Transportation 2035 - State of Rhode Island: Division of Planning

December 2012cars becoming more fuel efficient, the State, and by extension its transportation functions, currently receive $16 million, or 11 percent, less per year than in2007. Whereas in 2007, the State received $4.7 million for each penny of gas tax, in 2012, the State receives only $4.2 million for each penny. At the sametime, Rhode Island’s transportation program expenses were subject to the decreased buying power caused by inflation. Prior to FY 2010, at least a portion ofthe gas tax revenue was deposited in the General Fund, but in recent years policy-makers at the State level have redirected the funding to meet transportationneeds. The table below shows the FY2012 anticipated gas tax distribution based on current law and an estimated yield of $4.2 million per penny.RIDOT’S USE OF GAS TAX FUNDSThe fuel tax allocated to RIDOT funds the Department’s annual operating costs and pays for debt service on bonds issued for highway improvements.Operating costs include nearly all Department expenses that are not part of the Highway Improvement Program and are not otherwise covered by federalgrants. The gas tax pays for such work as snow removal, litter pickup, catch basin cleaning, bridge washing,grass cutting and minor road maintenance and repair as well as the agency’s administrative costs.FY 2012 Anticipated Gas Tax DistributionRIDOT’s expenditures for operating costs are forecast to increase each year. There are a number of factorsYield inRecipientPennieswhich contribute to escalating costs, including salaries and benefits for personnel, cost of materials,MillionsRIDOT 19.75 $ 83.4severity and duration of winter storms, equipment repairs and maintenance, utility costs, and otherGARVEE Program 2.00 $ 8.4variables that are dependent on the national and local economy.RIPTA 9.75 $ 41.2DHS 1.00 $ 4.2Until the General Assembly and Governor took action as part of the FY 2012 and FY 2013 State Budgets,Underground Storage 0.50 $ 2.1debt service had been forecast to increase on an annual basis as additional bonds were issued to matchTotal 33.00 $ 139.3FHWA funds. Typically, $40 million in bonds were issued annually to match FHWA capital funds and to payfor projects with 100 percent State costs. Reliance on bond funds for matching federal funds was a dangerous practice that threatened to severely limitavailable resources for operating as debt service costs grew to a disproportionate share of gas tax revenue, and gas tax revenue declined. Prior to the actionsof policymakers, the continued issuance of bonds were projected to result in debt service of $62.93 million in 2023, creating an estimated $30 million gap inRIDOT’s operating budget.Several steps have been taken in the last two years to address the issue of bond borrowing as a match for Federal funds and to smooth the sharp peak that hadbeen anticipated in debt service over the next decade, as a result of prior borrowing. These steps are detailed below.Transportation 2035 (2012 Update)State Guide Plan Element 611Rhode Island Statewide Planning ProgramPage 3-9