T2040 Financial Strategy. Transportation Policy Board July 13, 2017

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1 T2040 Financial Strategy Transportation Policy Board July 13, 2017

2 Today s Agenda Today s Meeting Financial Strategy Purpose TPB 6/08/13 Engagement Session Input Updated Revenue and Expenditure Estimates Finance Working Group Recommendations Action to Proceed with Analysis

3 The Question Will the revenues identified in the metropolitan long-range transportation plan cover the anticipated costs of the projects along with operation and maintenance of the existing system? 23 U.S.C. 134(g)(2)(B) and 134(h)(2)(B)(ii) 23 CFR (b)(11) 40 CFR CFR (b)(11)

4 Financial Strategy Purpose Federal Requirement: must show sources for identified needs in financially-constrained plan Identify reasonably assumed revenues Not an adopted budget, but a general game plan Increases or new sources must be publicly vetted and authorized either locally or by legislature Updated every 4 years to reflect progress and new thinking

5 What we heard on 6/8/17 Pros and Cons of different user fee options (mileage fees vs. tolls) Address projected declines in gas tax revenues Lack of near-term revenues for city and county investments Importance of educating and communicating needs and revenue options to public and stakeholders Clearly identify early and ongoing implementation steps and timelines as part of plan update Continue to explore non-typical sources, such as public private partnerships (P3s)

6 6 Financial Strategy Building Blocks Regional Capacity Project List Update Financial Strategy Working Group Programmatic Estimates Maintenance & Preservation Working Group Transportation Operators Committee

7 7 Financial Strategy Building Blocks Maintenance & Preservation Investments to maintain and operate existing infrastructure and services through plan horizon: $107 billion Address backlog Pavement preservation up to Good standard (70 PCI Rating) Bridges & Structures preserved and replaced Transportation-related stormwater infrastructure & costs Local infrastructure, operations, & ITS

8 8 Financial Strategy Building Blocks Regional Capacity Projects Regional List: 312 projects Average $184m Highest - $3.5b Lowest - $915,000 Local System Improvements Local Projects in Comprehensive Plans Projects and Service in Transit Long Range Plans Other state projects $44 billion $47 billion

9 Estimated Need: DRAFT Maintenance & Preservation Regional Capacity Projects Local System Improvements $198 billion King, Snohomish, Pierce, Kitsap Counties

10 Total Revenue Gap DRAFT Current Law Revenue $156.8 billion T2040 Gap $41.5 billion Cities, Counties & Local Transit: 3/4 of Gap

11 Proposed Policy Direction Reaffirm existing strategy of maintaining and increasing currently available sources while transitioning to user-based fees in long-run Better address more local needs in near-term, using both current and new tools

12 Proposed Policy Direction Develop gas tax solution Road Usage Charges rather than Limited Access Highway System tolls Use funding tools that address desired regional performance outcomes including reduction of congestion and greenhouse gases Strive for equity in benefits and impacts especially for underrepresented groups

13 User Pricing Approaches in Plan Current Updated Completion of Express Lanes, transition to Limited Access Highway System Tolling Completion of Express Lanes, and Road Usage Charges (VMT mileage fees)

14 Revenue Source Criteria Based on Regional Performance Outcomes Support regional vision System management potential GHG reduction potential Equity in application & outcomes Diversity & stability of sources Revenue potential Cost to administer/collect Feasibility

15 15 Current Revenue Sources Changes State Fuel Tax indexed to inflation State Fuel Tax return to region increased Federal support at current levels Continued reliance on variety of sources, including: state, regional, local fees & charges; fare increases; facility and express lane tolls

16 New Revenue Sources Changes Road Usage Charges Shares to highways, ferries, Cities, Counties, local transit Street Maintenance Utility Cities and Counties Carbon Tax on Motor Fuels Cities and Counties Employee Tax Local transit Parking Charges/Taxes Cities and Counties 16

17 Balanced Plan FINANCIAL SUMMARY (millions of year $2018 constant dollars) INVESTMENTS Maintenance & Preservation System Improvements DRAFT Total Current Law REVENUES New Revenue Counties $ 11,600 $ 2,600 $ 14,200 $ 9,900 $ 7,800 $ 17,600 Cities $ 22,400 $ 16,000 $ 38,400 $ 20,700 $ 19,600 $ 40,200 Local Transit $ 26,000 $ 17,400 $ 43,400 $ 35,000 $ 9,900 $ 44,900 Sound Transit $ 20,800 $ 40,800 $ 61,600 $ 61,600 $ - $ 61,600 State Ferries $ 7,300 $ 300 $ 7,500 $ 5,000 $ 2,500 $ 7,500 State Highways $ 18,600 $ 14,200 $ 32,800 $ 24,300 $ 24,400 $ 48,700 Other Regional $ - $ 400 $ 400 $ 400 $ - $ 400 TOTAL $ 106,600 $ 91,700 $ 198,300 $ 156,800 $ 64,200 $ 221,000 Total

18 Financial Strategy Takeaways City & County Near-term revenue gaps highlights need for immediate action steps to identify new revenue sources Local Transit Diversification of revenues helps address volatility of traditional sources State Highway & WSF Even with passage of a significant state package (Connecting WA), increasing M&P expenditures result in near-term revenue gaps

19 Action to Proceed Direct staff to proceed with identified investments and financial assumptions for modeling and analysis Return to the TPB in fall 2017 with a preliminary system performance report prior to inclusion in the draft updated plan, scheduled for December 2017 release for public review and comment

20 Pavithra Parthasarathi Principal Planner Benjamin Brackett Senior Planner Ben Bakkenta Program Manager Thank you.