House Finance Transportation Subcommittee

Transcription

1 Ohio Turnpike and Infrastructure Commission Budget Testimony 2017 Jerry N. Hruby Chairman Randy Cole Executive Director House Finance Transportation Subcommittee Tuesday, February 7, 2017 Timothy J. Paradiso Vice - Chairman Sandra K. Barber Secretary - Treasurer George F. Dixon Member Michael A. Peterson Member Capri S. Cafaro Member Jerry Wray Director of ODOT Member Ex-Officio Timothy S. Keen Director of OBM Member Ex-Officio Frank LaRose Ohio Senate Member Thomas F. Patton Ohio House Member

2 Ohio Turnpike and Infrastructure Commission Testimony of Executive Director Randy Cole House Finance Committee February 4, 2015 Chairman McColley, Ranking Member Reece and members of the House Finance Subcommittee on Transportation, my name is Tony Yacobucci, and I serve as Chief Engineer of the Ohio Turnpike and Infrastructure Commission. With me today is Adam Greenslade, Director of Government Affairs, Marketing and Communications. Thank you for inviting us to testify today. In accordance with the Ohio Revised Code ( ), we are here to provide an update regarding our current budget and long-term capital plan. As the Turnpike enters its 62 nd year of operation, it is fiscally sound, and our employees do an outstanding job of maintaining our infrastructure and taking care of our customers and the communities we serve. Although the entire Turnpike was incorporated by the Federal Highway Administration into the Interstate Highway System, as you may know, the Ohio Turnpike does not receive federal gas tax, nor does it receive Ohio General Fund Revenue or any monies appropriated from the State Treasury. In 2013, Governor John Kasich announced the Ohio Jobs and Transportation Plan, which was supported and passed by the Ohio General Assembly as House Bill 51. HB 51 authorized the Commission to issue Turnpike revenue bonds to fund infrastructure projects in Northern Ohio that have a transportation-related nexus to the Turnpike system. Those projects are first approved by the Transportation Review Advisory Council (TRAC), forwarded by the director of the Ohio Department of Transportation (ODOT) and approved independently by the Commission. Since H.B. 51 was passed, the Commission has successfully issued approximately $70 million in Senior Lien Bonds to help fund the replacement of the Turnpike s original concrete base, which is now more than 60 years old. 2

3 At the same time, Junior Lien Bonds were issued that generated $930 million in proceeds to fund 10 Commission-approved Infrastructure Projects. Through December 2016, the Commission has reimbursed ODOT $762 million in progress payments for the approved infrastructure projects. (See Tables 1 and 2 in Appendix A.) It is anticipated that the remainder of the $930 million in bond proceeds will be paid to ODOT by the end of Operating Budget I would now like to present our 2017 Operating Budget, which is detailed in Table 3. (See Table 3 in Appendix A.) Revenue As it was originally conceived, the Ohio Turnpike is a toll road. In fact, more than 90 percent (91.6%) of the Turnpike s revenue is still derived from tolls. Toll collection is performed in three ways. The Commission employs toll collectors; uses automated toll payment machines (ATPM s) which are located at lower-volume interchanges; and over 63 percent of toll revenue is currently collected through electronic toll collection, also known as E-ZPass. (For commercial vehicles alone, the E-ZPass toll revenue is over 81 percent). The current toll rates are very competitive with the rates charged by other toll authorities in this east-west corridor. Current toll rates reflect the Commission s ongoing commitment to remain fiscally sound, while providing a high level of service to the traveling public. For a typical resident of Northern Ohio, it costs from $.50 to around a $1.25 for a regular, daily commute. (See Table 4 in Appendix A.) Here are a few of the revenue highlights from the Operating Budget (for 2017): Toll revenue is budgeted to increase $7.5 million, which is about 2.6% above our 2016 actual toll revenue. One factor for our strong results is for the second year in a row more vehicles traveled on the Ohio Turnpike than any other year in our history. The total of 54.9 million vehicles in 2016 beat the previous record from 2015, which was 53.4 million. 3

4 In 2016, the Turnpike also recorded the second most number of vehicle miles traveled in our history with over 3 billion miles traveled. This was only 2.6 million fewer miles traveled than in the record year of These record numbers of travelers will also allow concession revenues from the service plazas to provide nearly five percent (4.9%) of revenues; interest income provides another 1.2%; and fuel taxes, advertising, and miscellaneous fees provide our remaining income. Fuel sold at Turnpike service plazas generates approximately $27 million in motor fuel taxes annually. Of that, the Turnpike receives $.05 per gallon or about $2.4 million each year. Since 2011, service station concession sales at the plazas have generated approximately $2 million annually. Last year, the Commission and Sunoco renegotiated the lease for the next term adding an estimated 18% increase in value to the agreement over the next five years ( ). Additionally, Sunoco has committed to make $6.4 million in capital improvements to the Commission s facilities. I d also like to note that, in addition to the revenue generated for our operations, vehicles traveling on the Turnpike annually generate about $118 million in state and federal fuel taxes, which is money that comes back to state and local governments for their transportation projects. Additionally, the Ohio Turnpike is responsible for generating significant economic activity in northern Ohio each year. In addition to our employees, there are approximately 3,000 more workers employed in jobs that are affiliated with our service plazas. In Sandusky County, for example, the former county auditor informed us that our two sets of service plazas (four total) generate more sales tax than any other enterprise in the county. Expenditures The Commission s Master Trust Agreement with its bond holders governs the flow of funds related to our expenditures. It requires that we first pay our operating expenses and then our debt service. Any remaining revenues are used to fund the Commission s capital program. 4

5 Chart 1- Expenditures Budget As you can see in the graphic, only 3.8% of expenditures will be spent on administration and insurance; 12.7% is allocated for roadway and facility maintenance; 17.8% for the operation of the toll and service plazas; and 4.4% for traffic control, safety, highway patrol and communications. Fringe benefits are budgeted to increase $4.2 million or 19% from last year s budget primarily due to a $3.4 million Governmental Accounting Standards Board (GASB) 68 pension expense increase and health care costs. Most of the $2.8 million increase in Services and Toll Operations expense is due to increased wage and fringe benefit expense combined with a projected increase in credit card fees because of greater E-ZPass usage. The decrease in Traffic Control, Safety and Patrol is primarily due to the cancelation of a telecommunications contract with an outside firm made possible by integrating the Turnpike into the MARCS statewide radio system and participating in the Ohio Department of Administrative Service s Voice Over Internet Protocol phone system. 5

6 The Commission also will pay $11.2 million (of the $14.5 million budgeted for traffic control, safety, and Highway Patrol) to the Ohio State Highway Patrol for their services in policing the Turnpike. Next, let s take a quick comparative look at operating budgets of the recent past. Chart 2 Historical Operating Budgets Chart 2 shows the Commission s Operating Budgets for the last nine years. The red line represents budgeted revenues that have steadily increased from $212 million in 2009 to $327 million in The green line represents budgeted operating expenditures that have held constant over this period increasing only slightly from $123.3 million in 2009 to $126.3 million in The difference between our revenues, the red line, and our operating expenditures, the green line, represents our income from operations, which has more than doubled over this period from $89 million in 2009 to $200 million in

7 This increased income from operations has enabled the Commission to fund the increase in debt service payments from $56 million in 2009 to $105 million this year. The Commission has also been able to increase the amount transferred to our capital improvement funds from $33 million in 2009 to $95 million in Debt Service The Commission currently has about $1.6 billion in senior and junior lien bonds outstanding. Debt service payments are estimated to be $105 million in Capital Expenditures Last December, the Commission approved a $121.4 million capital budget, which includes resources for roadway improvements, such as pavement replacement and resurfacing, bridge rehabilitation and technology to prepare for the future when vehicles are communicating with each other and the roadway. This budget will continue our pavement replacement program that began in 2011 in recognition of the original pavement s age across 241 miles. This year, the Commission will replace pavement in a five-mile long section in the eastbound lanes in Sandusky County between Sandusky and Riley Townships. Five-mile long sections will also be replaced in 2017 in Erie County in the westbound lanes between Groton and Oxford Townships and in Portage County between Streetsboro and Shalersville Township. In total, the Commission has approved a combined project budget for pavement replacement of $51.7 million. Four resurfacing projects are scheduled for 2017 totaling approximately $24.3 million. These projects will include resurfacing the pavement of the right and center lanes between Lake and Troy Townships in Wood and Ottawa Counties and resurfacing all three lanes and both shoulders in Lorain County between Brownhelm and Elyria Townships. We will dedicate $22.7 million to repairing and rehabilitating bridges. The bridge repairs include substructure repair at various sites and include 10 deck replacements and one bridge removal. 7

8 Looking beyond this year s program, Table 5 shows we re spending more than $1.3 billion on capital expenditures over the next 10 years. (See Table 5 in Appendix A.) In addition to what we are improving, it s also important to know that the Commission followed Governor Kasich s lead to improve how we complete our work and which companies have full access to our construction contracts and other bid opportunities. In 2016, we established an Office of Equity and Inclusion to provide more opportunities for contracting. These include efforts to package projects as smaller-sized contracts, eliminating unnecessary barriers to doing business with us, establishing contract-specific participation goals, evaluating prime contractors good faith efforts for inclusion and effective monitoring to ensure that contractors fulfill their commitments. The Office is implementing a new certification and compliance system. The system includes a one-stop shop located on the Commission s web page for certification and contract management. As a result, the Commission will have a greater ability to evaluate and report on the results of its efforts to include Small, Minority and Disadvantaged- Business Enterprises in its contracting opportunities. We re also increasing outreach to promote our contracting opportunities within our communities. We will participate in the Ohio Business and Career Expo in Columbus on May 17, and we are a partner in hosting Ohio s first-ever Civil Rights Symposium on April 11 th and 12 th. In addition, we continue our outreach by participating in the Greater Summit Business Conference on April 26 at the University of Akron. We continue to strengthen our relationships with ODOT and DAS by collaborating on these efforts, as well as with state and national groups. For example, we serve on the Host Committee to bring hundreds of industry professionals to Cleveland in 2018 for the American Contract Compliance Association s Annual National Training Institute. So, there will be ample contracting opportunities for all as we continue to strive to be the industry leader in providing safe and efficient transportation services. 8

9 Safety is our Top Priority Our single greatest priority is the safety of our customers, partners and employees. On the customer side, we have good news to report over 11,000 drivers have signed up to take our distracted driving pledge. Continued safety efforts like this and others are among the reasons why the number of crashes on the Turnpike were down in 2016 compared to There were 92 fewer crashes on our roadway last year, a nearly four percent improvement. And with the commitment and resources of the Highway Patrol, we re also removing dangerous illegal drugs and contraband from our road. In 2016 alone, troopers seized nearly $12 million ($11, ) in illegal narcotics from would-be drug dealers and users from the Ohio Turnpike, which was an 83 percent increase in street value compared to The Intersection of Safety, Efficiency and Technology We have embarked on an era of unprecedented innovation and technology updates in Turnpike operations. As mentioned earlier, MARCS was deployed across the Turnpike and we re now fully operational with our new dispatch consoles. Training is ongoing and we have deployed 340 MARCS radios in our vehicles across the length of the turnpike. The adoption of MARCS allows us greater interoperability with ODOT, the Highway Patrol and local police and fire in our 70 communities across the Turnpike. We re also beginning to evaluate a new feature to improve safety for our toll collectors and customers with the installation of LED speed limit warning signs in certain lanes at Toll Plazas along the Turnpike (Exit 71-Stony Ridge/Toledo; Exit 161-Strongsville/Cleveland; Exit 218- Niles/Youngstown). If you have driven on the Pennsylvania Turnpike, you may have seen similar signs. They will not be used for enforcement purposes, like red light cameras or school zone cameras. Instead, they will be placed prior to our Toll Booths to alert motorists of their current speed and remind them of the need to slow down to 10 miles per hour. Our most recognized technology improvement over the last decade is Ohio s E-ZPass program. It began providing discounted tolls and faster entrance and exit on the Ohio Turnpike in

10 We enrolled our 350,000th customer in August. This milestone occurred in part because of our strategy to expand our partnerships with Ohio retailers and to date there are now 377,000 active Ohio E-ZPass accounts. E-ZPass is available at 280 retail locations in 23 Ohio counties. It s now in Giant Eagle and GetGo, Discount Drug Mart, Barney s Convenience Marts, Mickey Mart Stores, and select AAA and Ohio BMV offices. With the increased availability of setting up an account, the number of overall users and vehicle miles travelled with E-ZPass has increased steadily. Currently, 57 percent of all customers use E-ZPass. E-ZPass usage adds up to big savings for our customers. In fact, E-ZPass has saved our customers more than $300 million compared to customers who paid cash since we began the program. In tandem with introducing E-ZPass in 2009, the Ohio Turnpike was one of the first toll roads to offer customers the ability to pay with a credit card. That first year, less than half a million credit card transactions were processed. Last year, however, over 2.1 million customers chose to pay by credit card. In response to the demand (last June) we worked with Teamsters Local 436, the union that represents our toll collectors, and an outside vendor, to implement updates to our credit card software processing system. As a result of the updated system, Toll Collectors spend about 50 percent less time assisting customers with their credit transactions. This is significant because, in a typical day, about 5,000 cars and 750 trucks will pay by using a credit card. Over the course of a year, the time spent by our customers at the toll booths is reduced by about 12,000 hours. While we are always finding ways to improve the current Toll Collection System and our Customer Service Center it is time to recognize that it s almost 10 years old. 10

11 In fact, parts of the system are expected to reach their planned end of life by In preparation for that eventuality, last year we began working with Jacobs Engineering Group of Cincinnati, to consider improvements and alternatives. The Jacobs Group and their team began extensive work to evaluate our current toll system. Most of the data gathering is complete, including customer surveys and extensive facility and infrastructure review that includes a comprehensive look at best practices in the industry. Our management team is now working with our consultants to narrow alternatives for further review. The in-depth analysis and development of a long-term strategic plan should be completed with a final recommendation to the Commission in March or April. In the midst of these other projects, and under the leadership and direction of Governor John Kasich, the Ohio Turnpike is working with ODOT and the Ohio Department of Public Safety (ODPS) to advance innovations that will change the way people and products are transported in Ohio and around the world. We re preparing our enterprise to reap efficiency gains and safety benefits from the leading edge of disruptive changes in transportation technology. We have been reviewing relevant sections of the Ohio Revised Code, our rules and policies, and our physical infrastructure in preparation for connected, highly automated and fully autonomous (or self-driving) vehicles. Along our right of way, we continue to leverage and upgrade an existing 241 miles of fiber optic cable, which provides a unique asset that other corridors do not yet have. Our mainline and interchanges have high quality and easily visible pavement markings, which exceed federal standards and are fully re-striped each year. In addition to serving as a proving ground for self-driving technology, we will also begin to deploy Dedicated Short Range Communications (DSRC) or Connected Vehicle Technology in our own operations. 11

12 Installation of the technology will take place on the mainline in our Boston and Amherst Maintenance Sections between Berlin Township in Erie County and Streetsboro in Portage County. The DSRC deployment will be used in conjunction with 40 Ohio Turnpike maintenance vehicles. They ll be equipped with onboard units that will gather and supply data to managers monitoring their usage. Through a partnership with ODOT, we ll be integrated with their Buckeye Traffic System and their OHGO application. In the meantime, we have partnered with the company WAZE to become a designated Community Partner. This partnership will ensure traffic conditions and incidents on the Ohio Turnpike are efficiently and immediately available to our customers and their 50 million subscribers. I want to assure you we are not working alone while testing and deploying new technologies. To help maintain Ohio s historic leadership role in transportation, the Ohio Turnpike is partnering with ODOT, the Department of Public Safety, the City of Columbus, The Ohio State University and the Transportation Research Center (TRC), to collaborate on development of smart mobility technologies. The group s ultimate goal is the strategic deployment of innovative technology that enhances safety, mobility, economic competitiveness and overall quality of life. Why are we making such a concentrated effort on emerging technologies? First, as we have emphasized, we value the safety of our 950 employees, the Highway Patrol troopers who enforce the laws on our roadway, our partners, and our 54 million customers. We consistently evaluate our policies, procedures, equipment and the latest technology to improve safety for everyone on the Ohio Turnpike. Experts across the country and around the globe agree, existing approaches to improving safety have diminished returns, mostly because driver distractions and impairments can t be stopped. As Director Cole explained to the full Finance Committee last week, we re confident that computer sensors will not fall asleep, shave, put on lipstick, text or drive drunk. 12

13 Secondly, our marketing slogan is A Better Way to Travel. Pursuing adoption of these emerging technologies helps ensure we maximize the value our customers receive when they choose the Ohio Turnpike and pay their tolls. The opportunity to provide additional services, safety and reliability to our customers positions the Turnpike for a very bright future. By partnering with our sister agencies (ODOT and ODPS), we help ensure that Governor Kasich has the support he needs to position the State of Ohio as a national leader in emerging transportation technologies. As we proceed, we appreciate the continued support of the Ohio General Assembly and we look forward to your input as we prepare for changes in the transportation industry unlike anything we have seen in our lifetimes. Chairman McColley, Ranking Member Reece, thank you again for this opportunity to address the Subcommittee. I ll be glad to answer any questions. 13

14 APPENDIX A Table 1 Project Name CUY Cleve. Innerbelt (CCG2-2 nd Bridge) CUY Opportunity Corridor ERI Erie US 250 HAN/WOOD I-75 Corridor LOR Lorain SR 57 LUC Lucas I-75/I-475 LUC Lucas I-75 LUC Lucas I-475/20 MAH Mahoning I-80 SUM Summit I-271 Funding Request $273.1 million $39 million $12.9 million $271 million $16 million $163 million $20 million $10 million $65 million $60 million TOTAL $930 million Table 2 Infrastructure Funds paid to ODOT 14

15 Table 3 Operating Budget OHIO TURNPIKE AND INFRASTRUCTURE COMMISSION 2017 ANNUAL OPERATING BUDGET INCREASE / (DECREASE) $ % REVENUES: TOLL $ 299,410,000 $ 297,905,000 $ 1,505,000.5% CONCESSION 15,868,300 15,253, , % INVESTMENT 3,963,600 4,030,900 (67,300) (1.7%) FUEL TAX 2,400,000 2,150, , % OTHER 5,173,700 4,544, , % TOTAL REVENUES $ 326,815,600 $ 323,883,000 $ 2,932,600.9% EXPENDITURES: OPERATION, MAINTENANCE & ADMINISTRATION: ADMINISTRATION & INSURANCE $ 12,295,100 $ 11,776,200 $ 518, % MAINTENANCE OF ROADWAY & STRUCTURES 41,443,500 40,205,800 1,237, % SERVICES & TOLL OPERATIONS 58,088,300 54,753,600 3,334, % TRAFFIC CONTROL, SAFETY & PATROL 14,511,200 15,354,600 (843,400) (5.5%) TOTAL OPERATION, MAINTENANCE & ADMINISTRATION 126,338, ,090,200 4,247, % DEBT SERVICE PAYMENTS 104,993,000 96,031,200 8,961, % TOTAL EXPENDITURES 231,331, ,121,400 13,209, % TRANSFERS TO / (FROM): EXPENSE RESERVE 354, ,000 (22,000) (5.9%) NON-TRUST FUND 533, , , % FUEL TAX FUND 2,406,000 2,153, , % SERVICE PLAZAS CAPITAL IMPROVEMENTS RESERVE 651, ,300 (28,400) (4.2%) RENEWAL & REPLACEMENT FUND 10,000,000 10,000, SYSTEM PROJECTS FUND 81,539,000 92,146,600 (10,607,600) (11.5%) TOTAL TRANSFERS 95,484, ,761,600 (10,277,100) (9.7%) TOTAL EXPENDITURES & TRANSFERS $ 326,815,600 $ 323,883,000 $ 2,932,600.9% Table 4 Comparison of Tolls Toll Rates Per Mile as of 1/1/17 Passenger Passenger 5 axle 5 axle E-Z Pass Cash E-Zpass Cash Indiana New York Ohio Illinois West Virginia Pennsylvania New Jersey

16 10 Year Capital Projection TOTAL 2017 CAPITAL PROGRAM Budget TOTAL $ 121,440,611 $ 98,171,022 $ 126,234,522 $ 122,811,909 $ 136,679,648 $ 138,805,886 $ 139,286,507 $ 143,245,514 $ 157,443,146 $ 156,861,519 A. Pavement Replacement $ 51,772,813 $ 32,496,200 $ 33,373,598 $ 51,412,028 $ 70,400,203 $ 72,301,009 $ 74,253,136 $ 76,257,970 $ 78,316,936 $ 80,431,493 B. Third Lane Reconstruction $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - C. Mainline Resurfacing $ 20,821,675 $ 23,830,547 $ 24,473,972 $ 22,849,790 $ 20,533,393 $ 21,087,794 $ 21,657,165 $ 22,241,908 $ 22,842,440 $ 23,459,185 D. Interchange Resurfacing $ 3,489,037 $ 3,607,078 $ 6,117,380 $ 3,650,254 $ 4,121,932 $ 3,904,254 $ 3,062,942 $ 1,437,463 $ 4,170,377 $ 1,829,816 E. Bridge Deck Replacements $ 13,280,852 $ 11,861,113 $ 10,512,683 $ 10,625,152 $ 12,261,369 $ 11,146,405 $ 10,209,806 $ 11,883,534 $ 14,162,313 $ 13,338,223 F. Bridge Deck Overlays $ - $ 2,274,734 $ 2,085,850 $ 2,570,601 $ 2,200,006 $ 2,711,288 $ 2,939,187 $ 2,383,062 $ 2,447,404 $ 3,183,747 G. Bridge Painting $ 3,489,037 $ 6,390,919 $ 6,563,474 $ 6,740,688 $ 6,922,687 $ 7,109,599 $ 7,301,558 $ 7,498,700 $ 7,701,165 $ 7,909,097 H. Misc Bridge Repairs $ 5,908,854 $ 2,166,413 $ 2,224,907 $ 2,284,979 $ 4,810,681 $ 4,940,569 $ 5,073,964 $ 5,210,961 $ 5,351,657 $ 5,496,152 I. Culverts & Drainage $ 168,824 $ 270,802 $ 278,113 $ 285,622 $ 293,334 $ 301,254 $ 309,388 $ 317,742 $ 326,321 $ 335,131 J. Interchange Lighting $ - $ - $ 444,981 $ 1,713,734 $ 1,290,670 $ 1,566,522 $ 1,361,307 $ 1,525,159 $ 2,936,885 $ 2,681,050 K. Sign Structure Upgrades $ 450,198 $ 379,122 $ 389,359 $ 399,871 $ 410,668 $ 421,756 $ 433,143 $ 444,838 $ 456,849 $ 703,776 L. Service Plaza's $ 4,210,586 $ 2,166,413 $ 1,668,680 $ 1,713,734 $ 2,581,341 $ 2,169,030 $ 1,237,552 $ 2,287,739 $ 4,046,375 $ 2,010,787 M. Toll Plaza's $ 393,924 $ - $ 556,227 $ 571,245 $ 586,668 $ 602,508 $ 618,776 $ 635,483 $ 652,641 $ 670,262 N. Maintenance Building's $ 2,357,914 $ - $ - $ - $ - $ - $ - $ - $ 2,610,565 $ 2,681,050 O. Telecommunications $ - $ 3,249,620 $ - $ 7,997,427 $ - $ - $ - $ - $ - $ 402,157 P. Toll Collection System $ 844,122 $ - $ 27,811,332 $ - $ - $ - $ - $ - $ - $ - Q. Renewal Replacement $ 13,183,554 $ 9,478,058 $ 9,733,966 $ 9,996,783 $ 10,266,696 $ 10,543,897 $ 10,828,582 $ 11,120,954 $ 11,421,220 $ 11,729,593 R. Miscellaneous $ 1,069,221 $ - $ - $ - $ - $ - $ - $ - $ - $ - 16