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December 8th, 2005, 11:52 AM
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Report on Dedicated Highway & Bridge Trust Fund Calls for Five-year Financial Plan, More Detailed Information on Expenditures
Fund Has Disbursed $21.8 Billion Since 1993
State Comptroller Alan G. Hevesi today recommended strengthening the State’s Dedicated Highway and Bridge Trust Fund (DHBTF) by developing a five-year financial plan for the Fund and providing more information on how projects from the Fund are financed.
An analysis of the Fund – which supports capital transportation projects around the state as well as the operations of the State Department of Motor Vehicles and certain Department of Transportation functions – and the Comptroller’s recommendations were included in a report released today.
The Comptroller’s report notes that DHBTF is a well-managed fund in that it provides support for vital transportation projects, its bonds are highly rated, and its revenues have remained sufficient to support capital needs and meet debt service requirements. However, the report also points out that:
Debt service is the fastest growing component of Fund spending.
Expenditures for debt service are growing faster than the Fund’s dedicated tax revenues and fees.
More than half (55 percent) of Fund disbursements went toward capital projects in 1994-1995, but only about a quarter (28 percent) of disbursements went toward capital projects in 2004-2005. During the same period, State operations increased slightly from 34 percent to 37 percent of Fund disbursements, but debt service rose from 11 percent to 35 percent.
In actual disbursements, debt service rose nearly six-fold from $140 million to $968 million between 1994-95 and 2004-05 – an increase of 590 percent. State operations rose 130 percent, from $449 million to $1.0 billion. Capital projects spending grew by only 7 percent, from $724 million to $776 million during that same period.
“New Yorkers support the Dedicated Highway and Bridge Trust Fund through a range of taxes and fees and have a right to know how money is being spent, whether trends in Fund finances are expected to continue, and if future Fund revenues will support future expenditures,” Hevesi said. “Our analysis found that it was difficult to determine the projects being supported with cash on hand from those supported with debt.
“New York State took a wise step 14 years ago when it created a dedicated fund to ensure ongoing support of the State’s transportation infrastructure, which is critical to the State’s long term economic health,” Hevesi added. “Now, further steps should be taken to make Fund operations and spending more transparent to and ensure that New York taxpayers’ money is being spent prudently.”
“The DHBTF is the cornerstone of the State’s transportation funding program and was created in recognition of the vital importance of maintaining the State’s infrastructure,” said AAA New York State Director of Government Affairs John A. Corlett. “The Comptroller’s report and recommendations present policy makers with a unique opportunity to help restore the public’s confidence in the long term viability of the DHBTF.”
“Despite the recent victory at the polls for Proposition 2, it is clear from Comptroller Hevesi’s report that more and immediate attention is necessary now to ensure adequate transportation funding for the future,” said New York State Road Improvement Coalition Treasurer Ross Pepe. “While Bond Act funds and available federal aid secure a solid footing for the next five years, State government needs to focus on long-term investment or face serious disrepair of our State’s transportation system.”
The DHBTF was established by legislation in 1991 and has been in operation since fiscal year 1993-1994. During its first 12 years of operation, through 2004-2005, the DHBTF made a total of $21.8 billion in disbursements. Capital projects amounted for 38.1 percent of these expenditures ($8.3 billion); State operations, 35.1 percent ($7.7 billion); and debt service, 26 percent ($5.8 billion).
From 1994-1995 to 2004-2005:
Total DHBTF spending grew from $1.3 billion to $2.8 billion, an average of 7.8 percent each year.
Actual dollars spent on capital projects increased by seven percent, from $724 million to $776 million, but the 0.7 percent average annual increase did not keep pace with the average annual rate of inflation of 2.2 percent. Thus, adjusted for inflation, annual spending on capital projects declined.
Debt service costs went from $140 million to $968 million, a 590 percent increase and a 21.3 percent annual growth rate.
The Comptroller’s report notes that the original intent of the DHBTF was to be a primarily pay-as-you-go capital projects fund supported by revenues from the Highway Use Tax, the Motor Fuel Tax, the Petroleum Business Tax and other sources. The report also notes that DHBTF’s financial reporting structure makes it impossible to determine the extent to which any particular project supported by the Fund is financed through debt or pay-as-you-go cash. However, the ratio of pay-as-you-go capital spending to debt-financed capital spending is probably decreasing, and this trend may jeopardize the level of future spending on capital projects.
The Fund’s single largest source of revenue is from the sale of bonds which are issued through the New York State Thruway Authority. The Petroleum Business Tax is the second largest source of revenue. The Fund also receives all revenues from the Highway and Fuel Use Tax and the Auto Rental Tax, and portions of revenues from the Motor Fuel Tax, motor vehicle fees, transmission and transportation taxes and other sources. Total Fund revenues for 2004-2005 were approximately $2.9 billion.
In order to have a clearer picture of the DHBTF’s fiscal condition and to know whether projected tax revenues are sufficient to meet long-term planned expenditures, the Report recommends developing and publishing a comprehensive five-year financial plan. The five-year plan should set forth by year:
Detailed descriptions of appropriations and planned disbursements, separating out debt service, capital projects and State operations and personal and nonpersonal service costs;
Detailed descriptions of individual projects supported by the Fund;
Complete information on capital project disbursements, distinguishing those financed with bond proceeds from those funded with cash;
Projected bond coverage ratios; and
Detailed descriptions of revenues.
The Report also recommends requiring that separate appropriations be made from the DHBTF for projects funded with bond proceeds and those funded with resources on hand.
Over the past 12 years, DHBTF revenues have financed a range of projects around the state such as:
Construction of High-Occupancy Vehicle lanes on the Long Island Expressway;
Replacement of the Stutson Street bridge in Rochester;
Construction of the I-86 Horseheads Bypass in Chemung County;
Reconstruction of the Cross Westchester Expressway, I-287;
Replacement of the Route 290 bridge over the Erie Canal in Onondaga County;
Improvements to the I-87 bridge over Route 3 in Clinton County;
Work on the Suffern Interchange Project (I-287 and I-87) in Rockland County;
Rehabilitation of the Belt Parkway bridges in Brooklyn; and
Work on the Depew Bridge in Erie County.
The Report issued today was prepared in accordance with legislation enacted in 2003, which called upon the Comptroller’s Office to analyze DHBTF finances and make suggestions for improvements in the Fund.
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Report on Dedicated Highway & Bridge Trust Fund Calls for Five-year Financial Plan, More Detailed Information on Expenditures
Fund Has Disbursed $21.8 Billion Since 1993
State Comptroller Alan G. Hevesi today recommended strengthening the State’s Dedicated Highway and Bridge Trust Fund (DHBTF) by developing a five-year financial plan for the Fund and providing more information on how projects from the Fund are financed.
An analysis of the Fund – which supports capital transportation projects around the state as well as the operations of the State Department of Motor Vehicles and certain Department of Transportation functions – and the Comptroller’s recommendations were included in a report released today.
The Comptroller’s report notes that DHBTF is a well-managed fund in that it provides support for vital transportation projects, its bonds are highly rated, and its revenues have remained sufficient to support capital needs and meet debt service requirements. However, the report also points out that:
Debt service is the fastest growing component of Fund spending.
Expenditures for debt service are growing faster than the Fund’s dedicated tax revenues and fees.
More than half (55 percent) of Fund disbursements went toward capital projects in 1994-1995, but only about a quarter (28 percent) of disbursements went toward capital projects in 2004-2005. During the same period, State operations increased slightly from 34 percent to 37 percent of Fund disbursements, but debt service rose from 11 percent to 35 percent.
In actual disbursements, debt service rose nearly six-fold from $140 million to $968 million between 1994-95 and 2004-05 – an increase of 590 percent. State operations rose 130 percent, from $449 million to $1.0 billion. Capital projects spending grew by only 7 percent, from $724 million to $776 million during that same period.
“New Yorkers support the Dedicated Highway and Bridge Trust Fund through a range of taxes and fees and have a right to know how money is being spent, whether trends in Fund finances are expected to continue, and if future Fund revenues will support future expenditures,” Hevesi said. “Our analysis found that it was difficult to determine the projects being supported with cash on hand from those supported with debt.
“New York State took a wise step 14 years ago when it created a dedicated fund to ensure ongoing support of the State’s transportation infrastructure, which is critical to the State’s long term economic health,” Hevesi added. “Now, further steps should be taken to make Fund operations and spending more transparent to and ensure that New York taxpayers’ money is being spent prudently.”
“The DHBTF is the cornerstone of the State’s transportation funding program and was created in recognition of the vital importance of maintaining the State’s infrastructure,” said AAA New York State Director of Government Affairs John A. Corlett. “The Comptroller’s report and recommendations present policy makers with a unique opportunity to help restore the public’s confidence in the long term viability of the DHBTF.”
“Despite the recent victory at the polls for Proposition 2, it is clear from Comptroller Hevesi’s report that more and immediate attention is necessary now to ensure adequate transportation funding for the future,” said New York State Road Improvement Coalition Treasurer Ross Pepe. “While Bond Act funds and available federal aid secure a solid footing for the next five years, State government needs to focus on long-term investment or face serious disrepair of our State’s transportation system.”
The DHBTF was established by legislation in 1991 and has been in operation since fiscal year 1993-1994. During its first 12 years of operation, through 2004-2005, the DHBTF made a total of $21.8 billion in disbursements. Capital projects amounted for 38.1 percent of these expenditures ($8.3 billion); State operations, 35.1 percent ($7.7 billion); and debt service, 26 percent ($5.8 billion).
From 1994-1995 to 2004-2005:
Total DHBTF spending grew from $1.3 billion to $2.8 billion, an average of 7.8 percent each year.
Actual dollars spent on capital projects increased by seven percent, from $724 million to $776 million, but the 0.7 percent average annual increase did not keep pace with the average annual rate of inflation of 2.2 percent. Thus, adjusted for inflation, annual spending on capital projects declined.
Debt service costs went from $140 million to $968 million, a 590 percent increase and a 21.3 percent annual growth rate.
The Comptroller’s report notes that the original intent of the DHBTF was to be a primarily pay-as-you-go capital projects fund supported by revenues from the Highway Use Tax, the Motor Fuel Tax, the Petroleum Business Tax and other sources. The report also notes that DHBTF’s financial reporting structure makes it impossible to determine the extent to which any particular project supported by the Fund is financed through debt or pay-as-you-go cash. However, the ratio of pay-as-you-go capital spending to debt-financed capital spending is probably decreasing, and this trend may jeopardize the level of future spending on capital projects.
The Fund’s single largest source of revenue is from the sale of bonds which are issued through the New York State Thruway Authority. The Petroleum Business Tax is the second largest source of revenue. The Fund also receives all revenues from the Highway and Fuel Use Tax and the Auto Rental Tax, and portions of revenues from the Motor Fuel Tax, motor vehicle fees, transmission and transportation taxes and other sources. Total Fund revenues for 2004-2005 were approximately $2.9 billion.
In order to have a clearer picture of the DHBTF’s fiscal condition and to know whether projected tax revenues are sufficient to meet long-term planned expenditures, the Report recommends developing and publishing a comprehensive five-year financial plan. The five-year plan should set forth by year:
Detailed descriptions of appropriations and planned disbursements, separating out debt service, capital projects and State operations and personal and nonpersonal service costs;
Detailed descriptions of individual projects supported by the Fund;
Complete information on capital project disbursements, distinguishing those financed with bond proceeds from those funded with cash;
Projected bond coverage ratios; and
Detailed descriptions of revenues.
The Report also recommends requiring that separate appropriations be made from the DHBTF for projects funded with bond proceeds and those funded with resources on hand.
Over the past 12 years, DHBTF revenues have financed a range of projects around the state such as:
Construction of High-Occupancy Vehicle lanes on the Long Island Expressway;
Replacement of the Stutson Street bridge in Rochester;
Construction of the I-86 Horseheads Bypass in Chemung County;
Reconstruction of the Cross Westchester Expressway, I-287;
Replacement of the Route 290 bridge over the Erie Canal in Onondaga County;
Improvements to the I-87 bridge over Route 3 in Clinton County;
Work on the Suffern Interchange Project (I-287 and I-87) in Rockland County;
Rehabilitation of the Belt Parkway bridges in Brooklyn; and
Work on the Depew Bridge in Erie County.
The Report issued today was prepared in accordance with legislation enacted in 2003, which called upon the Comptroller’s Office to analyze DHBTF finances and make suggestions for improvements in the Fund.
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