Maine Transportation Needs and Financing Presented by John Melrose, Senior Consultant Eaton Peabody Consulting Group August 27, 2014 Based on policy research done for the MBTA FIX IT NOW campaign
MBTA Launches 3 5 Year Effort in Spring 2013 Research and Policy Development State and County Profiles Web Accessible Stakeholder and Public Engagement Coalition Formation Build Public Awareness and Support Advocacy for Law and Budget Changes
Other Databases Available MaineDOT/FHWA Structurally Deficient and Functionally Obsolete Bridges FHWA 2012 Highway Statistics Series MaineDOT Multimodal Plans and Inventories Regional and Metro Transportation Planners Key Stakeholder Interviews Field Inspections
Maine s Transportation Investment Goals Focus on HCP 1, 2 and 3 that carry 70% of all public travel By 2022 HCP 1 and 2 CSL is to be fair or better By 2027 HCP 3 CSL is to be fair or better By 2017 HCP 4 pavement program is in place to maintain a ride quality of fair or better Maintenance pave on a 7-year cycle for HCP 5 By 2015, set priorities and CSL for all modes
Highway and Bridge Performance
Acceptable Miles (CSL "C" or Better) Priority Road Performance 2010-2027 2500 2351 2000 1972 1500 1000 1638 1509 1586 1213 1216 1184 Current Goals 500 Priority 1 & 2: Priority 3: 0 2010 2012 2014 2016 2018 2020 2022 2022 2024 2026 2027 2028 Year Data Source: Maine Economic Growth Council
Incidence of Substandard Highway 1400 Corridors 1200 Miles Rated D or F for Service, Safety or Condition 1000 800 600 Service Safety Condition 400 200 0 1 2 3 4 5 MaineDOT Highway Corridor Priority Data Source: Maine DOT
Crashes per Hundred Million Vehicle Miles of Travel 250 Crash Frequency Based on Highway Condition 200 172 178 172 195 150 147 149 141 148 123 100 84 50 0 Priority 1 Priority 2 Priority 3 Priority 4 Priority 5 Rated A, B or C Rated D or F Data Source: Maine DOT
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Percent of Fair to Poor Pavement By Highway Classification 91% 66% 67% 46% 48% 32% 20% 17% Rural Interstate Rural Principal Arterials Rural Minor Arterials Rural Major Collectors Nation Maine Data Source: FHWA
Bridge Deficiencies, Maine and U.S. 25% 20% 15% % Deficient 10% NATION MAINE 5% 0% Structurally Deficient Bridges Functionally Obsolete Bridges Structurally Deficient by Deck Area Functionally Obsolete by Deck Area Data Source: FHWA
BridgeInventory by Age, Maine and Nation 12% 10% 8% % of Inventory National Average 41 years old State Average 49 years old 6% MAINE NATION 4% 2% 0% Age of Bridge Data Source: FHWA
Highway and Bridge Performance HCP 1 & 2-30% (765 miles) poor/ unacceptable HCP 3 40% (756 miles) poor/unacceptable Crash incidence 75% higher on HCP 1 D&F roads Off I-95, Maine pavement conditions lag U.S. 15% of bridges (355) structurally deficient 18% of bridges (430) functionally obsolete Average bridge 8 years older than U.S. (49 vs 41)
HIGHWAY AND BRIDGE FINANCE
Federal Highway Trust Fund Projected In billions, by fiscal Shortfall 20 0 6 3-20 -13-40 -29-60 -80-100 Actual Projected -44-61 -77-95 Year-end balance or shortfall -120-113 -140-132 -160-151 -180-200 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024-172 Data Source: Congressional Budget Office
Highway Fund Revenue 2014-15 Biennium $618.8 Million MOTOR VEHICLE REGISTRATION AND FEES 27.08% OTHER REVENUES 2.92% INSPECTION FEES 0.96% FINES, FORFEITS AND PENALTIES 0.38% INCOME FROM INVESTMENTS 0.03% OTHER TAXES AND FEES 0.42% FUEL TAXES, NET 69.56% Data Source: OFPR, Maine Legislature
Index, with 1975 = 100 What Ails the Highway Fund? No Inflation Protection Cost $2.5 Billion 1200 1000 800 600 400 200 0 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Year General Fund MV Excise Tax Property Tax Highway Fund Inflation Rate Data Source: OFPR, Maine Legislature
30.0% A Declining State Commitment to Transportation 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Data Source: OFPR, Maine Legislature
Fuel Use, Travel and Fuel Tax Trends Many Variables in Play 30% 25% 20% % change in weighted tax per gallon 15% 10% 5% 0% % change in fuel tax revenue % change in diesel used -5% -10% -15% % change in miles traveled % change in gas used -20% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Data Source: OFPR, Maine Legislature and Maine Revenue Services
State Share of Highway Responsibility A More Than Full Plate 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 37% 24% 18% 17% 17% 8% 19% 0% Maine New Hampshire Vermont Connecticut Rhode Island Massachusetts National Data Source: FHWA
$400 $350 Highway and Bridge Capital Investment Trends "Right-Sized" Statutory Goal Estimate: $348.5M/year $300 $250 $200 Total Cost (millions) $150 $100 $50 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013* 2014* 2015* Calendar Year Bridge Projects Highway Treatment Data Source: Maine DOT *Projected as of 02/06/13
Progress in 2013-2014 State Police HF GF cost sharing fixed $100 million General Fund bond approved $40 million GARVEE bond authorized Continuing success with TIGER grants Lapsed FHWA funds reallocated HF year-end balances reallocated Municipal Partnership Initiative sustained Business Partnership Initiative created
Financial Demands Ahead Bridge funding declines after TransCap bond Age cluster of interstate bridges MaineDOT to follow MTA path Nearly half (41%) of pavement preservation need is unfunded Highway reconstruction/rehabilitation miles short by up to two thirds to meet HCP 1-3 goals on time HCP 4 & 5 roads relegated to pavement only
More Financial Challenges Federal Highway Trust Fund on life support, no motor fuel tax increase since 1993 Motor fuel tax indexing repealed in 2011 Adoption of CAFÉ Standards for fuel economy Stagnant to declining VMT Demographic Shifts Growing gas tax inequity - diverging mpg ratings Federal limits on tolling New Hampshire s low motor fuel tax rate
Highway and Bridge Finance: Policy Options
Initial Policy Considerations Who pays highway user, general fund or both? Should tax equity, inflation or better exportation of the burden be addressed? What is the future for financial partnering (state-federal, state-local and public-private)? Is there a better way to finance all modes? What are the consequences of changing technology all electronic tolling, rising mpg
What Are States Doing? Increasing traditional motor fuel taxes Converting to a sales tax on fuel at wholesale Increasing general fund participation Transitioning to more per mile fees and less per gallon charges Promoting public-private partnerships Adopting motor fuel tax indexing
Maine s Motor Fuel Tax Rate Ranking Is there Room to Raise Rates? Jurisdiction Gas Diesel Federal $ 0.184 $ 0.244 Average All States $ 0.312 $ 0.310 Northeast States Avg. $ 0.326 $ 0.348 Mid-Atlantic States Avg. $ 0.354 $ 0.408 New Brunswick * $ 0.515 $ 0.727 New Hampshire $ 0.238 $ 0.238 Maine $ 0.300 $ 0.312 *Excise tax only. New Brunswick also has a 13% sales tax. Canada s excise tax is another $.38/gallon. Canada s fuel taxes generally are about a third of the sale price Data Source: American Petroleum Institute and Province of New Brunswick
Maine Turnpike In-State/Out-of-State Shares 70% 64% 60% 52% 50% 48% In-State Patrons Out-of-State Patrons 40% 36% 30% Toll Transactions Net Toll Revenue
Gas Taxes Paid A Growing Tax Equity Issue $700 $600 $500 EPA Ratings $400 $300 $200 Dodge Ram Pick-up (15 mpg) Ford Focus Sedan (28 mpg) Toyota Prius (50 mpg) $100 $- 10,000 20,000 30,000 Miles Driven
Oregon Fuel Tax Revenue Distribution by MPG Charge per mile (cents) Miles Per Gallon Average 21.6 mpg Source: Oregon Department of Transportation
Other Financing Options Toll with EZ Pass beyond current locations Base motor vehicle fees on mpg ratings Cut highway fund debt service by only using general fund supported bonding Create development districts that assess fees based on traffic generation within the district Increase the use of transportation related sales taxes for transportation
Aspire-Inspire Attack bridge age bubble moving Maine to U.S. average on structural deficiencies Complete all HCP 1 & 2 upgrades by 2022 and all HCP 3 upgrades by 2027 Fully budget Pavement Preservation Program Address safety deficiencies on HCP 4 Adopt special initiative for interstate bridges Support economic game changing projects