Financial Plan and Financial Constraint for FTIPs and FSTIPFinancial Plan and Revenue Assumptions 2013 FTIP/FSTIP WORKSHOP January 17, 2012 Wade Hobbs, FHWA CADO
Financial Plan and Revenue AssumptionsFINANCIAL PLAN • The TIP shall include a financial plan that: • Demonstrates how the TIP can be implemented; • Indicates resources from public and private sources that are reasonably expected to be available to carry out the program; • Identifies innovative financing techniques to finance projects, programs, and strategies; and • May include, for illustrative purposes, additional projects that would be included in the approved TIP if reasonable additional resources beyond those identified in the financial plan were available. 23 USC 134(j)(B)
Financial Plan and Revenue AssumptionsFINANCIAL CONSTRAINT • Financially constrained or Fiscal constraintmeans that the metropolitan transportation plan, TIP, and STIP includes sufficient financial information for demonstrating that projects in the metropolitan transportation plan, TIP, and STIP can be implemented using committed, available, or reasonably available revenue sources, with reasonable assurance that the federally supported transportation system is being adequately operated and maintained. • For the TIP and the STIP, financial constraint/fiscal constraint applies to each program year. Financial constraint… shall be demonstrated and maintained by year and shall include sufficient financial information to demonstrate which projects are to be implemented using current and/or reasonably available revenues, while federally-supported facilities are being adequately operated and maintained.(23 CFR 450.216(m)) • For the TIP and the STIP, financial constraint/fiscal constraint applies to each category of Federal-aid funds. Fiscal constraint must be demonstrated by program year for the individual categories of Federal-aid funds. • Funds must be available or committed for those FTIP projects listed in the first two years of the TIP in nonattainment and maintenance areas for AQ NAAQS. Projects in air quality nonattainment and maintenance areas can be included in the first two years of the TIP and STIP only if funds are “available” or “committed.” • Total State and Federal Funding in the FTIP/FSTIP. The cumulative total of the State and Federal funds in the TIPs and FSTIP should not exceed, on an annual basis, the total State and Federal funds reasonably available to the State.
Financial Plan and Revenue AssumptionsREASONABLY AVAILABLE FUNDS Available and Committed Funds • Available Funds - Available funds means funds derived from an existing source dedicated to or historically used for transportation purposes. (23 CFR 450.104) • For Federal funds, authorized and/or appropriated funds and the extrapolation of formula and discretionary funds at historic rates of increase are considered “available.” A similar approach may be used for State and local funds that are dedicated to or historically used for transportation purposes. • Special Situation for an FTIP/FSTIP horizon beyond the funding authorization period - When the horizon year for the FTIP/FSTIP period extends beyond the current authorization period for federal program funds, “available” funds may include an extrapolation based on historic authorizations of those Federal funds that are distributed by formula.
Financial Plan and Revenue AssumptionsREASONABLY AVAILABLE FUNDS Available and Committed Funds • Committed Funds - Committed funds means funds that have been dedicated or obligated for transportation purposes. (23 CFR 450.104) • For State funds that are not dedicated to transportation purposes, only those funds over which the Governor has control may be considered “committed.” Approval of a TIP by the Governor is considered a commitment of those funds over which the Governor has control. • For local or private sources of funds not dedicated to or historically used for transportation purposes (including donations of property), a commitment in writing (e.g., letter of intent) by the responsible official or body having control of the funds may be considered a commitment. • For projects involving 49 U.S.C. 5309 funding, execution of a Full Funding Grant Agreement (or equivalent) or a Project Construction Grant Agreement with the USDOT shall be considered a multi-year commitment of Federal funds.
Financial Plan and Revenue AssumptionsREASONABLY AVAILABLE FUNDS New Funding Sources • New Funding Sources - New funding sources are defined as revenues that do not currently exist or that may require additional actions before the State DOT, MPO, or public transportation operator can commit such funding to transportation projects. • Reasonably available condition required for Inclusion in FTIP/FSTIP - The FTIP and FSTIP may take into account new funding sources and levels of funding not currently in place, but which are "reasonably expected to be available" [see 23 CFR 450.216(m), 23 CFR 450.322(f)(10)(ii), and 23 CFR 450.324(h), respectively].
Financial Plan and Revenue AssumptionsREASONABLY AVAILABLE FUNDS New Funding Sources (Continued) • Judgment Required to Determine what is Reasonable - Determining whether a future funding source is “reasonable” is a judgment decision. • Evidence of Review and Support is Necessary - To be considered "reasonable," the financial information and financial plans that accompany the TIP, STIP, and metropolitan transportation plan must identify strategies for ensuring the availability of these new revenue sources in the years when they are needed for project development and implementation [see 23 CFR 450.216(m) and 23 CFR 450.324(h)]. • Future Revenues Projected from Historic Trends - Future revenues may be projected based on historic trends, including consideration of past legislative or executive actions. • Federal Discretionary Program Funds - For Federal funds distributed on a discretionary basis, any funding beyond that currently authorized and targeted to the area may be considered as reasonably available, provided past history supports such funding levels.
Financial Plan and Revenue AssumptionsFUNDS NOT REASONABLY AVAILABLE Funds Not Reasonably Available • Example 1: New funds from a ballot initiative where this is a strong likelihood, or history, of defeat. Assuming new funds from an upcoming Statewide, regional, or local ballot initiative would not be reasonable if polls indicate a strong likelihood of defeat or there is a history of repeated defeat of similar ballot initiatives in recent years. • Example 2: 25 percent increase in gas tax revenues over five years when the growth over the previous five years was only 15 percent. A 25 percent increase in gas tax revenues over five years is not reasonable if the growth over the previous five years was only 15 percent. • Example 3: One MPO will receive federal discretionary program funding for multiple large-scale transportation projects. An assumption that a single metropolitan area will receive funding for multiple large-scale transportation projects under a federal discretionary program (e.g., FTA's New Starts) is not reasonable if the assumption would result in that one metropolitan area receiving a disproportionately high percentage of the total national program dollars.
Financial Plan and Revenue AssumptionsApportionments and Programming Capacity • Apportionment – Apportionment means the distribution of funds as prescribed by statutory formula. Apportionments are part of the Federal-aid Highway Program (FAHP) financing cycle and provide the means of distributing the funding authorized in the surface transportation authorizing legislation, such as SAFETEA-LU, in accord with a prescribed statutory formula. • Obligation – Obligation means The Federal government’s legal commitment to pay or reimburse the States or other entities for the Federal share of a project’s eligible costs. • Obligation Limitation – Obligation Limitation is a restriction or ceiling on the amount of Federal assistance that may be promised (obligated) during a specified time period. This is a statutory budgetary control that does not affect the apportionment or allocation of funds. Rather, it controls the rate at which these funds may be used. • Obligation Authority – Obligation authority means the total amount of funds that may be obligated in a year. For the Federal-aid Highway Program this is comprised of the obligation limitation amount plus amounts for programs exempt from the limitation (e.g. emergency relief). • Unobligated Balance - Unobligated balance means the portion of the funds apportioned by the Federal agency that has not been obligated by the grantee. The balance is determined by deducting the unexpired or un-lapsed cumulative obligations from the cumulative funds authorized. • Programming Capacity – Programming capacity has no specific meaning with regard to the Federal-aid highway program and is not used or defined by Federal Highway administered statute, regulation or policy.
Financial Plan and Financial Constraint for FTIPs and FSTIP For More Information on Financial Planning and Financial Constraint: http://www.fhwa.dot.gov/planning/fsclcntrntques.htm