State Transportation Infrastructure Finance Context & IssuesUncertain Fiscal Future

New York Public Transit AssociationFall Conference and Trade Show

November 19, 2010

“New York State currently lacks the revenue necessary to maintain its transportation system in a state-of-good-repair, and the State has no credible strategy for meeting future needs.”

Lieutenant Governor Ravitch

November 17, 2010

Session Discussion Topics

New York and the nation are at a crossroads in transportation

The current climate– Federal\State budgets are driving force in future investment decisions– Congress is stalled and is not moving forward– The financial backbone of the surface transportation programs is all but broken– Administration is focused on climate change, livability and performance based

planning

What is the Federal government’s role going to be in the future?

How will the State/nation best generate the required revenue for investment?

NYSDOT Capital Program Commitments/Funding Shares

The Current Climate

The Current Climate

The bad news

The Administration and the Congress have not put a high priority on reauthorization

The Highway Trust Fund (and Stated Dedicated Fund) has all but gone broke

– There is no support for increasing user fees– There are many competing goals at the national level

Difficult to develop multi-year plan at State level

Administration’s Direction

The long-term proposals postponed/Up front Investment of $50 billion

Some key features will likely include:

– Livable communities– Major emphasis on transit– Congestion reduction– Passenger rail revitalization– Climate change– Performance based programming/planning (Discretionary?)– No user fee increases in the immediate future

The Congress

Facing difficult choices

– The House of Representatives -Transportation and Infrastructure Committee - has developed a bill

– The Senate counterpart (EPW, Banking, ET AL) has not taken action but started work

– The Congress passed and extension through December 31st.– Funding is in critical condition

The road ahead is bumpy/no clear path forward

Mid-term Election Impacts

Results may have a significant and lasting impact on future surface transportation legislation/New York

New Congress will be more conservative/less likely to consider increase taxes and/or expenditures

Future of Oberstar’s proposed $500 billion program

House Transportation and Infrastructure Committee

Committee that will write next transportation bill in House

State may lose up to 4 of 5 seats on T&I (Bishop?)

Nadler Remaining member

Five (possibly six) new members of Congress. Encourage them to seek a seat on T&I

Congressman Mica (R-FL) expected to become next Chair– “…do more with less”

Senate Environment and Public Works Committee (EPW)

Writes highway title of the bill

Senate Democrat margin reduced

May result in reduced democratic committee slots

Senator Gillibrand - junior committee member – could lose EPW seat

Senate Banking, Housing and Urban Affairs

Writes transit title of the bill

Senator Dodd (D-CT) retired

Leadership will likely pass to Senator Johnson (D-SD) and Senator Shelby (R-AL) as ranking member

Shift to rural states may have further adverse implications for transit intensive states

Senator Schumer, however, remains second most senior Democrat

Declining Federal Share…

Steady Growth for New York

Total $B $11.77 $13.79 $16.55ISTEA TEA-21 SAFETEA-LU

$6.20

$5.57

$10.07

$6.48

$8.49

$5.30

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$ b

illio

ns

Transit

Highways

NY’s Share Eroding

Highways Transit

ISTEA92-97

5.63% 21.2%

TEA-21 98-20

5.16% 19.7%

SAFETEA-LU04-09

4.63% 17.6%

“Equity” BonusRate of Return

ISTEA 90.0

TEA-21 90.5

SAFETEA-LU– 2005 90.5– 2006 90.5– 2007 91.5– 2008 92.0– 2009 92.0

CT: $1.28

DE: $1.64NJ:$0.92

RI: $2.18MA: $0.92

CA$0.92

VT: $2.06NH: $1.00

WA$0.92

OR$1.02 ID

$1.44

NV$0.94

AZ$0.92

UT$0.94

NM$1.14

TX$0.92

MT$2.27

ND$2.07

SD$1.98 WY

$1.52

MN$0.92

OK$0.92

CO$0.92

NE$0.99

KS$0.96

IA$0.92

MO$0.98

AR$1.05

LA$0.95

WI$1.03 MI

$0.92

IL$0.92

IN$0.92

OH$0.92

AK$5.27 FL

$0.92

GA$0.92

SC$0.92

ME$0.96

NC$0.92

AL$1.07

MS$0.95

TN$0.92

KY$0.96

WV$1.69

NY$1.10

PA$1.13

VA$0.92

MD$0.92DC$4.25

Donor/Donee

Legend

Donee

DonorHI $1.75

Prospects of New York getting a larger share of federal funding…

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

$0

$500

$1,000

$1,500

$2,000

$2,500

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

NYS Apportionments/Allocations NYS Percent Share/National TotalYear

$ in

mill

ions

Message to Congressional Delegation

Transportation matters!

Need a “clean” long-term extension

– Allows states to plan for larger projects– With new Congress – struggle to get better deal than

current law

The Financial Backbone

is All But Broken…

-$10.3

$41.9

$31.6

-15

-10

-5

0

5

10

15

0

5

10

15

20

25

30

35

40

45

50

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

($ b

illio

ns

)Federal Highway Account of the Highway Trust

Fund: Receipts and Outlay Discrepancy

Negative Annual Cash Flow Highway Account Outlays Highway Account Receipts

*Excludes $8.017 billion transfer from General Fund to Highway Account of HTF in September 2008.**Excludes $7 billion transfer from General Fund to Highway Account of HTF in July 2009.

Actual Estimated

Decline in Purchasing Power of Motor Fuel Taxes(Based on Inflation since 1993)

0

10

20

30

40

50

60

70

80

90

100

Year

Per

cen

tag

e

NYS General Fund Transfers into the DHBTF

07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$ in

mill

ions

“Debt service for MTA and DOT by 2014 will be over $3.6 billion annually.”

Mary Ann Crotty

November 16, 2010

NYS Business Council

State Revenues Available for Infrastructure Investment

07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

Debt Service/DHBTF Revenue

Debt Service Revenue Available for Investment

$ in

mill

ions

“Thus, State is, in effect, spending more than ever before on its transportation program but getting less.”

Lieutenant Governor Ravitch

November 17, 2010

Trust Fund Spending

07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Debt Service Revenue Available for Investment General Fund Transfers

$ in

mill

ions

“New York’s recurring revenues to support its transportation related debt are not increasing at anywhere near the rate at which debt itself is increasing. As a result, the state confronts a crippling debt service crisis.”

Lieutenant Governor Ravitch

November 17, 2010

Low Hanging Fruit…

Revenue

The current federal/State system relies on fuel taxes

We have seen a marked decline in revenues

Two National Transportation Commissions/one Debt Commission have called for an increase in gas tax (short-term)

In the mid- to long-term, study the feasibility of alternatives, such as Vehicle Miles Traveled Fee

Deficit Reduction Commission

Report Released November 10 Recommended increasing gas tax by 15 cents/gallon Gradual increase beginning in 2013 Revenue exclusive for transportation/not deficit reduction Recommends change in budgetary treatment/mandatory

spending Relieve general fund transfers Enough to support a six-year $450 billion bill

In The Interim…

Without longer-term action/infusion of funding

– Short-term extensions limit opportunity to plan/make longer-term investment decisions

– Uncertainty is increasing the costs for transportation-related projects

– Jobs in the transportation sector will be lost without an infusion of funds and longer-term predictability

QUESTIONS ?

Ron EpsteinChief Financial Officer

New York State Department of Transportation50 Wolf Road

Albany, New York 12232(518) 457-8362

repstein@dot.state.ny.us