Division of Budgets July 6, 2011

Transportation Funding in California

2

Transportation Funding & Challenges

Funding complex and unstableFunding is insufficientRevenues currently decliningIncreased oversight

Scarce resources increases scrutiny of every priorityIncreasing mandates Increased demand for transportation

3

Reality Check

What does it really take to fund a highway project? How many gallons of gasoline need to be sold to fund a single

mile of road rehab? $240,000 avg cost per mile State excise tax of $0.18/ gal, only $0.1077/ gal remains with the State Need 2.2 million gallons!

An average tanker truck holds 9,000 gallons of fuel, generating almost $1,000 in revenue. So a $1 million project would take the revenue from the fuel in over 1,000 tanker trucks!

4

State Excise Tax Analogy

0.0 1.0 2.0 3.0 4.0

I t takes the revenue generated from the sale of 2.2 million gallons of gasoline to pay for the rehabilitation of one lane mile of highwyay - The amount contained in 3.4 miles of tanker trucks parked end- to- end. That's enough gasoline to drive an average car 47 million miles!

N

5

Statewide Transportation Resources:State, Local and Federal Funding

Bonds are limited-term funding

State Revenues17%

Local Revenues56%

Federal Revenues12%

Bonds15%

6

Statewide Transportation ResourcesBy Administering Agency

State-Admin-istered Re-

sources29%

Locally-Admin-istered Re-

sources71%

7

Major Uses of State Revenue Sources

Local Appor-tionment

28%

Bond Debt Service/

General Fund15%

Caltrans Projects and Maintenace

58%

8

Capital Investment Increasing Over Time…

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

$0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000$6,000,000$7,000,000$8,000,000$9,000,000

State-Funded Transportation Capital

Local Systems Investment

9

…But Inflation Reduces Value for Money

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

Comparative Loss of Buying Power Since 1994

Percent Change in Buying Power Percent Change in VMT

This chart compares the cumulative change in Vehicle Miles Travelled against the buying power of the excise tax, using the California Highway Construction Cost Index

10

External Factors Limit Available Funding

11

The Future

Proposition 1B bonds will be exhaustedARRA spending will completeInflation expected to outweigh revenue growthCost of doing business expected to continue

increasingUncertainty of federal funding, at least until a new

act is in place

12

What Have We Done

Federal Toll Credit program Minimize need for state cash on federal projects

Budgetary Flexibility Allows changes within the framework of the budget to

meet changing needs without undue delay.Cash Basis and Cash Management

Shifted to a cash basis in 2003-04, managing cash to maximize project funding

Broadening the public view by shifting the focus to full project cost (including support, R/W, etc)