is working with Clark County regarding maintenance of the Beltway. Figure 8 The map in Figure 9 shows the Statemaintained highway system in Clark County. Interstate-15 and US 95 and US 93 are the major highways, along with a number of State routes. Figure 9 27 E-27

28 The map in Figure 10 shows the State-maintained highways in Washoe County, including I-80 and US 395, which are the major facilities there. Figure 10 Figure 11 shows the regionally significant roads in Washoe County. NDOT entered into an agreement with Reno where NDOT takes over the McCarran Loop Road, which is on the National Highway System, in exchange for Reno taking over various NDOT routes such as 4 th and South Virginia streets. Figure E-28

29 Nevada Department of Transportation Funding/State Highway Fund Overview State highways maintained by NDOT are financed with dedicated highway-user revenue and federal funds (Figure 12). No General Fund (general tax) revenue is used. State and federal highway funds are principally derived from vehicle fuel tax and registration fees. Fuel taxes and other highway-user revenue collected by the federal government are placed in the Federal Highway Trust Fund. Congress allocates these funds to the states per provisions in the multi-year highway funding authorization acts. The current five-year authorization, which was passed by Congress and signed by President Bush on Aug. 10, 2005, is called SAFETEA-LU (Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users). Under SAFETEA-LU, Nevada is authorized to receive on average $260 million per year. These federal funds are apportioned to NDOT in some 40 categories. While there is some flexibility for NDOT to transfer funds among categories, generally funds in each category can only be spent on projects meeting eligibility requirements. In addition to annual apportionments authorized in SAFETEA-LU, Congress earmarks funds for specific projects during the annual appropriation process. Of the $1.296 billion authorized for Nevada in SAFETEA-LU, $424 million was earmarked for highway, transit and other projects. While SAFETEA-LU authorizes overall contract amounts, Congress must still authorize funding in its annual appropriations, which has typically been 10 percent less than what had been authorized in SAFETEA-LU. Nevada is neither a donor nor donee state, meaning it receives approximately $1 dollar in federal highway funds (as a combination of both apportioned funds and earmarked funds) for every dollar contributed to the Federal Highway Trust Fund. Federal funds are available only for reimbursement of expenditures on approved projects. Federal aid is not available for routine maintenance. To acquire federal funds, the state must Figure E-29

30 Federal funds are available only for reimbursement of expenditures on approved projects. Federal aid is not available for routine maintenance. To acquire federal funds, the states must generally pay 5 percent to 20 percent of the project cost. In addition, federal funds are apportioned in more 40 categories and must be spent on projects or programs meeting the program criteria. Article 9, Section 5 of the Nevada Constitution provides: The proceeds from the imposition of any license or registration fee and other charges with respect to the operations of any motor vehicle upon any public highway in the state and the proceeds of the imposition of any excise tax on gasoline or other vehicle fuel shall, except costs of administration, be used exclusively for the construction, maintenance, and repair of the pubic highways of this state. The State Highway Fund was established by NRS It is a special revenue fund set up to account for the receipt and expenditure of dedicated highway-user revenue. The majority of the Highway Fund finances the Department of Transportation. However, the bulk of the operating costs of the Department of Motor Vehicles and the Department of Public Safety are also financed by appropriations from the Highway Fund (Figure 13). Figure 13 Since 2001 NDOT has issued $665 million in bonds to advance the construction of six Super Projects : US 95 widening in Las Vegas, I-15 widening, I-515/Beltway Interchange in Henderson, Hoover Dam Bypass, I-580 Reno to Carson Freeway, and the Carson City 30 E-30

31 Freeway. It is anticipated that NDOT will need to issue an additional $335 million in bonds over the next three years to complete these projects. These are a combination of 10-, 15- and 20-year bonds with payments reaching a peak of about $98 million per year during the 2010 to 2013 period with payments diminishing after that. Nevada s gas tax is depicted in Figure 14. It includes an 18.4 cents per gallon federal portion, cents per gallon state portion, and 6.35 cents per gallon county mandatory portion. In addition to the county mandatory portion, counties are authorized to enact a 9 cents per gallon optional tax. Eleven counties (Carson City, Churchill, Clark, Eureka, Humboldt, Lander, Lyon, Mineral, Pershing, Washoe and White Pine) have a 9 cents per gallon optional tax, and the remainder have a 4 cents per gallon optional tax. All counties have authority to inflation index the county mandatory and county optional gas tax (NRS ). Only Washoe County has indexed their county gas tax (mandatory and optional) to inflation. County gas taxes are collected by the Nevada Department of Motor Vehicles and returned to the county of collection in accordance with various provisions of Nevada Revised Statutes. There is no county diesel tax (Figure 15). Figure 14 Gas Taxes Figure 15 Diesel Taxes The Task Force heard presentations from NDOT regarding the allocation of funds for projects, and it was noted that funding allocations need to be viewed over a period of time and not just one year, because one major project may skew the numbers. Figure 16 shows the actual distribution of funding for the past 4 years along with the proposed funding for the current fiscal year. The state s work program is a compilation of a cooperative effort between NDOT, the Metropolitan Planning Organizations and rural counties to address needs. The bulk of funding for capacity projects was allocated to Clark County (74 percent) and Washoe County (15 percent). The bulk of pavement and bridge preservation work was allocated where the road miles are in the rural counties. The other projects, which include highway-related projects such as landscaping and bike paths, also go to where the population is located. The large pie chart at the top of Figure 16 is a combination of all construction funds allocated from FY02 to 06. This construction budget represents only one piece of all expenditures, again remembering that the highway funds are used for other purposes 31 E-31

32 including other state agencies as well as NDOT s expenses. Figure 17 shows NDOT expenditures by category for the past 10 years. Figure 16 $800,000 $700,000 Dollars in Thousands $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $ Labor Travel Operating Equipment Capital Improvements Other Programs Figure E-32

33 Nevada Department of Transportation Pavement and Bridge Preservation Program Because it represents a $3 billion investment, preserving pavement is a top priority for the Nevada Department of Transportation. Well-preserved pavement also provides a smooth ride that the public demands. Nevada s bridges represent an additional $1.2 billion investment. These assets are managed using two systems: a pavement management system and bridge inventory system. Both provide an inventory of existing assets, their condition, needed repairs, and repair priorities. Repair costs are determined to forecast short- and long-term funding requirements. The health of State highway system pavements is assessed based on the age and type of pavement, route type, traffic volume, axle loads, and measured pavement distress. Generally, pavement preservation work consists of sealing, crack-filling, patching, milling, overlaying, or reconstructing the highway surface. Sealing, crack filling, and patching are typically accomplished by NDOT maintenance crews. Milling, overlaying, or reconstructing the highway surface is normally contracted. Timely preservation work is critical to achieving low-cost pavements. Pavement preservation represents a substantial portion of NDOT s budget. In FY2005, NDOT spent $123 million for pavement preservation projects, including $75 million in state funds for overlay and reconstruction, $48 million for federally funded overlay and reconstruction, and $10 million in pavement maintenance by State forces. In 2005, the backlog of pavement work was $287 million. In previous years, funding needs were based on an annual inflation rate of 3 percent. However, based on current conditions, an inflation rate of 11 percent to 16 percent is more realistic. For bridges, condition assessments are primarily a visual evaluation of the structure, which include the effects of age, environment, fatigue, hydrologic scour, settling, and traffic collisions. Bridges are also rated on how well they serve the public, or their functionality. A bridge s susceptibility to seismic activity is also assessed since Nevada is the third most seismically active state behind California and Alaska. A bridge is a structure 20 feet or more that carries traffic over a depression or obstruction and includes multiple box culvers and pipes. Generally, bridge preservation work consists of rehabilitating or replacing structurally deficient or functionally obsolete structures, seismically retrofitting earthquake-prone structures, sealing or replacing travel surfaces, and replacing worn joints. There are approximately 1,623 bridges open to the public in Nevada. Of this total, NDOT maintains 1,015 of them. In FY2005 NDOT spent $19 million for bridge preservation. Based on the biennial Highway Preservation Report, the backlog of bridges in dollars was $58,972,000 in 2005 and the seismic retrofit backlog was $61,200,000 in The Task Force hired Tom Warne and Associates to evaluate the Nevada Department of Transportation s Pavement and Bridge Preservation Program. Mr. Warne is a nationally recognized highway expert, having been the deputy director of the Arizona Department of Transportation and director of the Utah Department of Transportation, where he was 33 E-33

34 responsible for the nation s largest design-build contract to date: the reconstruction of I-15 in Salt Lake City for the 2002 Winter Olympics. Mr. Warne was also the president of the American Association of State Highway and Transportation Officials. Dwight Bower of Lochner and Associates assisted in the preparation of the report. Mr. Bower is also a nationally recognized highway expert with over 45 years of experience, including as director of the Idaho Transportation Department and as deputy director of the Colorado Department of Transportation, where he also served as a district engineer, assistant district engineer and senior highway engineer. The evaluation confirmed that Nevada has made significant financial investment in pavement conditions in the past eight years, and that the Federal Highway Administration s 2003 Pavement Conditions Report shows that Nevada s pavement on the National Highway System is ranked number one in the 50 states. This National Highway System represents over 160,000 miles of roadway, ranging from interstate highways to primary routes throughout the United States. For the entire federal-aid highway system, Nevada ranks No. 6 in the nation. All other roads surveyed that are major collectors, urban minor arterials, and urban collectors are ranked number 22. Based on the information, Nevada s highways have some of the best surface conditions in the United States. The report also concluded that Nevada has a very proactive pavement management program that is focused on managing risk and minimizing financial consequences. This program is called Financial Consequence-Based Pavement Management System. For this pavement management program to succeed long-term, ongoing adequate funding is necessary. If adequate annual funding is not continued, at some point restoring the condition of Nevada s roads to their current condition would cost four times as much as the annual funding allowance. The NDOT improvement strategies are more proactive than the traditional strategies that are more commonly used throughout the United States by other state departments of transportation. A long-term view toward highway preservation is essential to sound financial management. Prompt attention to preservation issues in the short run can reduce major reconstruction projects in the long run. The report concluded: Nevada has very good pavement conditions on the interstates and principal arterials throughout the state. The remaining balance of the roads statewide has average pavement condition. The proactive approach used in pavement management is innovative and results in higher quality service to the public. The resulting higher quality of service to the public, when funded, will result in a measurable savings over future years. The increase in the cost of products used in highway pavements has not been included in the funding levels needed to meet the stated policy. Finally, the report recommended that to preserve a high-quality state highway system at low cost, an action plan is needed that optimizes the use of available funds. NDOT s action plan, in priority order, is as follows: 34 E-34

35 Continue to maintain Nevada s Interstate system and high-volume roads at a high level of serviceability by applying timely overlays and reconstructing inferior segments. Continue to maintain Nevada s non-interstate principal arterials, minor arterials, and other moderate-volume roads at a modest to high level of serviceability by applying timely overlays and reconstructing inferior segments. Further develop economically sound methods to improve low-volume roads and maintain them at a limited, but acceptable, level of serviceability. Continue coordinating and integrating routine pavement maintenance activities with planned overlay and reconstruction work. The Federal Highway Administration (FHWA) recently acknowledged Nevada as having the best bridges in the nation. The 2006 FHWA report noted that 95 percent of Nevada s bridges are functional and structurally sound. Tom Warne and Associates also reviewed NDOT s bridge program and concluded there were 29 bridges that are currently considered to be in poor condition. The report also noted there are no load posted bridges on Nevada s state highway system. This is not true in many states where age and deterioration have caused significant structural degradation. Since 1995, when NDOT began prioritizing bridges for seismic retrofits, Nevada has replaced or retrofitted nearly 80 structures. A high priority exists for seismic retrofit of at least 153 state-owned bridges. Climatic conditions, usage, and age are the most cited factors affecting bridge life expectancy. The bridges in Nevada are much newer than in most of the United States. However, a large percentage (one third) of Nevada s bridges will reach 50 years of age in the coming decade, requiring increased maintenance and replacement. The report concluded that funding levels appear to be adequate to achieve NDOT s goals. However, inflation costs of the materials utilized in structure maintenance and replacement (concrete, steel, etc.) have been increasing and these increases, as well as age, should be factored into future funding if the policy is to be maintained. The report also concluded that NDOT has a good bridge program in place and should not vary in a significant way from the course it is currently on. The Task Force concluded that NDOT s policy that it budget to preserve the state s highway and bridge system so as not to increase the backlog of maintenance needs is a cost-effective and prudent strategy, and that preservation of the existing highway system is important and should not be reduced, even temporarily, to free up money for new projects. 35 E-35

36 Nevada Department of Transportation Super and Mega Projects The Nevada Department of Transportation presented information regarding 10 Super and Mega Projects it is planning to construct by These projects, in the planning and design phases, are to add capacity projects to address congestion relief and improve safety. The preliminary cost of these projects total $4.8 billion and include two Mega Projects exceeding $1 billion each: Widening I-15 from Tropicana Avenue to the Spaghetti Bowl, and Widening I-515/US 95 from the Spaghetti Bowl to Foothill Boulevard In addition, there are eight new Super Projects which exceed $100 million each: Southern Nevada Widening I-15 from the Spaghetti Bowl to Apex The Boulder City Bypass Widening US 95 from Craig Road to Kyle Canyon Widening I-15 from St. Rose Parkway to Tropicana Avenue, and Beltway interchanges at US 95, I-15, and Summerlin Parkway Northern Nevada Widening I-80 from Robb Drive to Vista Boulevard Widening US 395 from the Spaghetti Bowl to Stead, and Improvements to Pyramid Highway. The Department of Transportation presented information regarding levels of service (LOS) for various freeways in Las Vegas for 2005, 2015 and 2030 with and without the proposed improvements. Level of Service is a qualitative measure that describes operational conditions within a traffic stream and their perception by drivers and/or passengers. Six LOS, A through F, define the full range of driving conditions from best to worst, in that order. Level of Service A represents free flow at low densities with no restrictions due to traffic conditions. Level of Service F is a traffic jam, with frequent interruptions and breakdowns of flow, as well as volumes below capacity coupled with low operating speeds. Figures on the next page represent levels of service for the State freeway system in the Las Vegas Valley under current conditions and in 2015 and 2030 with and without the proposed Super and Mega Projects. Figures on the following page represent levels of service for I-80, US 395 and Pyramid Highway in Washoe County under current conditions, in 2012 and 2030 with and without the proposed improvements. The Task Force also hired Tom Warne and Associates to review NDOT s proposed Super and Mega Projects. There were two specific tasks. The first was to review available corridor studies, National Environmental Policy Act (NEPA) documentation, and other relevant planning documents for NDOT s future Super Projects and Mega Projects to determine if the proposed projects are needed to address future mobility and access issues. This review was to be performed with sufficient detail to determine that the proper analyses 36 E-36

37 Figure 18 Figure 19 Figure Figure 21 E-37

38 Figure 22 Figure 23 Figure Figure 25 E-38

39 were used to establish projected levels of service with and without the proposed improvements. The second task was to review Super/Mega Project cost estimates. This work included a review of cost estimate data, meetings with NDOT project managers, their consultants and other stakeholders to evaluate the reasonableness of the cost projections. It was recognized that the projects have not been designed and, therefore, costs were based on preliminary estimates. This review considered each of these projects in light of the National Environmental Policy Act and other planning activities. In addition, the nature and validity of their stated purpose and need, including a specific review of traffic projections and their respective cost estimates, were analyzed. Finally, each was considered for possible phasing or sequencing of their respective project elements to level out the overall cash flow requirements of the program. The specific findings of this study are as follows: The NEPA studies for each of these projects are at differing stages of the federally defined process. The only completed environmental impact statement (EIS) is for the Boulder City Bypass. This document was reviewed and found to be competently done and followed national standards of practice. Available NEPA and other planning documents were reviewed for the remaining projects, and they too were found to reflect a sound and thorough approach. In the case of concept studies reviewed, there is some variation in their content both within NDOT and other state DOTs, but these differences were not considered material. Given that most of the justification for these Super/Mega Projects is to relieve congestion and provide mobility, a review of the traffic analysis was performed for each. This review found that traffic conditions in most of corridors will grow to unacceptable levels absent the planned investments. Given that all of the projects are in their early stages of planning and engineering, the available cost estimates were general in nature and reflect an appropriate level of detail at this time. There are generally two dollar values associated with each project in the study information provided: a base cost estimate in the published documentation and the estimate shown in the materials in use by the Blue Ribbon Task Force. From these numbers an adjustment was made to escalate the estimates to current (2006) dollars. This resulted in a new total value for all 10 projects of approximately $5 billion, which is 4 percent higher than the $4.8 billion value currently in use by the Task Force. Future cost estimates should take into consideration the substantial dynamics of the construction market and national and world economic conditions to more accurately reflect the final estimated cost of the work. In analyzing the possibility of sequencing or phasing the planned work on these 10 projects, each was reviewed in light of its planned elements and the possibility of independent utility of selected features. In each case, some elements of the projects can be built in advance of the complete effort. Improvements on adjacent arterials and frontage roads in the Spaghetti Bowl area will provide some mobility relief in this critical area of Clark County. Perhaps most significant is that work on I-15 and much of the I-515 project will be dictated more by what is physically possible to build simultaneously rather than by cash flow. Of concern is the significant cost of the I-15 work from the Spaghetti Bowl to Tropicana Avenue. With 39 E-39

40 estimates reaching $1.2 billion for this five-mile section of freeway, a rigorous review of options is essential to ensure a wise investment for future mobility in this area. Mr. Warne concluded these projects are clearly needed to address Nevada s transportation challenges over the next 25 years and beyond. NDOT is pursuing the appropriate planning and environmental studies and must continue to do so with a sense of urgency and thoroughness. Cost estimates must be further refined and a complete overlay of construction sequencing and the cash flow model must be prepared to fully understand funding and scheduling options. The study also recommended that an evaluation be undertaken to determine if any of the projects could be built in segments or in phases, or delayed past 2015 to allow for a more even distribution of cash flow requirements for the Super/Mega Projects program. Given Mr. Warne s recommendation for overlaying construction sequence and cash model, NDOT evaluated the 10 Mega and Super Projects to determine the feasibility of substantially completing them by NDOT concluded that the projects could be completed. Figure 26 on the next page shows the proposed sequencing of projects and cash flow requirements for substantially completing the ten Super/Mega Projects. NDOT also presented a sequencing and cash flow model for completing a list of priority projects if the entire shortfall was not funded. This is shown in Figure 27 on the following two pages. The Task Force agreed that NDOT s proposed project implementation plan which is based on traffic congestion, project readiness, other available funding earmarked for the project, rightof-way acquisition and regional equity, were appropriate. The Report to the Blue Ribbon Task Force on Transportation Needs and Funding, Super/Mega Projects Program Review is included in the Attachments. Other Projects In addition to the Super/Mega Projects, NDOT has identified $400 million in additional needs for widening two-lane highways throughout the State and $100 million for enhancing intelligent transportation systems (ITS) in the urban areas. There are 4,405 miles of two-lane roadways on the State highway system. As growth continues, many of these roadways will need to be widened to accommodate growth and to improve safety. Examples of two highways that have experienced significant increases in traffic in recent years are State Route 160 (Blue Diamond Highway) in Clark County and US 50 in Lyon County. ITS is a collective term for measures targeting the efficient operations and management of transportation facilities and services, usually involving the use of electronic equipment to collect, process, disseminate, real time information. Examples of ITS are dynamic message signs on freeways that display information about traffic conditions and detours, and the recently activated ramp meters on US 95 at Lake Meade Boulevard and Cheyenne Avenue. ITS plans have been developed for Las Vegas and Reno, and have been implemented to varying degrees during the past eight years. The RTC of Southern Nevada operates a traffic management center located on Decatur Avenue near the Beltway in Las Vegas, under an agreement with NDOT. NDOT is planning to implement ITS along all the I-15, I-515 and US 95 corridors in Las Vegas and I-80 and US 395 corridors in Reno. 40 E-40

41 Figure E-41

42 Figure E-42

43 Figure 27 (continued) 43 E-43

44 Funding Shortfall From 1990 to 2003 Nevada s population grew by 92 percent, the fastest rate of growth in the nation. During the same time period, the vehicle miles of travel on all of Nevada s streets and highways more than doubled from 9 billion to billion, also the fastest rate of growth in the nation. Nevada s population is expected to grow to 2.8 million people by 2010, and vehicle travel in Nevada is expected to increase by 80 percent by 2010, to 35 billion miles of travel annually. As mentioned previously, Nevada s per capita highway travel has increased 6.8 percent (Figure 28) and per capita fuel use has declined 8.3 percent (Figure 29) since the state s fuel taxes were last raised in Ultimately, Nevada s highways are being traveled more heavily, using less fuel per capita, and at a tax rate that does not account for 14 years of inflation. Nevada Per Capita Highway Travel 9,500 Miles Traveled Per Person 9,000 8,500 8,000 7,500 7,000 6,500 6, Year Nevada Per Capita Fuel Use Figure Figure Gallons Per Capita Gasoline Use Year Per Capita Special-Fuel Use E-44

45 The rate of inflation in the highway construction industry has greatly exceeded general inflation, as shown in Figure 30. Asphalt, concrete and steel, the three main ingredients of highway construction projects, have increased more than 20 percent during the past 12 months. Fuel to operate vehicle and equipment has also risen sharply in cost. Figure 30 The Task Force was concerned with a number of issues related to the effect of hybrid vehicles on highway funding, the effects of Indian gaming on highway traffic counts, Indian Tribe taxation of motor vehicle fuel, the impact of new resort development, and the Ivanpah Airport in Las Vegas on the State s highways. Currently, 1,007 hybrid vehicles are registered in Nevada. This comprises 0.06 percent of all regular vehicles (not motor carriers) registered in Nevada, and as such does not significantly affect revenue to the State Highway Fund. Future projections are that hybrid and alternative fuel vehicles will comprise less than two percent of the vehicle fleet in NDOT presented information regarding traffic counts for I-15 and I-80 for the period 1995 to The traffic counts for I-15 indicate increases in traffic every year since The counts for I-80 indicate increases in traffic in 2004, 2002, 2000, 1999, Based on 45 E-45

46 this information the Task Force concluded that it was not possible to determine what affect, if any, Indian gaming has had on these traffic counts. A summary of a recent Supreme Court decision regarding tribal taxation of fuel in Kansas was presented, in which the Court held that imposing tax on non-indian fuel distributors involving off-reservation transactions did not violate an important interest-balancing test set forth in White Mountain Tribe v. Bracker, even if the fuel was later delivered to the reservation. Although this opinion appears favorable to the State of Nevada, a more salient issue surrounds the numerous court decisions involving tribal sovereignty: that is, did the governments involved negotiate good-faith agreements? Indeed, the State of Nevada negotiated good-faith agreements with those tribal governments selling fuel in Nevada where the State s best interest was to secure an agreement. No agreement is impenetrable, but the State of Nevada s position is enviable in comparison to other states, and the tribal governments involved have secured benefits for their members as well. The tribes are compensated for collecting fuel tax, receive an exemption for their members reservation fuel use, and their roads are often maintained by the State. The Task Force heard presentations regarding future traffic demands related to the development of new timeshares, hotels, and condo-hotel developments, as well as the proposed Ivanpah Valley International Airport: The rapidly expanding growth of the southern Las Vegas Valley, coupled with the increase in Southern California visitors and air passengers traveling to and from the proposed Ivanpah Valley International Airport between Primm and Jean, will drastically increase the number of motorists desiring to use I-15 north to Las Vegas. The average daily two-way traffic volumes on I-15 south of Sloan Road are forecast to nearly quadruple from 42,000 vehicles in 2003 to 156,000 by The areas adjacent to I-15 between the Bruce Woodbury Beltway and St. Rose Parkway housed 331,000 residents in The area is expected to house 841,000 residents by The average daily two-way traffic volumes on I-15 north of Blue Diamond Road are forecast to increase more than six fold from 67,000 vehicles in 2003 to 420,000 in In 2005, hotels, casinos, and support businesses employed some 305,000 workers in the resort corridor from roughly Tropicana Avenue to just south of Sahara Avenue. That area is expected to employ 430,000 residents by The average daily twoway traffic on I-15 in that area are expected to more than double from 230,000 vehicles in 2003 to 500,000 in The average daily two-way traffic on I-15 at Lamb Boulevard is expected to more than quintuple from 23,000 vehicles in 2003 to 123,000 by E-46

47 Bonding and Cash Flow Scenarios NDOT presented information regarding cash-flow needs to address the projected $3.8 billion shortfall (Figure 31) and support its proposed program. The Task Force concluded that because of their cost, bonding would be necessary to accomplish the Super and Mega Projects. The Task Force presented likely bonding scenarios based on cash flow needs to complete all Super and Mega Projects by An additional $280 million in annual revenue will be needed for 24 years to bond for the projected 2006 to 2015 shortfall of $3.8 billion (in 2006 dollars). Figure E-47