Federal-Aid Highway Program Federal Fiscal Year 2005 Report Arizona Department of Transportation Financial Management Services Office of Resource Administration FEDERAL-AID HIGHWAY PROGRAM Introduction This document is intended to give an overview of the Federal-aid Program and its impacts on Arizona. There are four major sections in the report: (1) Overview of the Federal-aid Program; (2) Arizona Federal funding highlights for fiscal year 2004-2005; (3) Federal-aid Highway Program Characteristics; and (4) Federal-aid Highway Program Descriptions. The first section gives a general overview of how the Federal-aid Program is financed, the authorization process and a discussion of the apportionment, allocation and obligation authority processes. The second section deals with Arizona Federal funding highlights for fiscal year 2004-2005. The last two sections are devoted to characteristics of the core programs, including eligibility, limitations, apportionment formulas and descriptions of the funding categories. • Program Overview Page 2 - 4 • Federal Funding for Arizona - FY 2004-2005 Status Page 5 - 11 • Federal-aid Highway Program Characteristics Page 12 - 14 • Federal-aid Highway Program Descriptions Page 15 - 19 PAGE 1 THE FEDERAL-AID HIGHWAY PROGRAM Program Overview The Federal-aid Highway Program (FAHP) is financed from the proceeds of motor fuel and other highway related excise taxes deposited in the Federal Highway Trust Fund (HTF). The Federal-aid Highway Program is a Federally assisted, state administered program, which distributes Federal funds to the states for the construction and improvement of urban and rural highway systems. On Federal-aid highway projects, a state (or local entity qualified for certification acceptance through the state) develops the plans, lets the contracts, and supervises the construction. The highways remain under the administrative control of the state or local government responsible for their operation and maintenance. Using revenues in the Highway Account of the Highway Trust Fund, the Federal Highway Administration (FHWA) reimburses states for expenditures related to approved highway projects. The FHWA distributes these revenues to states based on apportionment and allocation criteria. Authorization is the process by which Congress authorizes the expenditure of Federal revenues on Federal programs. In recent years the authorization has been for a six-year period. The most recent Highway Transportation Act, Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), was signed into law by the President on August 10, 2005, and extends the FAHP through September 30, 2009. For each Federal fiscal year, the FHWA apportions the authorized funding among the states according to formulas that are established in authorizing statutes. The distribution of Federal funds that do not have a statutory formula is called an “allocation” rather than an “apportionment”. Current law requires that the cash balance of the Highway Account of the HTF, plus projected revenues for the next two years, must be sufficient to repay all unpaid obligations before any additional apportionments of revenues can be made from the HTF. As a result, and unlike most Federal programs, the flow of Federal funding to states for highway projects does not depend on timely appropriation of revenues by Congress as funding is provided through trust-funded contract authority rather than appropriated budget authority. PAGE 2 THE FEDERAL-AID HIGHWAY PROGRAM Distribution of Obligation Authority The obligation limitation is the amount of authorized funding that Congress allows states to obligate in an individual year. The process of determining the annual obligation limitation begins when Congress establishes annual domestic discretionary spending caps - the amount of Federal dollars that can be spent on all domestic, non-entitlement programs in a given year. Once budget caps are determined, Congress distributes spending levels across different program areas, and a targeted level of outlays for highway spending is determined. Congress then establishes the amount of highway funding that can be obligated in the given year. This level often is below the authorized annual level, and serves as a limit on the total obligation in that particular year. Once Congress establishes an overall obligation limitation, the FHWA distributes Obligation Authority to states proportionately to each state’s share of apportioned and allocated revenues. The actual ratio of Obligation Authority to apportionments and allocations may vary from state to state because some Federal-aid programs are exempt from the obligation limitation. A state’s Obligation Authority (unlike its apportionments and allocations of authorized funding) must be used before the end of the fiscal year for which it is made available; if not, it will be distributed to other states. The reallocation of Obligation Authority is referred to as the August Redistribution. PAGE 3 FEDERAL AID FORMULA OBLIGATION AUTHORITY RATIO 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% 94 95 96 97 98 99 00 01 02 03 04 FEDERAL FISCAL YEAR Excludes Minimum Guarantee/Equity Bonus and High Priority Projects 05 THE FEDERAL-AID HIGHWAY PROGRAM Federal Apportionments and Allocations For most Program components, the Authorization Act sets the distribution of spending authority among states. The primary methods used to distribute authorized Federal highway revenues are apportionment and allocation. (a) APPORTIONMENTS. The contract authority created by authorization acts such as SAFETEA-LU is distributed annually among the states using a process called apportionment of revenues. Apportionments are the maximum amount of contract authority that each state can expend for projects in specific programs. For each fiscal year, the FHWA has responsibility for apportioning authorized funding for the various programs among the states according to formulas established in the authorizing statute. Apportionment factors include: lane miles, vehicle miles traveled, taxes paid into the HTF, diesel fuel usage, etc. Each program has a unique set of factors which determine the apportionments to the states. Annual apportionments are generally made on October 1st, the first day of the Federal fiscal year. (b) ALLOCATIONS. While most Federal-aid funds are distributed to states through apportionments, some funding categories do not contain legislatively mandated apportionment formulas. Distribution of revenues, where there are not statutory formulas, is based on criteria determined administratively by the Federal Department of Transportation or as provided in a statute. Apportionment formulas have been designed historically to ensure distribution of Federal revenues among states according to program needs, but are also increasingly intended to provide states a share of total HTF revenue relatively close to their payments into the HTF. ISTEA included provisions designed to help states achieve a closer ratio of revenues from the HTF to payments into the HTF (equity provisions) and to assure that no state would suffer a dramatic decline from one year to the next in its Federal-aid apportionment (the hold harmless rule). PAGE 4 FEDERAL FUNDING FOR ARIZONA The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) was enacted into law on August 10, 2005, providing Federal funding through Fiscal Year 2009. SAFETEA-LU provides Arizona with a record amount of Federal-aid revenue. Arizona received $600.2 million of Federal-aid apportionments for Federal Fiscal Year 2005. The Department received $455.7 million of Federal-aid apportionments with another $144.5 million allocated to local governments. Apportionments (Dollars in Millions) Fiscal Year 2004-2005 Highlights Apportionments Total apportionments for Federal fiscal year 2005 totaled $600.2 million, compared to $535.9 million in FY 2004. $800 $700 $600 $500 $400 $300 $200 $100 * * * * 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Federal Fiscal Year * Estimates per FHWA, HPLS -30 dated August 1, 2005 Includes Minimum Guarantee/Equity Bonus and High Priority Projects PAGE 5 FEDERAL FUNDING FOR ARIZONA Formula Obligation Authority & High Priority Projects Equity Bonus Formula Obligation Authority and High Priority Projects totaled $515.5* million in FY 2005. This compares to $459.5 million in FY 2004. Equity Bonus Spending Authority totaled $71.6* million in FY 2005. This compares to $70.2 million in FY 2004. Equity Bonus (Dollars in Millions) Formula Obligation Authority & High Priority Projects (Dollars in Millions) $80 $600 $500 $400 $300 $200 $100 $60 $40 $20 1998 1999 2000 2001 2002 2003 2004 2005 1998 Federal Fiscal Year 1999 2000 2001 2002 2003 Federal Fiscal Year * $515.5 million plus $71.6 million = Total Obligation Authority of $587.1 million PAGE 6 2004 2005 FEDERAL FUNDING FOR ARIZONA Other Allocations Other allocations received in FY 2005 totaled $8.2 million. This compares to $6.5 million in FY 2004. Arizona received allocations for the Border Safety Inspection Facilities, Local Technical Assistance Program, Minority Business Program, Motor Carrier Safety and other miscellaneous programs. Other Allocations (Dollars in thousands) NATIONAL SCENIC BYWAYS PROGRAM NATIONAL CORRIDOR PLANNING AND DEVELOPMENT DISADVANTAGED BUSINESS ENTERPRISE LOCAL TECHNICAL ASSISTANCE PROGRAM MINORITY BUSINESS ENTERPRISE PROGRAM BORDER TECHNOLOGY EXCHANGE PROGRAM PUBLIC LANDS HIGHWAYS INTELLIGENT TRANSPORTATION SYSTEMS - OPERATIONS TRANSPORTATION RESEARCH - ENVIRONMENT BORDER SAFETY INSPECTION FACILITIES PROGRAM INNOVATIVE BRIDGE RESEARCH AND CONSTRUCTION FEDERAL MOTOR CARRIER SAFETY ASISTANCE PROGRAM TOTAL FY 2005 ALLOCATIONS $296 752 207 140 365 33 689 10 25 5,000 400 327 $8,244 PAGE 7 FEDERAL FUNDING FOR ARIZONA Hoover Dam Funding Arizona was allocated $8.8 million in Public Lands Highways Discretionary funds for the Hoover Dam project during FY 2005. These funds were allocated directly to the Central Federal Lands Highway Division, which is administering the work on this project. Hoover Dam Funding (Dollars in thousands) FY98 HIGH PRIORITY PROJECTS (Sec 1602) $4,518 FY99 HIGH PRIORITY PROJECTS (Sec 1602) NATIONAL CORRIDOR (Sec 1118) 6,161 2,000 FY00 HIGH PRIORITY PROJECTS (Sec 1602) PUBLIC LANDS DISCRETIONARY (Sec 1115) PUBLIC LANDS DISCRETIONARY (Sec 1115) NATIONAL CORRIDOR (Sec 1118) MILITARY CONST BILL (PL 106-246) 7,789 6,000 4,000 2,000 3,000 FY01 HIGH PRIORITY PROJECTS (Sec 1602) HOOVER DAM DEMO (Sec 378) 8,080 19,956 FY02 HIGH PRIORITY PROJECTS (Sec 1602) PUBLIC LANDS DISCRETIONARY (PL 107-87) 7,804 8,000 FY03 HIGH PRIORITY PROJECTS (Sec 1602) FY03 PUBLIC LANDS HWY GRANT FY03 NEVADA FEDERAL DEMO FUNDS** 7,755 5,913 4,967 FY04 PUBLIC LANDS DISCRETIONARY 6,412 FY05 PUBLIC LANDS DISCRETIONARY FY05 PUBLIC LANDS DISCRETIONARY 8,550 257 TOTAL HOOVER DAM FUNDING $113,162 *Sec 1602 funds are included in Apportionments and are distributed over the 6 years of TEA -21. FY00 & FY01 include Sec 1602 RABA Apportionments received. **Federal allocation made to the State of Nevada PAGE 8 ARIZONA FEDERAL FUNDING SOURCES FY 2005 TOTAL OBLIGATION AUTHORITY ($587.1m) (1) Surface Transportation $152.8 26.0% Interstate Maintenance $128.3 21.9% Equity Bonus $71.6 12.2% Bridge $19.1 3.3% TOTAL APPORTIONMENTS ($600.2m) Other $75.0 12.7% Surface Transportation $154.8 25.8% Interstate Maintenance $130.2 21.7% Equity Bonus $71.6 11.9% National Highway $140.3 23.9% Bridge $19.4 3.2% (1) Obligation Authority is shown by program category although it is not limited to a specific program. NOTE: Total Obligation Authority does not include other miscella neous allocations. PAGE 9 Other $81.9 13.7% National Highway $142.3 23.7% ARIZONA FEDERAL FUNDS DISTRIBUTION STATE, MARICOPA, PIMA AND LOCALS FY 2005 TOTAL OBLIGATION AUTHORITY TOTAL APPORTIONMENTS ($587.1m) ($600.2m) Total Obligation Authority (Dollars in Millions) $500 $400 Total Apportionments & Equity Bonus (Dollars in Millions) $444.7 $500 $400 $300 $455.7 $300 $200 $100 $200 $100 $95.4 $18.0 $10.4 $18.6 $0 $96.8 $18.2 $10.6 $18.9 PAG LOCALS *OPTIONAL $0 STATE MAG PAG LOCALS *OPTIONAL STATE MAG * Optional use of Transportation Enhancement, Safety and Bridge funds are available to Metropolitan Planning Organizations (MPOs) and Council of Governments (COGs) on a first come-first served basis PAGE 10 ARIZONA APPORTIONMENTS, OBLIGATION AUTHORITY & REIMBURSEMENTS (Includes Minimum Guarantee/Equity Bonus & High Priority Projects) FEDERAL OBLIGATION FISCAL APPORTIONMENTS YEAR END FY 09/30 ADDITIONAL AUTHORITY TOTAL END FY 09/30 (1) O.A. % REIMBURSEMENTS OBLIGATION BALANCE OF AUTHORITY APPORTIONMENTS 1992-93 252,834,626 221,392,942 87.56% 179,740,061 6,573,820 1993-94 250,989,265 240,788,537 95.94% 245,913,123 8,324,000 1994-95 265,186,888 252,757,024 95.31% 213,379,038 6,121,044 1995-96 219,882,709 235,657,919 107.17% 232,645,266 5,737,471 1996-97 300,114,264 282,854,998 94.25% 294,640,603 19,489,270 1997-98 352,565,695 318,639,756 90.38% 259,394,779 4,727,085 1998-99 433,407,164 384,609,615 88.74% 432,737,810 2,389,596 1999-00 475,048,758 418,113,461 88.01% 412,173,350 4,915,687 2000-01 521,578,989 466,560,234 89.45% 459,056,486 4,979,716 2001-02 546,097,028 514,412,037 94.20% 459,409,075 9,046,298 2002-03 468,201,715 494,189,012 105.55% 460,654,075 7,108,189 2003-04 535,913,033 524,702,519 97.91% 416,954,003 18,347,757 2004-05 600,156,301 587,105,795 97.83% 472,988,762 19,262,961 NOTE: DOES NOT INCLUDE OTHER ALLOCATIONS (1) OBLIGATION AUTHORITY DATA INCLUDES ADDITIONAL OBLIGATION AUTHORITY RECEIVED THROUGH RE-DISTRIBUTION AFTER AUGUST 1ST. PAGE 11 UNOBLIGATED $547,190,369 FEDERAL-AID HIGHWAY PROGRAM CHARACTERISTICS Fund Interstate Maintenance Weight Apportionment Formulas 33.33% Based on lane miles on Interstate System routes open to traffic Period Available Federal Share % FY + 3 Years 94.34 FY + 3 Years 94.30 33.33% Based on total vehicle miles traveled on Interstate System routes open to traffic 33.33% Based on State's annual contributions to the Highway Account of the Highway Trust Fund attributable to commercial vehicles National Highway System 25% Based on total lane miles of principal arterials 35% Based on total vehicle miles of travel on principal arterials 30% Based on diesel fuel used on all highways 10% Based on total lane miles of principal arterials per capita PAGE 12 FEDERAL-AID HIGHWAY PROGRAM CHARACTERISTICS Fund Surface Transportation Program Apportionment Period Weight Formulas Available 25% Based on total lane miles of Federal- FY + 3 Years aid highways 40% Based on vehicle miles traveled on lanes on Federal-aid highways 35% Based on estimated tax payments attributable to highway users in the States into the Highway Account of the Highway Trust Fund STP sub allocations Retains 10% set aside for Safety construction Retains 10% set aside for Transportation enhancements Retains set aside for urbanized areas with populations over 200,000 PAGE 13 Federal Share % 94.30 FEDERAL-AID HIGHWAY PROGRAM CHARACTERISTICS Fund Bridge Program Apportionment Weight Formulas 1 Formula based on each State's relative share of the total cost to repair or replace deficient highway bridges Period Available FY + 3 Years Federal Share % 94.30 Congestion Mitigation & Air Quality Program 1 Formula based on population and severity of pollution in ozone and carbon monoxide areas FY + 3 Years 94.30 Metropolitan Planning 1 Based on the population in urbanized areas or portion of urbanized areas in the State compared to all States FY + 3 Years 94.30 Planning & Research 1 2 % of IM, NHS, STP, CMAQ, Bridge and the new Highway Safey Improvement Program (HSIP) FY + 3 Years 80.00 Equity Bonus 1 Ensures that each state receives a minimum rate of return on contributions to the Highway Account of the Highway Trust Fund FY + 3 Years Safe Routes to School Coordinated Border Infrastructure Program 1 Apportioned to States based on their Available until expended shares of total enrollment in primary and middle schools, but no State will receive less than $1m 20.00% Based on number of incoming Available until expended commercial trucks 30.00% Number of incoming personal motor vehicles and buses 25.00% Based on weight of incoming cargo by commercial trucks 25.00% Based on number of land border ports of entry PAGE 14 Program applicable 100.00 100.00 FEDERAL-AID HIGHWAY CONSTRUCTION PROGRAMS (Dollars in Millions) FY05 ARIZONA OBLIGATION AUTHORITY PROGRAM DESCRIPTION NATIONAL HIGHWAY SYSTEM - The National Highway System includes 161,795 miles of rural and urban roads serving major population centers, international border crossings, intermodal centers, intermodal transportation facilities and major travel destinations. Arizona’s portion of the NHS includes 2,734 miles, which is made up of the Interstate System and other high traffic volume highways in the state. Funds can be used for construction, reconstruction, resurfacing, restoration and rehabilitation, and safety improvements. INTERSTATE MAINTENANCE - The Interstate Maintenance Program provides funding for resurfacing, restoring, rehabilitating and reconstructing routes on the Interstate System. The Interstate System is also part of the National Highway System. SURFACE TRANSPORTATION PROGRAM - The STP Program provides flexible funding that may be used by states and local governments on any Federal-aid highway, including NHS, bridge projects on any public road, transit capital projects and intracity and intercity bus terminals and facilities. A portion of funds reserved for rural areas may be spent on rural minor collectors. STP SET-ASIDE FOR SAFETY IMPROVEMENTS - Once the STP funds are allocated to the states, 10% of the amount is set-aside for safety construction activities (hazard elimination and railroad-highway crossing improvements). PAGE 15 FY05 NATIONAL APPORTIONMENTS $140.3 $5,525.0 ** $128.3 $4,522.5 ** $122.2 $5,173.9 ** $15.3 $646.7 ** FEDERAL-AID HIGHWAY CONSTRUCTION PROGRAMS (Dollars in Millions) FY05 ARIZONA OBLIGATION AUTHORITY PROGRAM DESCRIPTION STP SET-ASIDE FOR TRANSPORTATION ENHANCEMENTS - Once the STP funds are allocated to the states, 10% of the amount is set-aside for transportation enhancement projects. Transportation enhancements are transportation related activities that are designed to strengthen the cultural, aesthetic and environmental aspects of the Nation’s intermodal transportation system. The Transportation Enhancements Program provides for the implementation of a variety of non traditional projects, with examples ranging from the restoration of historic transportation facilities, bike and pedestrian facilities, to landscaping and scenic beautification, to the mitigation of water pollution from highway runoff. EQUITY BONUS - Ensures that each state receives a minimum rate of return on contributions to the Highway Account of the Highway Trust Fund. This program replaces TEA-21’s Minimum Guarantee program. CONGESTION MITIGATION AND AIR QUALITY IMPROVEMENT PROGRAM - The Congestion Mitigation and Air Quality Improvement Program funds projects and programs in air quality nonattainment and maintenance areas for ozone, carbon monoxide and small particulate matter which reduce transportation related emissions. PAGE 16 FY05 NATIONAL APPORTIONMENTS $15.3 $646.7 ** $71.6 $5,702.8 ** $43.1 $1,578.1 ** FEDERAL-AID HIGHWAY CONSTRUCTION PROGRAMS (Dollars in Millions) FY05 ARIZONA OBLIGATION AUTHORITY PROGRAM DESCRIPTION HIGH PRIORITY PROJECTS – Provides designated funding for specific projects (commonly referred to as demonstration projects) identified by Congress. HIGHWAY BRIDGE REPLACEMENT AND REHABILITATION PROGRAM The Highway Bridge Replacement and Rehabilitation Program provides funds to assist the states in projects to replace or rehabilitate deficient highway bridges and to seismic retrofit bridges located on any public road. $6.5 FY05 NATIONAL APPORTIONMENTS $1,201.7 $19.1 $3,863.7 ** SAFE ROUTES TO SCHOOL – Provides funding to enable and encourage children to walk and bicycle to school; to make walking and bicycling to school safe and more appealing. To facilitate planning, improve safety. $1.0 $51.0 SAFEY INCENTIVES (0.08 BAC) - Provides funding to states that have enacted 0.08 percent Blood Alcohol Concentration (BAC) as the legal limit for drunk driving offenses. $1.2 $89.0 $1.3 $59.2 RECREATIONAL TRAILS PROGRAM - The Recreational Trails Program provides funds to develop and maintain recreational trails for motorized and nonmotorized recreational trail users. PAGE 17 FEDERAL-AID HIGHWAY CONSTRUCTION PROGRAMS (Dollars in Millions) PROGRAM DESCRIPTION FY05 ARIZONA OBLIGATION AUTHORITY COORDINATED BORDOR INFRASTRUCTURE PROGRAM – Provides funding to improve the safe movement of motor vehicles at or across the land border between the U.S. and Canada and the land bordor between the U.S. and Mexico. STATE PLANNING AND RESEARCH PROGRAM - Planning of future highway programs and local public transportation systems. Research, development and technology transfer activities necessary in connection with the planning, design, construction and maintenance of highway, public transportation and intermodal transportation systems. These funds are a 2 percent set-aside from certain Federal-aid funds apportioned to a state. METROPOLITAN PLANNING FUNDS - Metropolitan Planning funds are available for Metropolitan Planning Organizations (MPOs) to carry out the metropolitan transportation planning process required by Title 23, United States Code, including development of metropolitan area transportation plans and transportation improvement programs. *MOTOR CARRIER SAFETY ASSISTANCE PROGRAM - The objective of the MCS Assistance Program is to reduce the number and severity of accidents and hazardous material incidents involving commercial motor vehicle through state implementation of a balanced program of enforcement, education and crash data analysis. A portion of the annual authorization is earmarked for grants. The remaining funds are allocated by formula to the states. PAGE 18 $5.9 FY05 NATIONAL APPORTIONMENTS $123.0 $10.4 N/A $5.6 $293.9 $0.3 N/A FEDERAL-AID HIGHWAY CONSTRUCTION PROGRAMS (Dollars in Millions) PROGRAM DESCRIPTION FY05 ARIZONA OBLIGATION AUTHORITY *INTELLIGENT TRANSPORTATION SYSTEM - The Research and Development program is to carry out a comprehensive program of intelligent transportation system research, development and operational tests of intelligent vehicles and intelligent infrastructure systems. *LOCAL TECHNICAL ASSISTANCE PROGRAM - The purpose of this program is to provide training and technical assistance to rural, small urban and tribal governments on roads, bridges and public transportation. *MISCELLANEOUS ALLOCATIONS – National Scenic Byways Program $296k, National Corridor Planning and Development $752k, Disadvantaged Business Enterprise $207k, Minority Business Enterprise Program $365k, Border Technology Exchange Program $33k, Public Lands Highways $689k, Transportation Research-Environment $25k, Border Safety Inspection Facilities Program $5m, Innovative Bridge Research and Construction $400k *Formula allocations ** A portion of Equity Bonus funds get distributed to the IM, NHS, Bridge, STP and CMAQ programs. Distribution amounts not available at the time this report was published PAGE 19 FY05 NATIONAL APPORTIONMENTS $0.01 N/A $0.1 N/A $7.8 N/A