The Current State of Connecticut’s Transportation System June 19, 2019 Commissioner Joseph Giulietti Transportation Network in Connecticut • 3719 Centerline Miles of State-Maintained Roadways • 103 Miles of State-Owned Rail Service • CTtransit Bus in 8 Service Areas • 488 Highway Buildings – CTDOT Owned • 2783 Traffic Signals • 4016 Roadway Bridges Other State Assets Include: • 263,000 Signs • 600 Busses • Pavement Markings • 163 Million LF of Line Striping • 2.2 Million SF of Symbol and Legends • 486 M8s & Rail Cars • 1625 Overhead Sign Supports • 28 Locomotives • Service to 51 Rail Stations 2 Transportation Network – Current Condition To be Federally compliant, CTDOT must submit our Transportation Asset Management Plan (TAMP) and have it certified. The TAMP outlines a risk-based and data-driven process using the existing and projected condition of our transportation assets. TAMP Highway Assets TAMP Transit Assets 3 ** Additional Assets Not Shown Transportation Network – Current Condition Asset: CTDOT Maintained Bridges 685 10-year bridge program – Building Boom after MianusCT River bridge collapse in 1950s and 1960s ~70% of State Maintained Bridges were Built Before 1970 Below National Numbers from 1970s Reflects to Today $650 Million Per Year Preferred recent focus on bridge program 148 Preferred Current Funding Funding == Maintain below Goal Goal through by 2030 2039 Difference of 362 Bridges at a SOGR in 2039 4 Transportation Network Current Condition Asset: CTDOT Maintained Bridges National Highway System Bridges in Poor Condition E: Eli: n? 21115:51Transportation Network – Current Condition Asset: CTDOT Maintained Pavement $475 Million Per Year Preferred ~65% of CT NHS Roadway Pavements Built Between 1960 and 1989 ~40% Difference Current Preferred Funding Funding = Less = Over Than 40% at a State of Good 80% Repair Repair by 2028byand 2028 Goal Met 6 Transportation Network – Current Condition Asset: Other Highway SOGR Annual Funding Needs Signs $53 Million Retaining Walls – $8 Million (TAMP Preferred) Fleet - $20 Million Traffic Signals $45 Million ITS - $5 Million (TAMP Preferred) Buildings - $55 Million Sign Supports $13 Million (TAMP Preferred) Lighting and - $15 Million Illumination Guiderail – $50 Million Pavement Markings $25 Million (TAMP Preferred) Other* - $35 Million 7 *Other Assets Include: Drainage, Curb Ramps, Sidewalks, Rumble Strips, Noise Walls, Connected Systems Transportation Network – Annual Funding Need Pavement Bridges Signs Traffic Signals Sign Supports Pavement Markings Retaining Walls Fleet ITS Buildings Lighting and Illumination Guiderail Other $475 Million $650 Million $ 53 Million $ 45 Million $ 13 Million $ 25 Million $ 8 Million $ 20 Million $ 5 Million $ 55 Million $ 15 Million $ 50 Million $ 35 Million ------------------ SOGR (Highway) Subtotal: $1.449 Billion per year 8 Transportation Network – Annual Funding Need FHWA TAMP Penalties • Penalty slide Bridge: If NHS bridges Structurally Deficient by deck area exceeds 10%, then CTDOT must obligate ~$80 million on NHS bridges. Pavement: If % of Interstate Pavements in poor condition exceeds 5.0%, CTDOT must obligate ~$60 million on NHS pavements. TAMP: If not certified, then maximum federal share of NHPP reduces to 65%. For CTDOT, an additional $100 million of state funding would be needed to utilize all federal dollars. 9 Reference 23 CFR Parts 490.413, 490.317, and 515.15 Transportation Network – Annual Funding Need FHWA TAMP Penalties • Penalty slide Bridge: If NHS bridges Structurally Deficient by deck area exceeds 10%, then CTDOT must obligate ~$80 million on NHS bridges. Currently in penalty. Anticipate condition getting out in calendar year 2019 = out of penalty 10/1/21 (tied to FFY). At current funding, return to penalty in 2027. Pavement: If % of Interstate Pavements in poor condition exceeds 5.0%, CTDOT must obligate ~$60 million on NHS pavements. Not currently trending toward penalty as it is tied to interstate condition. However, non-interstate NHS pavement will suffer to avoid penalty (3% poor now, 9% poor in 2027) TAMP: If not certified, then maximum federal share of NHPP reduces to 65%. For CTDOT, an additional $100 million of state funding would be needed to utilize all federal dollars. TAMP due 6/30/19 then every 4 years thereafter for certification. Annual consistency reviews by FHWA as well. Reference 23 CFR Parts 490.413, 490.317, and 515.15 10 Transportation Network – Current Condition Asset: CTDOT Rail Infrastructure Estimated SGR Investment Needs of $2.8 Billion for 2018 - 2021 Due to Backlog 11 Transportation Network – Current Condition Asset: Other Transit SOGR Funding Needs Rail Infrastructure $284 Million Rail Facilities $102 Million Rail Rolling Stock $72 Million Bus Facilities $39 Million Bus Rolling Stock $49 Million Bus Small Capital $5 Million ---------------------------- SOGR (Transit) Subtotal: $550 Million per year 12 Transportation Network – Annual Funding Need State of Good Repair – Highway State of Good Repair – Transit Annual SOGR Subtotal: $1.449 Billion $550 Million -----------------$1.999 Billion 13 rrI dors ty a. Vi all ponomlc Transportation Network – Congestion Connecticut Continues to have 7 of the top 100 Truck Freight Bottlenecks in the Country 15 (Source: American Transportation Research Institute, 2018) Transportation Network – Congestion Strategies to Reduce Congestion I-95 West of New Haven A Case Study 2017-2019 I -95 WEST of New Haven 16 Transportation Network – Congestion Problem = Congestion • Peak morning and evening congestion • 54 million annual hours of delay • Stamford to New Haven • Cost- $1.2 billion lost time annually • Previously full widening in both directions was anticipated to “fix” congestion • Major property impacts deemed widening infeasible by many 17 Transportation Network – Congestion I-95 Widening Feasibility Study West of New Haven New Findings: • Limited, directional & strategic widening yields major benefits • Can be constructed within EXISTING DOT property 18 Transportation Network Congestion l-95 Existing ROW West of New Haven DRAFT - .?mrur Summary of Existing Conditions on 8. name A Laws - Q9 All" - DJtsid: Siou?er - Ihled' Ln'c: i-?n I SM- Fnlhull ?In I .l 1m 15(mama: Sadat: Quin .?imral Fur?hi Badgopn Sunk! 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Transportation Network – Congestion I-95 West of New Haven Targeted Improvement Projects Short-Term Projects Mid-Term Projects Long-Term Projects 20 20 Transportation Network – Congestion Strategic Improvement: Northbound I-95 Exit 19 - 28 to remove bottleneck 8 Exit 28 Exit 19 Norwalk Exit 18 ADD 1 NB LANE (6.3 miles): Exit 19 to 28 Exit 13 (no widening in SB direction) Exit 9 21 Exit 21 (I-287) FIGURE 1-1 Transportation Network – Congestion Example Scenario – 2040 – Widen Exits 19-28 NB Stamford Bridgeport Norwalk NO BUILD 2040 scenario 4 hours Route 8 BUILD scenario widen NB exits 19 - 28 Stamford Norwalk Southport Bridgeport Add NB Lane 22 Transportation Network – Congestion Impact of removing a single bottleneck on I-95 Reduction in Trip Time from NY to Bridgeport northbound in weekday PM peak (3:00 - 7:00 PM) • • 65% reduction in traffic delay: (NB in afternoon peak) 22-minute time savings: NY- Bridgeport (NB in afternoon peak) 30 miles: NY – Rt. 8 22-minute savings in travel time (35%) * Reduces overall hours of delay by 64% 23 * 1 Lane added northbound between Exits 19 and 28 23 Transportation Network – Congestion I-95 Congestion Relief/VPPP Study (2015-2016) *NOT the Current Congestion Pricing Included in Draft legislation* For illustration purposes only Analyzed the effectiveness of Widening & Congestion Pricing (NYS Line to New Haven) Funded under FHWA’s Value Pricing Pilot Program (VPP) 24 Transportation Network – Congestion Study Findings: A Representative Scenario (VPPP Study) Widening & Congestion Pricing I-95 Northbound in PM peak period 2040 : No Build 2040 : WIDEN I-95 (Stamford – Bridgeport) 2040 : Widen I-95 & Congestion Pricing (tolls on I-95 & Route 15) 25 Transportation Network – Congestion Study findings: A Representative Scenario (VPPP Study) Widening & Congestion Pricing I-95 Northbound in PM peak period Congestion Reduction Findings: “Trip Time” on I-95 total = 96 min total = 69 min total = 49 min Reduction in trip time from NY to New Haven Northbound in PM peak (3:00 – 7:00 pm) Average trip on I-95 only 26 Transportation Network – Congestion Representative Projects Currently In Design at CTDOT Travel Time Savings Achieved Interchange I-91/I-691/Rt 15 • • I-91 SB to Rt 15 (AM) = 5 minutes Rt 15 NB to I-91 (PM) = 5 minutes I-84 Danbury Project** • • I-84 WB (AM), EB (PM) = 8 min/day Rte 7 SB (AM), NB (PM) = 18 min/day Route 9 Signal Removal ** NEPA still in progress – One Alterative Represented • • 27 SB (AM), NB (PM) = 11.5 min/day NB (AM), SB (PM) = 22.6 min/day Transportation Network – Funding Summary State of Good Repair – Highway State of Good Repair – Transit Subtract Federal $ $1.449 Billion $550 Million ($750 Million) -----------------Subtotal: $1.249 Billion Subtract State $ - $850 Million -----------------State of Good Repair Shortfall $399 Million 28 Transportation Network – Funding Summary State of Good Repair – Highway State of Good Repair – Transit Subtract Federal $ $1.449 Billion $550 Million ($750 Million) -----------------Subtotal: $1.249 Billion Subtract State $ - $850 Million -----------------State of Good Repair Shortfall $399 Million Congestion Relief / System Enhancement Projects $0 29 The Current Financial Condition of Connecticut’s Transportation System June 19, 2019 Secretary Melissa McCaw Transportation State of Good Repair Estimated Annual Funding Summary Investment Need (in millions) State of Good Repair - Highway State of Good Repair - Transit Less: Federal Funds CT Share State of Good Repair 2 $ 1,449.0 550.0 (750.0) $ 1,249.0 Special Transportation Fund: Components of the Revenue and Expenditure Base **Includes $12.0 million for unallocated lapses. Note: 7.87% of Sales Tax is deposited into the fund in addition to 17% of sales tax attributable to the purchase of a vehicle. 3 The Special Transportation Fund is in Crisis • The projected compound annual growth rate of revenues, excluding increases for the car sales tax, amounts to just 1.2% over a 10 year forecast period • This is compared to a projected 6.4% compound annual growth rate for expenditures. This assumes an annual debt issuance of $875 million. 4 Historical Growth in the Major Revenue Sources is Slow Growing Motor Fuels Tax: All motor fuel sold in Connecticut is subject to a cent per gallon tax: 25 cents for gasoline and 46.5 cents for diesel fuel (as of July 1, 2019). The diesel fuel tax rate is set annually by DRS. Calculation is based on: A base rate of 29 cents per gallon and a calculation of the average wholesale price for the Hartford/Rocky Hill and New Haven areas as reported by the Oil Price Information Service from April 1st to March 31st of the prior year multiplied by the Oil Companies tax rate. Oil Companies: Levied on the gross earnings from the first sale of petroleum products by distributors in Connecticut. The current rate is 8.1%. The period between 2010 through 2014 saw a significant increase in the per barrel price of oil which increased revenue from this source. 5 Historical Growth in Debt Service out-paces the Rate of Revenue Growth 34% Increase from 2009 to 2018 6 Special Tax Obligation Issuance History • Increased borrowing has been focused on enhancements and less on State of Good Repair (SOGR). • Results in an backlog of SOGR & deferred maintenance for the transportation infrastructure. 7 Phase-in of the Car Sales Tax Special Transportation Fund Car Sales Tax Diversion to the STF - Phase-in Schedule (in millions) Bi-Partisan HB 7424 Original Schedule Revised Schedule Fiscal Transfer Estimated Transfer Estimated Year Level Revenue Level Revenue 2019 8.0% $ 29.0 8.0% $ 29.0 2020 33.0% $ 120.0 17.0% $ 61.8 2021 56.0% $ 204.8 25.0% $ 91.4 2022 75.0% $ 275.7 75.0% $ 275.7 2023 100.0% $ 368.2 100.0% $ 368.2 2024 100.0% $ 368.9 100.0% $ 368.9 Diversion of the Car Sales Tax transfers to the Special Transportation Fund is a part of the projected $1.1B structural gap in FY2022. 8 STF Forecast - The Fiscal Challenge State of Good Repair $1.2 billion Annual Investment • Assumes Special Tax Obligation bond issuance of $1.2 billion starting in FY 2021. • Caps the transfer of the Car Sales Tax to 25% starting in FY 2021 to reduce impact to General Fund resources. Version 3 9 Transportation Forecast - The Fiscal Challenge (State of Good Repair with Transportation Enhancements - $2.0 Billion) • Assumes Special Tax Obligation bond issuance of $2.0 billion starting in FY 2021. • Caps the transfer of the Car Sales Tax to 25% starting in FY 2021 to reduce impact to General Fund resources. Version 3A 10 Transportation Forecast With Bi-Partisan Supported Full Implementation of Car Sales Tax Transfer 11 Transportation Potential Solution 1 Congestion Price Tolling and Full Car Sales Tax Transfer State of Good Repair - $1.2B Annual • Incorporates Congestion Price Tolling proposal. • Assumes a capital plan (tolls, and borrowing) of $875 million in FY 2021 through FY 2023 and $1.2 billion per year starting in FY 2024. • Fully implements the car sales tax transfer. Reaches 100% by FY 2023. • Incorporates the following: • Maximum Connecticut resident tolling discounts • Reduces transit bus fares from $1.75 to $1.00 • Includes a low income toll credit Version 7 12 Transportation Forecast – Potential Solution 1A Congestion Price Tolling and Full Car Sales Tax Transfer State of Good Repair and Transportation Enhancements - $2.0B • Incorporates Congestion Price Tolling proposal. • Assumes a capital plan (tolls, and borrowing) of $875 million in FY 2021 through FY 2023 and $2.0 billion per year starting in FY 2024. • Fully implements the car sales tax transfer. Reaches 100% by FY 2023. • Incorporates the following: • Maximum Connecticut resident tolling discounts • Reduces transit bus fares from $1.75 to $1.00 • Includes a low income toll credit Version 7A 13 Transportation Forecast – Not An Adequate Solution Bridge Tolling • Incorporates Bridge Only Tolling. Up to 12 bridges are eligible to be tolled over a 30 year period. • The chart shows two capital plans: • $1.2 billion per year in tolls and borrowing starting in FY 2021 • $2.0 billion per year in tolls and borrowing starting in FY 2021 • Fully implements the car sales tax transfer. Reaches 100% by FY 2023. • Incorporates the following: • Maximum Connecticut resident tolling discounts • Reduces transit bus fares from $1.75 to $1.00 • Includes a low income toll credit Version 5 & 5A 14 Rating Agency Comments • Rating Agencies have concerns over the interdependence of the Special Transportation Fund and the General Fund • General Fund needs to show structural improvement before the Special Tax Obligation bond ratings could improve • Each rating agency has noted the slow growing nature of the Special Transportation Fund’s revenue streams. There are concerns that significant increases in investment would not be able to be covered by the current revenues within the fund. 15 Concerns • • • • • • Transportation expenses are outpacing revenue by a ratio of 5:1. Most of our infrastructure is near or past its expected life span. Past expenditures did not keep up with maintenance needs. There is a cost to “kicking the can.” Congestion now threatens the state’s economic development. Every year we delay action puts us further behind other states, exacerbating the economic development challenges and puts CT at a disadvantage. • The current economic expansion will come to an end eventually, at which time asking for new revenue from the public will be even more difficult. 16 Conclusion • In order to put Connecticut on a path to growth, our transportation infrastructure must be addressed. We have to get CT moving again! • This is about growth, quality of life and fiscal responsibility. • The financials demonstrate that the Special Transportation Fund is in crisis without any action • The infrastructure conditions assessment indicates we are on a declining path. • In order to achieve the economic growth goals and fiscal sustainability the Special Transportation Fund would require the 100% fulfillment of the car sales tax transfer AND congestion price tolling in order to achieve a state of good repair for the existing transportation network. Additional enhancements will require further financing and/or additional revenues. 17 Millions ofDollars $200.0 5. $(200.0) $(400.0) $(800.0) $(1.000.0) Our Fiscal Challenge Projected Operating Surplus/(Deficit) of the Transportation Fund Issuance of $1.2 billion and Car Sales Tax Capped at 25% (State of Good Repair Only) $30.0 $26.7 $(173.1) $(287.5) $(378.8) 5(5000) $(598.1) $(709.8) $(829.3) 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Fiscal Years A Path Forward Millions ofDoIIars $200.0 5. $(200.0) $(400.0) $(600.0) $(800.0) Bi-Partisan Proposal Projected Operating Surplus/(Deficit) of the Transportation Fund Issuance of $1.2 billion Full Implementation of Car Sales Tax (State of Good Repair Only) $30.0 $26.7 58.8 $(106.2) $(221.3) $(313.2) $(417.7) $(530.0) 100% Car Sales Tax Transfer 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Fiscal Years 18 Millions ofDoIIars Comprehensive Compromise $200.0 5. $(200.0) $(400.0) $(600.0) $(800.0) 5300 $50.3 $58.2 $62.9 592-2 $47.2 $25.6 Projected Operating Surplus/(Deficit) of the Transportation Fund Congestion Price Tolling with Full Implementation of Car Sales Tax (State of Good Repair Only) $0.8 $2.7 $3.2 $4.3 - I 2022 2023 2024 2025 2026 2027 2028 2029 2030 Fiscal Years 0PM Middle Class Tax Relief • Reduce the 3.0% tax rate to 2.0% • Under the Personal Income Tax, Connecticut has 7 tax brackets ranging from 3.0% to 6.99% (See below) • This proposal would lower the 3.0% rate to 2.0% which will result in an approximate maximum benefit of $90 to single filers and $180 to joint filers. • Under our Personal Income Tax, the first 10,000 of taxable income (AGI net of exemptions) for single filers and $20,000 for joint filers is taxed at 3%. Lowering the bottom rate give all taxpayers a benefit ranging from $90-$180 because the first $10,000 for single and $20,000 for joint filers is subject to a 3% rate which we propose reducing to 2%. • Tax relief would go to filers with Adjusted Gross Incomes of approximately $25,000 to $101,500 for single filers and $35,000 to $145,500 for joint filers (technicality: assuming taxpayer receives property tax credit). • In other words, all filers benefit from this lower bracket up to the specific AGI dollar threshold because we have a recapture provision that eliminates the benefit of the lower rate once single filers AGI reaches $101,500 and joint filers up to $145,500. • Would result in a General Fund revenue loss of approximately $100 million per year. Benefit: Single Filers Joint Filers Approx. AGI Range $25,000 - $101,500 $35,000 - $145,500 Max $ 90.0 $180.0 19 Structural Holes One-time Items included in the Budget and Impact in FY 2022 (in millions) Tax Types 1.Personal Income Tax 2.Personal Income Tax 3.Sales and Use Tax 4.Sales and Use Tax 5.Corporation Tax 6.Corporation Tax 7.Inheritance and Estate Tax 8.Real Estate Conveyance 9.Miscellaneous Taxes 10.Refunds of Taxes 11.License, Permit and Fees 12.Transfers - Other Funds 13.Transfers - Other Funds 14.Transfers - Other Funds 15.Transfers - Other Funds 16.Expenditure Item Cap teachers' pension exemption at 25% for 2 years, rises to 50% in FY 2022 Pension and Annuity Phase In by 1/1/2025 (PA 17-2 JSS) Adjust diversion of the car sales tax to the STF at 17% and 25%, rises to 75% in FY 2022 Municipal Revenue Sharing Account comes online in FY 2022 (PA 17-2 JSS) Maintain current 10% surcharge for 2 years, no surcharge in FY 2022 Phase-Out Capital Stock Tax by 1/1/2024 Phase in Federal Exemption level by 1/1/2023 (PA 18-81) Mansion Tax Credit begins in FY 2022 Plastic Bag Fee - Ban Plastic Bags July 1, 2021 Maintain Eligibility Limits on Property Tax Credits for IY 2019 & 2020, expire in IY 2021 Banking Fund Transfer ends in FY 2022 Transfer FY 2020 Revenue for use in FY 2021 Transfer to Mashantucket/Pequot Fund Use of Surplus for potential Hospital Litigation Resolution GAAP - Restore Funding for Cumulative GAAP Deficit Debt issuance premium directed toward capital projects delay for 2 years Total - All Items 20 Ongoing Fiscal 2022 $ (8.0) (16.4) (184.3) (356.3) (37.5) (9.5) (13.2) (1.0) (26.8) (53.0) (5.2) (85.0) (6.6) (95.0) (85.1) (120.0) $ (1,102.9) Operating Forecasts Annual Surplus/(Deficits) (in millions) 1. Baseline at $1.2 Billion 2. Baseline at $2.0 Billion 3. Bi-Partisan Car Sales Tax at $2.0 Billion 4. Bi-Partisan Car Sales Tax at $1.2 Billion 5. Congestion Tolling at $1.2 Billion 6. Congestion Tolling at $2.0 Billion 7. Alt. Congestion Tolling at $1.5 Billion 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 $30.0 $26.7 ($173.1) ($287.5) ($378.8) ($500.0) ($598.1) ($709.8) ($829.3) ($943.5) ($1,023.4) $30.0 ($26.9) ($294.7) ($478.5) ($639.7) ($830.6) ($998.4) ($1,179.8) ($1,369.1) ($1,553.1) ($1,702.7) $30.0 $26.7 $8.8 ($14.8) ($106.2) ($221.3) ($313.2) ($417.7) ($530.0) ($636.7) ($708.9) $30.0 ($26.9) ($112.8) ($205.8) ($367.1) ($551.9) ($713.5) ($887.7) ($1,069.8) ($1,246.3) ($1,388.2) $30.0 $50.3 $58.2 $62.9 $92.2 $47.2 $25.6 ($8.2) ($49.5) ($85.0) ($85.7) $30.0 $50.3 $58.2 $62.9 $36.4 ($78.3) ($169.7) ($273.2) ($384.3) ($489.5) ($560.0) $30.0 $50.3 $58.2 $62.9 21 $71.2 $0.1 ($47.6) ($107.6) ($175.0) ($236.7) ($263.6) Prioritize Progress • Prioritize Progress would lead to growing levels of General Obligation debt service which are not currently anticipated nor funded. • By the end of just the first 10 years, the Office of Policy and Management estimates that the debt service cost would exceed $600 million per year and result in more than $7.0 billion additional GO debt issued by 2030. • This is nearly equivalent to a 1.0% increase in the Sales and Use tax. • Would require significant reduction in other bond priorities in order to achieve the debt service levels described in the biennial budget. • Prioritize Progress would place the bill squarely with the taxpayers of the State of Connecticut by increasing the state’s fixed costs and crowding out other essential programs. 22 Tolling – Making it Easier for CT Residents • 30% In-State Discount for all Connecticut based E-ZPass • 20% Frequent Driver Discount (Commuter Discount) • Lowers Bus Fares from $1.75 to $1.00, a 43% discount • 20% Low Income Toll Credit up to 125% of Federal Poverty Level (AGI of $15,612 to $32,187) 23