May Commonwealth Transportation Board Meeting
The Commonwealth Transportation Board (CTB) met on May 17 and 18 in Staunton, Virginia. All members of the CTB were present for this meeting. All presentation made at this meeting can be accessed by clicking on the links shown in blue in this email.
The agenda for the workshop can be found here. The workshop began with presentation of a video on the Staunton District by the Staunton District Administrator. Secretary Layne then began the workshop by saying this was the first meeting in a long time where all members of the CTB were present. He said the first two presentation of the workshop were among the most important of the year and cover the budget and six year plans for the Department of Transportation (VDOT) and the Department of Rail and Public Transportation (DRPT). He noted that the CTB oversees these two agencies and that understanding the financial aspects of VDOT and DRPT were one of the most important core functions of the CTB.
1. Draft FY 2017 VDOT Budget: John Lawson, VDOT Chief Financial Officer, presented the draft 2017 budget and six year financial plan that provides an overview of the revenues that will be available to VDOT in the next fiscal year and for the next six year improvement plan. He began by noting that there is an $829 million increase contained in the draft six year financial plan (SYFP) over the previous one as a result of the February 2016 update. He said this increase is primarily attributable to a $291.5 million increase in motor fuel tax collections (resulting from increased consumption) and $381.5 million increase in motor vehicles sales taxes through 2021. He also noted there would be a $1 billion increase in available federal revenues as a result of passage of the FAST Act. He next reviewed the changes in the distribution of revenues that resulted from HB 1887 (2015) that are shown on slides 3 and 4 of his presentation.
Lawson noted that this is the first SYFP where total transportation fund revenues will exceed $6 billion (slide 5). Highway Maintenance (VDOT and Local Payments) is allocated 36% of all revenues (about $2.1 bill) and Highway Construction is allocated about 31% of all revenues (about $1.87 billion) excluding an additional $496 million for regional programs (slides 6 and 7). Secretary Layne noted that about half of the construction dollars are federal dollars. CTB Member Gary Garczynski asked where the $52 million of revenues allocated to “other agencies” goes and Lawson said it was to agencies such as the Virginia State Police, DMV and the Attorney General’s Office. Secretary Layne said this is not VDOT’s money, it is the CTB’s money to allocate.
CTB Member William Fralin said he would like to know how much of an increase in state revenues have been realized year over year since the passage of the 2013 funding legislation. Secretary Layne responded the package was supposed to start revenue neutral and that most of the initial increase came from the regional funding. Lawson noted again that the increased revenues he reported did not include the regional revenues. Layne said the 2013 legislation has given the Commonwealth more revenues than we would have had without it but that the revenues are “nowhere near” the projections.
Fralin asked for an explanation of the Financial Assistance to Localities allocation of $437.1 million (slide 6) and he was advised this money is mostly payment to cities for street maintenance. Fralin also inquired about the $8.7 million increase in Administrative allocations (slide 7) and wanted to know what kind of growth this increase represented. Lawson responded this represented about a 3% increase per year and was driven by cost of living increases and payroll. Secretary Layne noted with all the work going on, this level of staffing is needed. VDOT Commissioner Charlie Kilpatrick also noted some of the Administrative costs for engineering can’t be allocated to projects. For example, he said while inspection is charged to a project, the training of inspectors comes out of the administrative budget. CTB Member Scott Kasprowicz asked how administrative costs are captured for a project. Kilpatrick responded they are budgeted as a percentage of a job but spent as an hourly charge. He said it is easier to keep these costs on budget for larger projects. He said engineering is usually around 10% of project cost for VDOT. Secretary Layne said these costs are going to be looked at, especially for P3s where the private party is taking on substantial risk. He said 10% may not be the right number. Lawson said about 40% of the $267 million of revenues allocated for administration are for the technology side of the agency.
Lawson next presented an overview of the 2017-2022 SYFP (slide 8) and noted it allocated $35.2 billion over the period (slide 8). He explained the uses of GARVEES and CPR bonds in response to a question from Fralin and noted that the FRANS have been retired. He also reminded the CTB that the CPR bonds support transit and that if they are not reauthorized transit funding goes over the fiscal cliff in 2021 with the last $50 million being allocated in 2020, down from $122 million in the first two years of the SYFP.
CTB Member Shannon Valentine asked for an explanation of the Route 58 funding program. Lawson explained bonding comes into play in 2020 and 2021 for Route 58 and that recordation taxes and additional VDOT funding are servicing the current debt for the program. There was discussion of whether the Route 58 program would extend further west. Fralin said some members of the General Assembly do not believe the program stops at I-77. Secretary Layne said the General Assembly retains the right to authorize bonds for specific projects or general purposes. He said this year the General Assembly ultimately agreed not to designate specific projects with the House taking the lead on this view which he said was the right decision. While in the end a law can be passed that overrides the HB 2 process, this is another reason why it is important to demonstrate the HB 2 process is a better way according to Secretary Layne. Valentine asked if the current Route 58 program would be completed in 2021 and Commissioner Kilpatrick responded construction will extend a few years beyond that date but that the widening of Route 58 from 1-77 to Virginia Beach would be completed by the end of this period.
Secretary Layne said big issues are facing WMATA (Washington Metropolitan Area Transit Authority) that he would discuss in more detail later in the meeting. He noted that the CPR bonds had been the recent funding source for metro and with that authorization expiring, funding WMATA would be a real issue to work through over the next several years.
Lawson next reviewed significant changes in the SYFP (slides 11 and 12). He noted that released funds from the 460 project allowed for a one-time infusion of funds into the maintenance program for pavement and bridges. He also mentioned $60 million of toll facilities revolving funds had been allocated for I-66 inside the beltway. Revenue sharing was held at $100 million per year. Garczynski said the revenue sharing program is a big plus for Northern Virginia. CTB Member Court Rosen said he thought the Board should look at increasing the revenue sharing amount since it is a program that leverages $2 of construction for each $1 spent by the state. Layne said they heard a lot about this during the HB 2 development process and that it had been increased to $100 million but was outside the HB 2 process and comes off the top of their funding. He recommended leaving it at $100 million since only $800 million of state construction funds remained to be allocated. He said $100 million remains a huge part of the program and reminded the members of the CTB that a lot of previous revenue sharing projects addressed deferred maintenance and these kinds of projects could now be addressed with State of Good Repair funding.
Fralin said 80% of the HB 2 funding was sent to four construction districts and the revenue sharing funds give other districts ways to get projects done. Layne responded a number of jurisdictions cannot afford the required match and thought $200 million was way too much. Fralin suggested $150 million and Layne said the number could be adjusted next year. CTB Member Carlos Brown said Hampton Roads and Northern Virginia have their regional funds that other areas do not have and can use the regional funding to replace the reduction in revenue sharing funds. Layne said Hampton Roads and Northern Virginia use revenue sharing funds too. CTB Member Dixon Whitworth said it would be important to vet this issue next year. Layne said it is important to remember the localities haven’t seen the 45% State of Good Repair dollars yet and that, unlike HB 2, these monies are all allocated based on asset management and the projects can’t be picked and chosen like HB 2 projects.
Lawson next reviewed the structural changes that have occurred in the construction program as a result of HB 187 (2015) (slides 13-15). Starting in 2017 funds are allocated based on programs and not based on highway systems. He said the CTB formula is phased out by 2021 as shown in Slide 15. He concluded his presentation by discussing the mid-session reforecast and noting that any reductions in sales taxes were offset by addition GARVEE capacity.
Steve Pittard next presented the DRPT FY 2017 Budget. Secretary Layne noted that the Atlantic Gateway projects are included in these budgets.
John Lawson next presented the draft Six-Year Improvement Program. Lawson said this is a transitional six-year plan that phases in the new funding formula as well as the HB 2 program. Funds in year 6 are transferred to maintain funding levels for round 1 of the HB 2 program that runs from FY 2017 to FY 2021. Lawson noted there were 3500 projects in this SYIP, $11 billion for highway construction and $3.7 billion for rail and transit. He said 437 new projects are added in this program including 163 funded under HB 2 and noted that $88 million is provided from GARVEES for the I-66 inside the beltway project. The $132 million recommended for transfer from year 6 will be offset by additional GARVEEs in FY 2022-2023. William Fralin expressed concern about the use of year 6 funds to fund the current HB 2 program. Lawson responded that the reductions and need for this revenue was caused by a reduction in revenue collections. Secretary Layne said the projects funded in Round 1 of the HB 2 program are the highest scoring projects and so it made sense to fund them. Lawson said the borrowed funds will be paid back.
Lawson presented the recommended State of Good Repair (SGR) funding distribution (slide 12) that allocates funds to VDOT bridges and pavements as well as local bridges and pavements (these are the city streets funded through payments from the Commonwealth). Commissioner Kilpatrick said by early June the CTB members will receive a list of specific projects recommended for SGR payments for state bridge and pavement projects as well as local pavement projects. He said a specific project list for local bridges will be released at a later date. Gary Garczynski asked if the SGR projects will be selected through a formula. Kilpatrick responded that they will be selected as provided in the resolution to be acted on at the action meeting and which continues using the asset management formula that VDOT is currently using. Slide 13 shows the programmed funds by Construction District by percentage as well as dollars. Lawson concluded by showing how projects are displayed in the SYIP and which shows the various funding sources for each project (slides 14 and 15). CTB Member John Malbon asked if all projects in the draft SYIP were fully funded and Lawson responded that was correct. Fralin asked if bids came in too high or construction costs exceed the project award by a certain amount the project can be brought back to the CTB for reconsideration and he was told that was true.
This section of the workshop concluded with Steve Pittard presenting the DRPT Draft SYIP. Pittard noted that 48% of funds were for operating costs and 50% for capital costs. He reminded the CTB of the $110 m million reduction in funds that will occur after FY 2020. He said they were working on identifying ways of closing this funding gap and a new advisory board on this subject had been authorized by the 2016 General Assembly. He said they also were considering a funding approach that incorporates an HB 2 type process instead of the tiering approach currently used. Garczynski said that WMATA is the 800 pound gorilla but that it was not being dealt with through this study. Layne said that was true and would require legislation. Layne said there were two major issues raised for WMATA, the first being safety (which would be dealt with through a new commission) and the second is funding that a number of groups are saying is needed. He also said Virginia Beach light rail remains in the SYIP but there will be a local referendum on that project and that funding is also included for the Atlantic Gateway project.
Todd Horsley, Director of Northern Virginia Transit at DRPT, next gave an update on I-66 inside the beltway. He said the initial multimodal programs to be funded will be presented to the CTB at its June meeting. He said NVTC will approve projects on June 2 and they will be forwarded to the CTB. Slide 4 of his presentation shows the types of m multimodal projects that are eligible for this initial funding and Slide 5 shows the jurisdiction and types of projects seeking funding. He said 19 applications were received totaling $42.6 million in requests for $5 million in available funds. He said the projects are along Route 29, Route 50, Route 613 and the orange and silver metro rail lines. He noted tolling would begin in the summer of 2017 and toll revenues would be used to repay the $5 million allocated for these initial projects.
Deputy Secretary of Transportation Nick Donahue said that the action by the General Assembly at the 2016 Session will require amendments to the Memorandum of Understanding (MOU) between NVTC and the Commonwealth on I-66 inside the beltway. Garczynski asked if the CTB will retain advice and consent over the NVTC funding recommendations each year. Secretary Layne responded that they would for any funding recommendations that are not consistent with the MOU. Both Donahue and Layne noted how these multimodal projects will provide benefits to the corridor before the widening begins. Donahue noted that the two years of construction will produce some angst for drivers traveling in the construction zone and the multimodal projects being funded up front will help ease these impacts. Slide 8 shows the timeline for award of the multimodal projects and how all precede the start of tolling in the summer of 2017.
CTB Member Jim Dyke asked if it is possible that more than $5 million could be made available for the multimodal projects? Secretary Layne said he might recommend increasing that amount to $10 million since it will be repaid from toll revenues, represents such a small amount of total toll revenues and, because it is being repaid, will not impact other areas of the state. He indicated he would write NVTC that $10 million could be made available and Garczynski and Dyke both agreed with this.
Julie Brown of the Local Assistance Division of VDOT next provided an update on the FY 2017 Primary Extensions and High Volume Unpaved Roads Program. She then provided a Special Funding Programs Update that focused on the revenue sharing program. Brown noted VDOT had received $214.6 million in requests for FY 17 revenue sharing funds (broken down by District in slide 4) and they recommended $172 million in awards to be funded through the $150 million budgeted for FY 2017, $4.5 million of funds de-allocated and $18.2 million of funds anticipated to be released by localities (slide 7). All requests meeting the first priority criteria will be fully funded and all requests meeting second priority criteria will be funded up to the first $1 million and 61.5% for requests over $1 million (slide 7). Brown said a tentative list of project selections would be communicated to localities shortly and the CTB would approve a project list at its June meeting. Brown concluded her presentation by reviewing the recommendations for the Transportation alternatives program (slides 9-11) and recommended funding 55 projects fully and 6 projects partially for a total awarded of $21.5 million out of $37 million in requests. Secretary Layne said his comments on revenue sharing were due to the limited resources available. He then adjourned the workshop for the evening with three items left on the agenda to be addressed the next day prior to the action meeting.
Secretary Layne reconvened the workshop on May 18 and it began with a presentation by Nick Donahue on Preparing for Second Round of HB 2. Donahue said the recommendations for changes in the HB 2 process result from lessons learned during the first round of the HB 2 process. He reviewed survey results and noted concerns from some localities over equity. He said this cut both ways with Northern Virginia localities feeling rural areas benefitted from HB 2 and rural areas like Salem feeling like Northern Virginia benefitted. Fralin said they could not ignore that 80% of the HB 2 funds went to four districts and they need to pay attention to that going forward. Secretary Layne said if the CTB members went to all the hearings they could learn how each area says different things and have different and competing perceptions of the HB 2 process. He said the overall consensus is we are better than where we were before the HB 2 process. He said the HB 2 process pointed out deficiencies in applications and also made it clear there were projects left out that should have gotten done had their been sufficient funds. CTB Member Marty Williams said that having regional funds takes pressure off in the General Assembly to vote to take funds from rural areas.
Donahue reviewed changes being considered to the environmental factor (slides 11-12), the economic development factor (slides 13-17), the safety factor (slides 18-19) and the land use factor (slide 20). He illustrated how the HB 2 process encouraged common sense engineering that produced reductions in the cost of projects (slides 22-26). Commissioner Kilpatrick said in the past VDOT would design projects to fully address absolute needs. He said there is a different mindset today that designs project to best use precious funding. Donahue ended the presentation on HB 2 by saying further updates on changes would be presented at the June CTB meeting and revisions would be acted on at the July meeting.
Commissioner’s Items: (a) Kilpatrick praised the staff at VDOT who worked on HB 2. He said about 22 VDOT employees worked on the project and had received a Governor’s award for teamwork for their efforts; and (b) he would ask for a transfer of $30 million in unallocated funds to the FY 2016 maintenance program during the new business portion of the action meeting. He said this action was needed as a result of snow removal exceeding budget by about $100 million and this transfer will provide a small cushion for the end of year balance. He said in 2010 the department carried forward about $500 million and they had worked hard to greatly reduce such carry-over amounts but the transfer would provide a needed margin at the end of the 2016 fiscal year and make sure they do not exceed the budget. He said the alternative, which is not recommended, would be to stop mowing and paving for a period of time. He said the transfer will not impact next year’s funding.
WMATA: Nick Donahue briefed the CTB on efforts with Maryland and the District of Columbia to establish a new entity to oversee safety at WMATA and the metro. They anticipate 2017 legislation in all three jurisdictions to establish this new safety entity. Draft language should be available in September or October of 2016. Dyke said the safety concerns have to be addressed before new funding can be addressed. Fralin noted that the U.S. Secretary of Transportation had said if safety concerns are not addressed by February of 2017 the federal government could withhold 5% of federal funding to Virginia, so this issue has statewide implications. Secretary Layne said without improved governance he could not recommend more funding for WMATA. He adjourned the workshop by saying he would keep the CTB posted n the Atlantic Gateway application for federal funds and hoped it would be successful.
Secretary Layne next convened the action meeting. The agenda for the meeting can be found here. There were no public comments submitted at the meeting. All action items were approved, including the bid for extension of the I 95 Express Lanes, with the exception of the resolution on State of Good Repairs (SGR). Jennifer Ahlin presented the SGR resolution and said a list of SGR projects would be provided to the CTB. Secretary Layne said SGR puts the spotlight on VDOT to perform its core mission of maintaining the existing system. Fralin expressed concern that the CTB did not get the draft resolution until this meeting and asked what was the rush to adopt it. Rick Walton said the statute requires the formula to be adopted by July 1. Dyke asked for a better effort to get documents to the CTB before its meetings. Secretary Layne recommended they defer action on the resolution, that the Department should proceed with project recommendations as if it had been approved and that a list of recommended projects would be provided by June 1 in preparation for a vote on the resolution at the June meeting. The CTB agreed with that approach.
The final item at the action meeting was the transfer of the $30 million to the maintenance program as discussed previously. The transfer was approved and Secretary Layne adjourned the meeting. I hope you find this information to be helpful. Please let me know if you have any questions on it.
Officers/Board of Directors
Vice President: Matt Holcomb
Secretary/Treasurer: S.D. Cagle
Immediate Past President: Jeb Burton, IV
Full list here