DOT/NJT Department Response to OLS Questions
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Department of Transportation and Motor Vehicle Commission FY 2016-2017 Discussion Points Department Of Transportation/ New Jersey Turnpike Authority 1. The New Jersey Transportation Capital Plan display on page H-7 of the Governor’s FY 2017 budget lists the amount of Federal Highway, Public Transportation, and Third Party Funds under the Mass Transit Assets category as $993.3 million under the recommended amount for FY 2017 and $1.533 billion as the adjusted appropriation for FY 2016. • Question: Please provide a breakdown for FY 2016 and 2017 that identifies the portion of these amounts that is derived from federal sources and from third party funds. For the portion that is derived from federal sources, please identify what portion is attributable to formula based apportionment funding, which is a recurring source of funding from year to year, and what portion is attributable to non-recurring federal sources, such as competitive grants or emergency relief funding. Please identify any known projects or capital program line items that comprise this funding. Answer: A breakdown is provided in the following table which includes Congestion Relief and Local System Support funding. In FY 17, the amount of Sandy Resiliency Federal funds decreases by $478 million. Proposed Source FY 2016 FY 2017 ($ in millions) Amount Amount FTA Formula Funds $484 $502 FTA Local Program Funds $11 $11 FHWA Funds $220 $167 Sandy Resiliency Federal Funds $871 $393 Casino $19 $18 County Match $12 $2 Other $6 $5 TOTAL $1,623 $1,098 1 Department of Transportation and Motor Vehicle Commission FY 2016-2017 Discussion Points (Cont’d) 2. The main portion of federal highway funding provided in the New Jersey Transportation Capital Plan comes from apportionment funding. Apportionment funding is the funding that is provided to each state based on a formula that divides a fixed pool of federal funding among the states based on categories that include, but are not limited to, the number of miles of State roadway, traffic density, fuel sales, and population. Apportionment funding under the Fixing America’s Surface Transportation Act (FAST Act) is broken down into the following categories: National Highway Performance Program, Surface Transportation Block Grant Program, Highway Safety Improvement Program, Railway-Highway Crossings Program, Congestion Mitigation & Air Quality Improvement (CMAQ), Metropolitan Planning, and National Highway Freight Program. States are typically given the fiscal year in which the money is granted plus three additional fiscal years to obligate the money before it is subject to rescission by the federal government. The total federal apportionment to New Jersey in fiscal years 2013-2016 has been $962.9 million, $963.7 million, $963.7 million, and $1.0128 billion respectively. If any of the $962.9 million in federal funds provided in FY 2013 have not been obligated by the end of the fiscal year, the federal government can rescind those funds and then make that amount available to other states. It appears that in recent years the full amount of federal apportionment funding has not been included in the capital program for appropriation. For example, the CMAQ apportionment in each of the last three years has been approximately $103 million, yet the amount included in the FY 2015 and 2016 capital programs was approximately $70 million. • Question: How much federal apportionment funding from prior fiscal years has not yet been appropriated through the capital program? For each federal fiscal year from federal FY 2013-2016, please identify the amount of funds in each federal apportionment category that was appropriated in each year’s State capital program and any amount that has not yet been appropriated in the capital program. Answer: The Federal Highway Administration (FHWA) apportions federal funds to a number of program accounts for New Jersey each year. New Jersey may, with FHWA’s approval, obligate funds for eligible projects from these accounts or transfer funds between accounts, subject to certain rules. Apportionments may also accrue from year-to-year subject to any lapse restrictions. The FHWA may transfer funds to the Federal Transit Administration or other modal administration for administration at the request of the New Jersey Department of Transportation. This has been done in the past to make available FHWA funds for use by New Jersey Transit. 2 Department of Transportation and Motor Vehicle Commission FY 2016-2017 Discussion Points (Cont’d) NJDOT, with FHWA’s guidance and approval, programs funding up to the overall level apportioned annually by FHWA, however, the programming of funds related to the specific federal programs does not match up with the amounts apportioned for each program by FHWA. This is because NJDOT, based on its investment strategy priority of safety and infrastructure preservation, chooses to prioritize funding for these areas. Federal programs such as the Congestion Mitigation and Air Quality Program (CMAQ) will not see funding programmed to the level apportioned annually. Also, project readiness also affects what can be programmed. A project that only qualifies for one type of funds will impact how federal funds are programmed. It is also important to remember that as federally funded projects are constructed and closed, remaining, unspent federal funds are released back to the apportionment accounts from which they were originally obligated. This can increase apportionment balances through the year. Having provided this context, below is a table that outlines federal apportionment balances for each major federal program category prior to FFY2016: Major Federal Program Categories Amount ($ millions) Surface Transportation Program $233.8 Congestion Mitigation and Air Quality Program $99.9 Highway Safety Improvement Program $67.9 Transportation Alternatives Program $44.3 Statewide Planning and Research Program $17.7 National Highway Performance Program $17.6 Safe Routes to School $16.3 Total Apportionment Balances $497.5 The reason there are unspent apportionment balances is because FHWA provides two kinds of authority: 1) contract authority (also known as apportionment) for each program and 2) obligation authority. 3 Department of Transportation and Motor Vehicle Commission FY 2016-2017 Discussion Points (Cont’d) The ability to spend apportionments is limited by the overall annual obligation authority limit provided each year. This limit is set by FHWA based on projected federal gas tax revenues supporting the Federal Highway Trust Fund. Typically the obligation authority limit runs somewhere around 90% of the overall formula apportionment amount. Apportionments that are not obligated in a given year accrue to the next year. It is impossible for New Jersey to obligate funds to the level apportioned annually. New Jersey has always obligated funds to the obligation limit allowed by FHWA. The attached table provides the amount of funds appropriated and the amount of funds obligated for each fiscal year from FY 13 through FY 16 by federal program. • Question: For each federal fiscal year from federal FY 2013-2016, please identify the amount of funds in each federal apportionment category that was obligated in each State fiscal year and any amount that has not yet been obligated. Answer: See chart in NJDOT Appendix A. • Question: Please identify the federal funds, if any, that are at risk of rescission if they are not obligated in the upcoming State fiscal year. Answer: No funds are at risk of rescission in the upcoming State fiscal year. • Question: Why are there federal funds not fully appropriated in the year in which they are awarded? For any funds at risk of rescission if not obligated this year, why were they not already obligated? Does the department have internal goals for how long the department takes to obligate federal funds? Answer: Federal funds apportioned in a given year are not required to be appropriated in that year by the state. Because of programming limitations and investment choices, states do not program funding to the exact levels apportioned by FHWA. No funds are at risk of rescission. In response to internal goals for obligation of federal funds, NJDOT’s goal is to ensure we obligate all funds up to the obligation limitation allowed by FHWA each federal fiscal year. Furthermore, NJDOT strives to be in a position to receive additional obligation limitation should FHWA provide it toward the end 4 Department of Transportation and Motor Vehicle Commission FY 2016-2017 Discussion Points (Cont’d) of the federal fiscal year. The reason these balances were available is that other states were unable to obligate contracts within the deadline established by the FHWA. In FY 14 the Department received an additional $11 million in federal funds, and in FY 15 the Department received an additional $47 million in federal funds. 3. Newly proposed language on page D-357 of the Governor’s FY 2017 budget appropriates to the department amounts received in connection with the issuance of Indirect Grant Anticipation Revenue Vehicles (Indirect GARVEE) bonds by the New Jersey Transportation Trust Fund Authority (TTFA). This is a type of bond that is issued against the anticipated reimbursement of federal funds that would otherwise be used to pay for federally funded construction projects. When an Indirect GARVEE is issued, the State must identify some other source of funding to pay for the costs of the original project, because the federal reimbursements are now being pledged for the repayment of the Indirect