The Transportation Funding Gap

This is what you have heard.

Twenty Year Funding Needs to Achieve Desired Outcomes

System/Mode Anticipated Transportation Revenue Expected Over the Next

20 Years

Maintain Current Performance Economically Competitive/World Class System

State Highway System(State Roads and Bridges) $18 billion $5.0 billion $10-12.0 billion

County State Aid System $5 billion Municipal State Aid System $1.6 billion Greater Minnesota Transit $1.9 billion $0.02 billion $0.09 billion

Metropolitan Area Transit(thru 2030)

$8.5 billion $1.6 billion $3.2 billion - $4.8 billion

Passenger Rail $0.1 billion ─ $5-7.0 billion

Freight - Rail and Ports $0.3 billion $0.6 billionAirports(Not MAC System) $1.4 billion $0.6 billion $0.8 billion

Totals $36.9 billion $7.2 billion $20.6-$26.2 billionAnnual Funding Gap $0 $300 million $1.1 billion

An Illustration of Various Transportation Funding Mechanisms and Projected Revenue

Generating Capacity

Motor Fuels Tax Funding Mechanism

Current Rate Incremental Yield

Annual YieldFY 2012

Illustrative Rate and Annual Yield

20 year Yield

Motor Fuels Taxes• Gas tax• Diesel tax

$0.285 per gal.

$0.01 yields $32.0 million annually to HUTDF

$912 million x 95% = $866.4 million

62% TH = $537.2 million

29% Counties = $251.3 million

9% Municipal State Aid = $78.0 million

$0.25 per gal. increase = $800 million to HUTDF x 95% = $760 million($40.0 million is allocated under statute to counties and townships)

62% TH =

$471.2 million 29% Counties

= $220.4 million

9% Municipal State Aid = $68.4 million

($0.8 billion to Counties and Townships)

$9.42 billion to TH Fund

$4.41 billion to Counties State Aid Fund

$1.37 billion to Municipal State Aid Fund

Motor Vehicle Registration Fees

Funding Mechanism

Current Rate Incremental Yield

Annual YieldFY 2012

Illustrative Rate and Annual Yield

20 year Yield

Registration Fees

$35 base rate + 1.25% of value +$10(Depreciates by 10%/year)

0.10% = $46.2 million to Highways Users Tax Distribution Fund (HUTDF)

$577.24 million to HUTDF x 95% = $548.38

62% to TH

Fund = $340.0 million

29% to CSAH = $159.0 million

9% to MSA = $49.4 million

0.25% increase = $115.45 to HUTDF x 95 % = $109.67($28.9 million is allocated under statute to counties and townships)

62% TH = $67.9 million

29% Counties = $31.8 million

9% Municipal State Aid = $9.9 million

($0.58 billion to Counties and Townships)

$1.36 billion

to TH Fund $0.63 billion

to Counties $0.20 billion

to Municipal State Aid Fund

Motor Vehicle Sales Tax Funding Mechanism

Current Rate Incremental Yield

Annual YieldFY 2012

Illustrative Rate and Annual Yield

20 year Yield

Motor Vehicle Sales Tax

6.5% of vehicle costs60% HUTD40% Transit Assistance Fund

1% yields $30 million to TH fund1% yields $22 million to County and Municipal1% yield 35 million to Transit Assistance Fund

$336 million to HUTDF x 95% = $319.2 million($225 million to Transit Assistance Fund)

62% to TH Fund = $197.9 million

29% to CSAH = $92.6 million

9% to MSA = $28.7 million

0.50% increase = $43.15 million x 60% = $25.89 HUTDF (40% to Transit Assistance Fund = $17.26 million) ($16.8 million is allocated under statute to counties and townships)

62% TH =$16.1 million

29% Counties = $7.1 million

9% Municipal State Aid = $2.6 million

$17.26 to Transit Assistance Fund

($336 million to Counties and Townships)

$321 million to TH Fund

$141.6 million to Counties

$52.0 million to Municipal State Aid Fund

$345.2 million to Transit Assistance Fund

Sales Tax Funding Mechanism

Current Rate Incremental Yield

Annual YieldFY 2012

Illustrative Rate and Annual Yield

20 year Yield

Statewide Sales Tax

6.875% of select purchases

1 .0 percent generates $670 million

Annual yield to the state is $4.6 billion

0.50% increase = $335 million

$6.7 billion

Metropolitan Area Sales Tax (5 counties)

.25% of purchases in five counties (Anoka, Dakota, Hennepin, Ramsey, Washington)

.25% generates $100 million

Annual yield to CTIB is $100 million

.50% increase = $200 million

$3.6 billion (thru 2030)

Alternative Transportation FinancingApplication Public-Private

PartnershipsTolling/Direct

User FeesValue

CaptureSponsorships

Existing State Hwys

New Capacity on State Highways

New Capacity on State Bridges

Local Roads and Bridges

Metropolitan Transit

Transit (Greater MN)

Passenger Rail

Ports and Waterways

Airports (state)

Transportation Improvement Districts Application Local

Option Sales Tax

Wheelage Tax

Public-Private

Partnerships

Tolling Value Capture

Sponsor-ships

Assessment

Examples

Area 1: New Capacity on State Highways Area 2: New Capacity on Local RoadsArea 3: Street Improve-ment Districts

Anticipated Outcomes for Status Quo Scenario: State Highways

Interstates maintained at MAP-21 target Principal arterials become 16% poor (1,300 miles) Minor arterials become 42% poor (2,800 miles) by 2032 Bridge condition is well under performance targets with 76% of

bridges in good or satisfactory condition and 20% of bridges (647 bridges) in poor condition

Safety investments remain at current levels, traffic fatalities continue to decline

Metro congestion increases and reliability decreases systemwide, reliability and throughput increase at spot locations

Inter-regional corridors have limited delays, performance on a handful of major corridors continues to decline

Little money available for expansion, regional and local priorities, economic development, etc

Anticipated Outcomes for Maintaining Current Performance Scenario: State Highways

Interstates maintained at MAP-21 target Principal arterials become 6% poor by 2032 (454 miles) Minor arterials become 11% poor by 2032 (741 miles) Bridges at or near current performance targets Traffic fatalities continue to decrease Metro congestion increases slightly systemwide, reliability

improves on future MnPASS corridors and at congestion management and safety HROI project locations

IRCs continue to meet performance target Modest amount available for expansion, regional and local

priorities, economic development, etc

World Class/Economically Competitive System Scenario: State Highways

Interstates maintained at MAP-21 target Principal arterials improve to less than 2% poor by 2032 (151

miles in poor condition) Minor arterials improve to less than 3% poor by 2032 (202

miles in poor condition) Bridge conditions meet targets of less than 2% poor and

greater than 84% good and satisfactory Safety investments remain at current levels, MnDOT meets

Toward Zero Deaths fatality targets in future years With capacity investments, metro congestion remains stable,

reliability improves on MnPASS corridors and at HROI locations Modest amount available for expansion, regional and local

priorities, economic development, etc

Greater Minnesota Transit Anticipated Outcomes

Maintaining current performance Annual hours of service remain at projected 2013 level

of 1.23 million hours Some revenue is reserved from 2013 to 2022, then

spent to maintain service as inflationary costs exceed revenue

Economically competitive/World class Minnesota Statutes §174.24 Meet 80% of transit needs by July 1, 2015 Meet 90% of transit needs by July 1, 2025

Freight RailAnticipated Outcomes

• Rail Grade Crossing Improvement – Public cost share is 25%– Performance goal of 50% crossings with gates & signals = 2250 of

4500 crossings vs. 1500 (33%) currently– Assumes $250K per crossing for gates & signals– Assumes useful life of signal system is 25 years

• Selected needs as identified in 2010 MN Statewide Rail Plan.– Statewide short line railroad track and structure upgrades to handle

Class 1 286,000 lb. rail cars – Economic development projects include rail-served business parks,

intermodal container, transload, etc

Ports and Waterways Anticipated Outcomes

• Port upgrades include reconstructing dock walls, warehouse rehabilitation, improving road and rail access, limited dredging, loading equipment, etc.

• Appropriations over past five years have totaled $7.5 million = $1.5 million/year

• Assumes twenty year needs of $90 million based on average annual needs as identified by the state’s port authorities

Statewide AirportAnticipated Outcomes

• Current System Maintained• Eliminates runway and taxiway extensions• No new airports• Funding priorities: safety, mobility, financial,

operations, preservation• No new navigation (NextGEN) deployment• Economically Competitive/World Class

Passenger Rail Anticipated Outcomes

• Full build out of Phase 1 projects as a statewide system over twenty-year timeframe:– Twin Cities to Chicago -110 mph service– Twin Cities to Duluth -110 mph service– Twin Cities to Rochester -150 plus mph service– Twin Cities to St. Cloud, Moorhead -up to 90mph service– Twin Cities to Mankato -up to 90mph service– Twin Cities to Eau Claire -up to 90 mph service

• 20-year capital cost estimate $4B - $5.1B for priority passenger and share freight rail improvements if built as a system, built as a series of individual unrelated projects the 20-yr. estimate is $4.5B - $5.7B.

• Outcomes:– Between 4.1 to 6 million annual riders.– Annual operating subsidies of $41m - $95m are based on a farebox recovery of approximately 71% -49%.– Shared freight and passenger rail improvements– Best case scenario in terms of operations cost– Interstate/intrastate Pass. rail connection to economic centers– 2009 $26m in State G.O. Bonds– Phase 1 State Rail Plan projects implemented

Metropolitan Area Transit Scenario 1 – Status Quo

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• Continue to operate the transit system that exists today and finish Central LRT and Cedar Stage 1

• System includes:– Existing bus and Metro Mobility service levels– Mandatory Metro Mobility (ADA) service increases– Hiawatha LRT– Northstar Commuter Rail– Central LRT starting in 2014– Cedar Ave BRT Stage 1 starting in 2013

Metropolitan Area Transit Anticipated Outcomes for

Status Quo Scenario

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• Increased fares• Reduced service• Reduced ridership• Does not address growing demand• Service quality and customer satisfaction

reduced

Metropolitan Area Transit Scenario 2 – Maintain Current Performance

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• Regional growth requires more transit investments to maintain current mobility levels

• System includes:– Scenario 1 service levels– Bus service expansion (0.5% growth / year)– Southwest LRT (SWLRT)– I-35W South BRT– Cedar Ave BRT Stage 2– Three Arterial BRT corridors

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Expected Outcomes:+ Positive results for residents+ Addresses growing transit demand and makes progress

toward doubling ridership by 2030+ New connections between home, school, work and

entertainment

+ Positive results for businesses+ Transit spurs economic development+ Solid infrastructure attracts jobs & development

Metropolitan Area Transit Anticipated Outcomes for

Maintaining Performance Scenario

Metropolitan Area TransitScenario 3 – Economic Competitiveness

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• Improved mobility levels for residents and businesses and enhanced regional economic competitiveness

• System includes (conceptual example):– Scenario 1 and 2 service levels– Bus service expansion (1.0% total growth/year over status quo)– Two additional LRT (after SWLRT)– Six additional Arterial BRT corridors– Three additional Highway BRT/Managed Lane corridors

Scenario 3 based on the transit vision in the Council's 2030 Transportation Policy Plan and the Program of Projects

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• Positive results for residents– Addresses more growth in demand and doubling of ridership by 2030– Significantly better connections between home, school, work and entertainment– Faster, cheaper transportation options that are safe and environmentally-friendly

• Positive results for business– Additional 500,000 employees will have access to jobs via transit– Freight and logistics savings– Investments compete well with similar investments in peer regions

• Positive result for all taxpayers: A return on investment (ROI) between $6.6 and $10.1 billion to 2030

Metropolitan Area Transit Anticipated Outcomes for

Economic Competitiveness Scenario

Metropolitan Area TransitScenario 4 – World Class

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• Accelerated transit investment program, sustained beyond 2030

• A more robust, balanced and comprehensive regional transit system

• System includes (conceptual example):– Scenario 1, 2, and 3 service levels– Bus service expansion (1.5% total growth/year over status quo)– Three additional Arterial BRT corridors– Two additional rail lines– Two additional Highway BRT/Managed Lane corridors– Six streetcar lines

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• Positive results for residents– Significantly address growth in demand and more than double ridership by 2030– Extensive connections between home, school, work and entertainment– Additional faster, cheaper transportation options that are safe and environmentally-

friendly

• Positive results for business– Additional employees will have access to jobs via transit– Additional freight and logistics savings– Position the region to surpass investments in peer regions and further enhance regional

competitiveness

• Positive result for all taxpayers: an ROI between $10.7 and $16.5 billion in 2030

Metropolitan Area Transit Anticipated Outcomes for

World Class Scenario

Metropolitan Area Transit Summary

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• Scenario 1: results in service cuts and less mobility and leaves this region falling behind peers and losing competitiveness

• Scenario 2: brings the region in line with existing conditions of competing peer regions

• Scenarios 3 and 4: make the region competitive with peers and provide opportunities to attract additional investment