Recommended Funding Strategies Governor's Task Force on Local Transportation Strategies October 12, 2004 Indexing Motor Fuel Tax to Inflation z Tax adjusted annually (increase/decrease) based solely on inflation (Consumer Price Index-CPI) z Helps maintain constant buying power z Incorrectly viewed as an arbitrary increase (only tax increases approved by General Assembly) z Only a 2% increase annually in motor fuel tax if indexed to inflation Source: GDOT-Office of Planning 1 Indexing Motor Fuel Tax to Inflation (continued) z Change in price of gasoline compared to other consumer items between 1984 and 2004 -Gasoline 44.5% -Coffee 45.0% -Cereal 87.0% -Postage 90.9% -Airline fare 127.6% -Water/Sewer 162.5% -Medical Services 174.5% -Prescription Drugs 232.1% -College Tuition 328.5% Source: American Petroleum Institute Indexing Motor Fuel Tax to Inflation (continued) z Consumer cost of gasoline per VMT adjusted for inflation (relates to: gas prices/fuel efficiency) 1973-11.8 cents 1977-13.6 cents 1982-14.2 cents 1987-8.4 cents 1992-7.3 cents 1997-6.8 cents 2002-6.7 cents Source: American Petroleum Institute 2 Indexing Motor Fuel Tax to Inflation (continued) z Potential Task Force Recommendation to Governor: -Draft legislation authorizing indexing Motor Fuel Tax to CPI Shift Motor Fuel Tax Collection from Distributor to Terminal "Rack" z Three locations at which to collect motor fuel taxes: -Retailer (8,000) -Distributor (300) -Terminal (45) z Federal gas tax collected at the terminal level z 21 states collect state gas tax at the terminal level z Prior to 2003, Motor Fuel Excise Tax was collected at the distributor level; Motor Fuel Sales Tax was collected at the retailer level z HB 43 shifted Motor Fuel Sales Tax collection to distributor. HB 43 anticipated to increase Motor Fuel Tax collections by $15 million annually 3 Shift Motor Fuel Tax Collection from Distributor to Terminal "Rack" (continued) z Benefits of collecting Motor Fuel Tax at terminal: -Easier collection process (only 45 registered terminals) -Less room for error z Shifting Motor Fuel Tax collection from distributor to terminal anticipated to generate at least $10 million annually z Increased revenues would increase funding in all programs (federal-aid; state-aid; LARP) Source: GDOT-Administration Division Shift Motor Fuel Tax Collection from Distributor to Terminal "Rack" (continued): z Potential Task Force Recommendation to Governor: Draft legislation shifting Motor Fuel Excise and Motor Fuel Sales Tax from distributor to terminal State Transportation Board has approved draft legislation for 2005 legislative session 4 Impact Fees z Permitted under the 1990 Development Impact Fee Act z Fee can only be used to accommodate new growth z One time payment imposed upon a developer to pay for a proportionate share of system improvements needed to serve new growth and development z Developers only pay for impacts generated by their development Impact Fees (continued) z Eligible uses for impact fees: -Water supply production, treatment, distribution -Wastewater collection, treatment and disposal facilities -Roads, streets and bridges -Storm water systems -Parks, open spaces, and recreation areas -Libraries -Public safety (police, fire, emergency medical and rescue facilities) -3% of fee collections may be used for administration costs 5 Impact Fees (continued) z Since 1990 only 28 jurisdictions, out of approximately 560 cities and counties, levy impact fees z Local government must adopt a Comprehensive Plan containing a Capital Improvements Element (CIE), which meets DCA requirements z CIE includes: -Projection of needs -Service areas -Levels of service -Schedule of improvements -Funding sources z DCA reviews/approves CIE Impact Fees (continued) z Local governments may exempt developments from impact fees if the development: provides extraordinary economic benefit, or provides affordable housing z To adopt impact fees a local government must: -Establish a Development Fee Impact Advisory Committee -Decide which services will use impact fees -Hold Public Hearings -Develop the CIE -Submit the CIE to RDC/DCA for review -Adopt the CIE -Adopt impact fee ordinance -Establish administrative oversight -Prepare annual reports 6 Impact Fees (continued) z CIE and Short Term Work Program (STWP) must be updated annually, including: -Financial report describing fees collected, expended, and encumbered -New schedule of improvements with a new fifth year of proposed capital improvements -STWP with a new fifth year and any changes to other years z Appears through conversation that difficulty exists in managing/administering the fee z Potential Task Force Recommendation to Governor: explore options to enhance the 1990 Development Impact Fee Act Local Option Sales Tax in NonAttainment Counties z 22 counties and two partial counties presently designated as non-attainment for ground level ozone by EPA z Revenue could be directed to transportation needs z Present state law caps sales tax (state and local) at 7% (except City of Atlanta at 8%) 7 Local Option Sales Tax in NonAttainment Counties (continued) z Potential revenues generated by a 1% sales tax: (2002, $ millions) -Cherokee $21.6 -Forsyth $20.1 -Clayton $47.4 -Fulton $200.0 -Cobb $117.5 -Gwinnett $120.1 -Coweta $13.8 -Henry $17.7 -DeKalb $94.6 -Paulding $8.6 -Douglas $17.5 -Rockdale $14.8 -Fayette $16.2 SOURCE: GBT Local Option Sales Tax in NonAttainment Counties (continued) z Potential Task Force Recommendation to Governor: Draft legislation enabling local governments designated as non-attainment by EPA to assess a 1% sales tax for transportation improvements 8 Highway Fuel Taxes October 12, 2004 Cents Per Gallon Marsha Johnson Director, Office of Financial Development Florida Highway Fuel Taxes 26 24.4 24 22 6 20 18 16 14 12 10 18.4 8 6 4 2 0 FED 16 16 5.7 5 10.3 STATE 6 1 2 1 1 LOCAL LOCAL OPTION (1-5) LOCAL OPTION (1-6) NINTH-CENT CONSTITUTIONAL COUNTY MUNICIPAL SCETS ADD'L TAX ON DIESEL STATE SALES TAX FED GAS TAX 1 Florida Locally Imposed Fuel Taxes 1 - 6 Local Option Fuel Tax Levied by Majority Vote of the Ordinance or by Voter Approval Full 6 Imposed on Diesel Fuel Proceeds Shared with Municipalities Proceeds Used to Fund Transportation Expenditures Florida Locally Imposed Fuel Taxes 1 - 5 Local Option Fuel Tax Diesel Fuel Not Subject to Tax Levied by Majority Vote of the Ordinance or by Voter Approval Proceeds Used to Fund Transportation Expenditures 2 Florida Locally Imposed Fuel Taxes Ninth Cent Fuel Tax (1/gallon) Levied by Majority Vote of the Ordinance or by Voter Approval Required on Diesel Fuel Proceeds May Be Shared with Municipalities Proceeds Used to Fund Transportation Expenditures LIBERTY CALHOUN WALTON OKALOOSA ESCAMBIA Florida Local Imposed Motor Fuel Taxes Tax Rates (/gal) as of January 1, 2004 SANTA ROSA 3 HOLMES JACKSON WASH. BAY GADSDEN LEON WAKULLA GULF FRANKLIN 5 = 1 6 = 23 7 = 26 9 = 2 10 = 1 11 = 1 12 = 13 Total Counties = 67 JEFFERSON GILC. BRAD. COLUMBIA SUWALANFNAYEEETTE 2 HAMILTON MADISON TAYLOR BAKER UNION NASSAU DUVAL CLAY DIXIE ALACHUA PUTNAM LEVY JSOTH.NS FLAGLER SUMTER 7 PINE. CITRUS HERN. PASCO HILLSBOROUGH MARION LAKE VOLUSIA SEMI. ORANGE POLK OSCEOLA MANAT EE SARASOTA HARDEE DESOTO HI GHLA NDS CHARLOTTE GLADES 1 LEE HENDRY COLLIER OKEEC HOBE E BREVARD 5 INDIAN RIVER ST. LUCIE MARTIN 4 PALM BEACH BROWARD DADE MONROE 6 3 State Imposed Fuel Taxes Distributed to Locals Constitutional Fuel Tax (2/gallon) Revenue Source for Counties Distributed After Deduction for Debt Service County Fuel Tax (1/gallon) Revenue Source for Counties Municipal Fuel Tax (1/gallon) Revenue Source for Cities State Imposed Fuel Taxes Distributed to Locals Alternative Fuel Tax Either Per Gallon Tax or Annual Decal Fee Distributed to State, Counties, and Municipalities Imposed on Operators of Alternative Fueled Vehicles Special & Motor Fuel Use Tax Fuel Tax and Decal Fee Imposed on Commercial Vehicles Distributed to State, Counties, and Municipalities 4 State Imposed Fuel Taxes Imposed to Locals $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Constitutional County Municipal $ in Millions 2003 2004 2005 2006 2007 2008 2009 Untapped Locally Imposed Fuel Taxes 300 250 200 9th Cent 150 Local Option 100 50 0 $ in Millions 2002 2003 2004 2005 2006 2007 2008 2009 5 Florida Locally Imposed Sales Taxes Charter County Transit System Surtax Rate of 0.5% - 1.0% Levied by Majority Vote of the Ordinance OR by Voter Approval 1.0% Maximum Not Imposed on Fuel or Transactions over $5,000 Local Government Infrastructure Surtax Rate of 0.5% or 1.0% Levied by Majority Vote of the Ordinance AND by Voter Approval Florida Locally Imposed Sales Taxes Small County Surtax For Counties with Population of 50,000 or Less Rate of 0.5% or 1.0% Levied by County Ordinance if Revenues are Used for Operating Expenses Levied by Voter Approval if Revenues are Used for Debt Service 6 Dedicated District Revenue State Comprehensive Enhanced Transportation System (SCETS) Tax Based on Local Option Fuel Tax Rate Indexed to CPI FDOT Expends in District Where Collected Dedicated District Revenue Rental Car Surcharge Imposed on Rentals of 30 Days or Less Rate is $2 per Day 80% Distributed to FDOT Remaining 20% Spent on Tourism FDOT Expends in District Where Collected 7 Additional Information Florida's Transportation Tax Source http://www.dot.state.fl.us/financialplanning/revenue/primer.htm Local Government Financial Information Handbook http://fcn.state.fl.us/lcir/reports.html Statutory Authority Florida Statutes Found At http://www.flsenate.gov/Statutes/ Local Option Discretionary Sales Taxes Charter County Transit System Surtax 212.055(1), F.S. Local Government Infrastructure Surtax 212.055(2), F.S. Small County Surtax 212.055(3), F.S. Local Option Fuel Taxes Ninth Cent Local Option Fuel Tax, 336.021, F.S. 1 - 6 Local Option Fuel Tax, 336.025(1)(a), F.S. 1 - 5 Local Option Fuel Tax, 336.025, (1)(b), F.S. State Imposed Fuel Taxes Distributed to Locals Alternative Fuel Tax, 206.877, F.S. Special & Motor Fuel Use Tax, 207.003 & 207.004, F.S. 8 Questions Potential Task Force Recommendation to Governor: Draft legislation enabling local governments to assess local option motor fuel taxes for transportation improvements 9 Governor's Task Force on Local Transportation Strategies Dan Drake Director, Policy and Programs State Road and Tollway Authority Responses and Answers to Previous questions/issues: State Infrastructure Banks (SIB's) October 25, 2004 at 1:30 p.m. Previous Issues/Questions Capitalization of "State" SIB's Levels and Types of "State" SIB Activity Issues and Concerns: South Carolina SIB 2 1 Capitalization of "State" SIB's There are currently 31 States with various SIB activities formed. Four (4) of these States have so-called special Federal SIB's as per federal program legislation Six (6) States have the most active State SIBs These prominent State SIB's are: Florida, Texas, Minnesota, Ohio, Arizona and South Carolina 3 Examples and Characteristics of Capitalization of State SIB's or State SIB Accounts Florida Texas South Carolina 4 2 Florida Has two SIB accounts: one State and one Federal State account much more popular with local entities State account initially capitalized at $50 million 1st year; and, $44 million second year Source of capitalization: State Fuel Tax Trust Fund Continues to be infused with $10 million additional capitalization each year Used for numerous transportation modes: highways/roads transit, bridges, airports and seaports. 5 Texas Texas was one of the original FHWA Pilot Programs Initially capitalized at $12 million seed money from FHWA Additional capitalization from FHWA of $171 million from 1998 to 2004, matched by $43 million from State funds. 6 3 South Carolina Allows grants, along with no interest loans and low interest loans. Source of capitalization includes one cent of State Road Fuel Tax ($23 million) and Truck Registration Fees ($53 million) annually Level of initial 1997 capitalization was $65 million from the State General Fund. 7 Levels and Types of Activity from various State SIB's Florida Texas Arizona Ohio South Carolina Minnesota 8 4 Florida A State with both State and Federal SIB's Current level of outstanding State SIB financing transactions is 23, for a total of $438 million Present application process is under way with 12 requests totaling $637 million in projects/transactions Approximately $90 million are expected to be approved this year Over $3.4 billion in projects leveraged by State SIB Federal account is used to make loans to FDOT districts which they pay back out of federal project 9 funds Texas Current level of outstanding SIB Activity: 44 transactions/loans No grants are available from the SIB $258 million in total loan amounts has leveraged nearly $2 billion in projects SIB used to finance Regional Mobility Authority projects 10 5 Arizona Current level of outstanding SIB activity: 45 transactions/loans $521.5 million in total loan amounts 11 Ohio Current level of outstanding SIB activity: 41 transactions/loans $185 million in total loan amounts 12 6 Minnesota Current level of outstanding SIB activity: 15 transactions/loans $96 million in total loan amounts 13 South Carolina Current level of outstanding SIB activity: 8 transactions/loans $3 billion in projects funded by SIB to date with about $1.5 billion in loans, the remainder in grants and local funding participation Extensive levels of bond financing are used in the transactions funding of the bank Major refinancing of several bond issues has been achieved in September, 2004 providing a savings of nearly $90 million. 14 7 Evaluation of South Carolina SIB program SC is largest user of SIB Transportation Project Financing Current level of use is tied to State Transportation financing plan to an activity of funding 27 years worth of projects in a 7 year implementation schedule Thus far, $3 billion in SIB loans/transactions have been made through 8 major financing activities, very reliant on bond financing Uniquely, grants have been made in addition to loans and other forms of credit enhancements as part of the program SC includes a new financing by capitalization provided from State road funding of $243m in July, 2004 Fundamental concern is not with SIB per se, but fact that SC has used this and other mechanisms to significantly leverage their transportation by financing and implementing them now and paying the debt over time 15 Summary of SIB Points State SIB's are funded by State Road Funds primarily State SIB's favored by local entities SIB's remain generally financially sound Conventional tax revenue growth/increases or policy constraints make the case for further SIB utilization State SIB's continue to be expanded with recurring annual or new capitalization State SIB operations seem to be effective SC situation unique due to size of and overall direction of State Transportation Program and Policy 16 8 Governor's Task Force on Local Transportation Strategies List of Potential Recommendations Matthew Fowler GDOT-Office of Planning October 25, 2004 Indexing Motor Fuel Tax to Inflation Potential Recommendation: -Propose/support legislation to index the state (and any local level) motor fuel excise tax to the Consumer Price Index Shift Motor Fuel Tax Point of Collection from Distributor to Terminal Potential Recommendation: -Propose/support legislation to shift the point of collection from the distributor to the terminal 1 Local Option Transportation Tax (local option motor fuel tax) Potential Recommendations: -Propose legislation allowing local governments to assess a LOTT ranging from $0.01 to $0.10 per gallon -Dedicate half of LOTT to GDOT solely for local needs; funds could be redistributed based on formula -Ensure that LOTT revenues could be used for transit purposes State Infrastructure Bank (SIB) Potential Recommendation: -Propose/support legislation to create a SIB (legislation needed at state and federal level) Transportation Local Option Sales Tax (TLOST) Potential Recommendations: -Propose that local governments; regional authorities; and/or non-attainment/maintenance areas be permitted to assess an additional 1% sales tax for transportation improvements -Approved by voter referendum -Should have sunset provisions -Revenues could be spent for transit purposes -Requires increasing the current tax ceiling 2 Locally Owned/Operated Toll Roads Potential Recommendations: -Propose legislation to allow local governments to own/operate toll roads independent of a public-private partnership -Propose legislation to clarity the ability of local governments to enter into agreements allowing the construction of crossjurisdictional toll roads -Propose legislation regarding the creation of regional authorities to address transportation/mobility -Propose legislation clarifying SRTA's ability to partner with/assist local governments regarding toll roads Impact Fees Potential Recommendations: -Explore options to enhance the 1990 Development Impact Fee Act -Recommend that local governments be given the tools to charge for local government services 3