Let's fix funding! Panel APWA 2016

Chris Evers727-638-1699

Let’s fix funding!

The wisdom of learning

“When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much he had learned in seven years.”

Mark Twain

Our Esteemed Panel• Eric Poole – Assistant Legislative Director, Florida

Association of Counties

• John Goodnight, P.E. – Executive Liaison, FACERS

• Rick Howard, P.E. – Public Works Director, Orlando

• Ramon Gavarette, P.E. – County Engineer, Highlands County

1 How do we currently fund our roads

How much actually gets to the road2

3

4

Panel Discussion

How do we fix funding and whenLet’s fix funding strategy

Cost of Deficient Infrastructure

We’re #19!We’re #19!

2013 U.S. Infrastructure Needs

Florida Department of Transportation

FLORIDA’S HIGHWAYS

• State Highway System (FDOT Maintained)– State Roads, US & Interstate Highways– 12,116 centerline miles– 6,783 bridges– 54% of all traffic

• Local Governments:– 107,674 centerline miles– 5,091 bridges

• Federal Government:– 2,315 centerline miles– 290 bridges

ASCE 2013 Report Card

How do we currently fund our roads?

Did you know?• “Every dollar invested in transportation

results in a return of $4.40 in benefits to Florida’s residents and businesses.”– FDOT, Macroeconomic analysis of Florida’s

Transportation Investments, January 2015

• “Every dollar spent at the top of the deterioration curve saves between $4 and $10 at the bottom.” Good roads cost money, bad roads cost more!

How are we funding roads?• Primarily we rely on fuel taxes although there are

other funding sources such as:– Motor vehicle license fees– Registration fees– Title fees– Rental Car surcharge– Documentary Stamp tax– Impact fees– Red Light Cameras– Sales tax

How are we funding roads?

How are we funding roads?

How are we funding roads?

State Transportation RevenueFiscal Year 2013-14

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$ in

Mill

ions

Doc Stamps

Local Option

Rental Car

Aviation

Motor Vehicle Fees

SCETS Fuel

Fuel Tax

State Transportation Revenue

Actual through fiscal year 2014, 2015 through 2020 based on Spring 2015 Revenue Estimating Conference

How are we funding roads?

How are we funding roads?

Local Option Fuel Tax 1-6 cents approved by simple majority of

County Commission or vote of citizens 1-5 cents approved by super majority of

County Commission or vote of citizens “Ninth Cent” approved by super majority

of County Commission or vote of citizens Local Option Fuel Tax for each county

(Map shown on next page)

Local Option Sales Tax Charter County Transportation System Surtax –

approved by vote of citizens 31 counties are eligible to levy the surtax Duval, Walton, and Miami-Dade have enacted

Local Government Infrastructure Surtax All counties eligible to levy the surtax, 18 have

enacted Small County Surtax

31 counties eligible to levy the surtax, 29 have enacted

http://edr.state.fl.us/Content/ to find the Counties that have implemented the tax as of 2016

21

State Grants Small County Road Assistance Program (SCRAP)

Statute 339.2816 (30 counties qualify) Population of 75,000 and under “At a minimum small counties will be eligible only if the

county has enacted the maximum rate of the local option fuel tax authorized by s. 336.026 (1)(a) (6 max’d)

Small County Outreach Program (SCOP) Statute 339.2818 (37 counties qualify) Population of 150,000 and under Criteria include condition of the road…does the County

have a pavement management plan

22

How are we funding roads?

Local Government spending

How are we funding roads?

Locally Imposed Fuel TaxesDistributed to Local Governments

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$ in

Mill

ions 9th Cent

Local Option

Actual through fiscal year 2014, 2015 through 2020 based on Spring 2015 Revenue Estimating Conference

How are we funding roads?

Construction inflationOver the same twenty year period that fuel efficiency improved 12% transportation costs grew by 60%!

So for every $1 fuel efficiency gains drained from gas tax funds, inflation drained $3.50

Impact of indexing fuel sales tax

Untapped Locally Imposed Fuel Taxes

$0

$50

$100

$150

$200

$250

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$ in

Mill

ions

9th Cent

Local Option

Actual through fiscal year 2014, 2015 through 2020 based on Spring 2015 Revenue Estimating Conference

The top 15 counties account for over 87% of the total unutilized gas tax

That’s a bunch of money!

Top 15 Counties

Rank COUNTY TOTAL REVENUE RATE Total Unutilized $ Indexed Year 11 ORANGE 44,589,922.32$ 0.06$ 37,311,062.26$ 1,965,623.63$ 2 HILLSBOROUGH 46,120,215.15$ 0.05$ 27,972,510.99$ 1,778,225.43$ 3 DUVAL 32,594,893.82$ 0.06$ 25,541,669.41$ 1,395,277.52$ 4 DADE 107,673,694.57$ 0.02$ 19,694,412.26$ 3,056,834.56$ 5 PINELLAS 27,536,741.66$ 0.05$ 17,915,119.45$ 1,090,844.67$ 6 BREVARD 21,806,106.27$ 0.06$ 13,987,226.94$ 859,040.00$ 7 SEMINOLE 14,656,702.42$ 0.05$ 9,569,564.48$ 581,430.41$ 8 OSCEOLA 13,546,816.92$ 0.05$ 8,964,599.73$ 540,274.00$ 9 LAKE 10,222,347.36$ 0.05$ 6,509,982.57$ 401,575.92$

10 ST JOHNS 7,594,416.56$ 0.06$ 6,213,457.62$ 331,388.98$ 11 BAY 7,162,206.67$ 0.05$ 4,496,539.50$ 279,809.91$ 12 SANTA ROSA 4,591,567.25$ 0.06$ 3,927,029.26$ 204,446.32$ 13 INDIAN RIVER 4,900,567.64$ 0.06$ 3,775,783.18$ 208,232.42$ 14 CLAY 5,853,833.91$ 0.05$ 3,771,054.07$ 230,997.31$ 15 SUMTER 5,946,346.43$ 0.05$ 2,760,809.93$ 208,971.75$

354,796,378.94$ 192,410,821.64$ 13,132,972.81$

How much gets to the road?

Examples of where the $ goes• I didn’t even know this data existed• For each expenditure there are cost codes and these enable

the State of Florida to track expenditures by agency• These next slides are examples of what is available if you look• What I’ve learned is that some of the data is too broad for our

purposes• To start with we can find ways to drill down and get more

accurate data• For Counties the $ go into a Trust Fund but for municipalities

it appears to flow into the general fund, shouldn’t that change?

• Are there improvements we can make in tracking?

St. Johns Example FY 2013  Ninth Cent 1-6 Cent 1-5 Cent Combined  Countywide Countywide Countywide Countywide  Realized Realized Realized RealizedCounty Tax Revenues Tax Revenues Tax Revenues Tax RevenuesSt. Johns $ 209,119 $ 6,821,258 $ - $ 7,030,378

County Transportation TOTAL - All Expenditure Account CodesGovernment Total Per Capita % of Total Total Per Capita % of TotalSt. Johns $ 32,210,975 $ 159.82 8.2% $ 391,666,995 $ 1,943.36 100%

St. Johns County Unrealized Tax Revenue = $5,702,644

County 2015 resurfacing budget = $1,300,000

Annual resurfacing needs = $15,000,000Total Backlog = $500,000,000

Palm Beach Example FY 2013

County Transportation TOTAL - All Expenditure Account CodesGovernment Total Per Capita % of Total Total Per Capita % of TotalPalm Beach $ 254,198,112 $ 188.90 10.1% $ 2,505,898,432 $ 1,862.22 100%

  Ninth Cent 1-6 Cent 1-5 Cent Combined  Countywide Countywide Countywide Countywide  Realized Realized Realized RealizedCounty Tax Revenues Tax Revenues Tax Revenues Tax RevenuesPalm Beach $ 5,705,854 $ 32,119,219 $ 23,992,986 $ 61,818,059

Palm Beach County 2015 resurfacing budget = $4,000,000

Annual resurfacing needs = $12,000,000Total Backlog = $?

Total going to mass transit?At 15% it would be $9,272,708.85

How much gets to the road?• Statewide we really don’t know• When I looked for the answer I found that the figures were too broad

to be sure• We don’t do a very good job of tracking expenditures• What I did find was this:

– Many agencies seem to have trouble funneling money down to the project level– Some agencies have depended on fuel taxes to fund operations (Statutory intent

ignored?)– The amount of asphalt use in the State has dropped dramatically (easiest way to

track since 97% of roads are asphalt) about 40% drop since 2006– Disconnect between statutory intent and practice– Huge unfunded needs that could be met with shift in either policy or attitudinal

shift, both– Many of the non-transportation budget items actually are dependent on quality

and safe infrastructure

Historical FDOT Asphalt Tonnages

Historical Florida Asphalt Tonnages

Florida Department of Transportation

Historical Statewide Performance

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$ in

Mill

ions

Veterans Programs

SEED Transfers

Agriculture

DEP & GFC

Tourism & Trade

Admin Charges

GR Service Charges

GR Fund Transfers

Education

Transportation Revenue Used For Non-Transportation Purposes

Actual through fiscal year 2014, 2015 through 2020 based on Spring 2015 Revenue Estimating Conference

How do we fix it and when?

The answer should be now• Gas prices have dropped significantly in

the last year• Even in DC attitudes towards

increasing the gas tax have softened• Indexing is not the same as raising

taxes!• We have a window to act but need to

come up with a game plan

Gas Prices have dropped significantly

Several Counties are trying• Brevard County is currently attempting

to go after a ½ cent sales tax– Is that better than increased impact fees/gas

tax?

Go Hillsborough is under way

• The County is attempting to increase funding by implementing either a ½% or full 1% sales tax to fund transportation projects

• For some reason they feel it’s easier than increasing gas tax

• Gas tax is seen as broken already and some agencies are opting for sales tax as a more sustainable approach

Revenue Stream Challenge:The Future of Fuel Tax

Various market pressures are driving up average vehicular fuel efficiencies

Alternative fuels are exempt from fuel taxes (CNG) Corporate fuel economy standards for new cars

will increase from 35.5 MPG in 2016 to 54.5 MPG in 2025

The average driver will pay less for use of the roadway network in the future Fuel taxes paid decrease as fuel efficiency increases

The fuel tax will become a less sustainable and less equitable fee for road use

Graphing the bad news

Revenue Stream Challenge:The Future of Fuel Tax

Let’s fix funding strategy

Let’s break it down…• We hear all of the

time how opposed everyone is to increased taxes

• The common retort is that it just can’t be done because the public hates it

• Of course that’s more accurate when gas is $4/gallon

We need to get the public to rally around the effort!

Public Opinion

What’s the public perception of our roads?

Public Opinion

Public Opinion

Politics – Funding in Florida• Out of 67 Counties only 23 have zero unutilized

County-Imposed gas tax

• Using Hillsborough as an example with 3,318 centerline miles (7,700 lane miles) of paved road their $3M resurfacing budget puts them on a 148 year paving cycle

• That additional 5¢ would generate nearly $30M per year which would wipe out their funding shortfall

• Madison County has 242 centerline miles, industry standard is 20 year paving cycle meaning Madison County should be paving at least 12 miles per year expending $1,815,000

• Instead the County was operating with a 61 year paving cycle

• Madison County purchases a piece of equipment costing $46,851,200– This piece of equipment is vital to all

economic activity in the County– Other tax revenue would not exist

without this equipment– Not investing in upkeep costs every

taxpayer in the County (19,115) since every single taxpayer uses it

– If we let this piece of equipment completely deteriorate it, a new one could cost us as much as 10 times what we paid for it

Communicating with Stakeholders

Communicating with Stakeholders

Important to use everyday examples, analogies

Preventative Medicine is the model we want to shoot for

In infrastructure, the longer we wait the bigger the bill

When you brush your teeth, do you brush only the worst teeth

Why then would we only address the worst roads

Roads vs. AT&TAverage driver logs 12,000 miles per year @ 24 mpg

Average driver uses 500 gallons per year

In Hillsborough County they pay $0.50 per gallon

Average Driver pays $250/yr or just over $20 a month

The argument goes that an extra $0.05/gal or $2/month would anger the electorate

What can we do?• Admit we have a problem and define it

– As an industry and a community we should discuss the issue and begin to mobilize

• Engage elected officials and taxpayers– Continue the education process any way possible

whether that means engaging with legislators, writing editorials or having these panels (APWA, FAC Panel)

• Find partners and champions– We all know folks who can help, government

associations (FAC, League of Cities), private trade organizations (FES, FICE, FTBA, ASCE, ACAF) other public works organizations (APWA, FACERS)

• Craft a multi tier strategy that fits your agency and situation

What can we do?• Some fixes exist at the County level and will benefit the Cities

within the County– Let’s get all of the PWD’s together and game plan how to get the unutilized

gas tax money utilized

• Statutory fixes may also be required– Work with Tallahassee to index the fuel taxes that are distributed to local

governments

• Educate decision makers on the impact ill advised policy has on our roadway health– Hold panel discussions throughout the State– Are local agencies allocating fuel tax funding to operations? Hint: (not

supposed to!) – Does management know that not maxing out fuel taxes could cost

matching funds from FDOT?

What can we do?• Does raising gas taxes have any

discernable effect on retail gas prices?– Work to better understand pricing

mechanisms– Explain the effects of market forces such as

seasonality

Gas price heat map

What can we do?• Work with MPO’s on legislative priorities• For instance MetroPlan Orlando has been debating a

legislative priority that would:– Expand Charter County surtax for municipalities over 150K to

enact 1 cent sales tax; carry over from last year’s priorities; FL MPO AC did revenue study in 2013 and this was one of the items that came out of this study; local option sales tax – where it fails in the county it typically passes in the city; gives cities another tool

• Plan ahead, a lesson from Jim Stivender’s napkin:– Use the calendar to our advantage– Back into the off year election politics– If you look at when the gas tax goes into effect (January 2018) that

puts the vote on an off year election– Typically there will be less acrimony and more political cover with

an off year election

Success Story, Lake County!• Lake County voted overwhelmingly to

renew their Infrastructure Sales Tax– Voters this month passed the 20 year renewal

for the County’s Sales Tax– The vote margin likely means the Commission

will feel comfortable going after the remaining un-imposed gas tax

• Statutory fixes may also be required– Work with Tallahassee to index the fuel taxes

that are distributed to local governments

So what harm comes of asking? They might say yes…

But haven’t we failed before?• We’ve tried some of these approaches

before so how do we succeed this time? • We change the conversation, use our

recess voice and explain the true scope of the problem

• We recruit a champion before hand• Get creative with presenting our

material

The future is this?

SELF DRIVING CARS

Or this…

Or this!!!

Self Driving CarsImplementation will pick up steam between

2020 and 2030• In 2025 SDC will approach 12M with 4.8M self drive

only, nearly all cars will be self drive only by 2050

SDC requires good roadsHuge opportunity • Dependent on smooth pavements• Reduction in capacity requirements• Game changer in productivity,

healthcare etc.

Our Nation’s most valuable asset

“It was not our wealth that made our highways possible; rather it was our highways that made our wealth possible” Thomas MacDonald,

former U.S. Commissionerof Public Roads

We can have a bright future and insure one for future generations!

Chris Evers727-638-1699

Let’s fix funding!