Strategic Highway Investment Formula for Tomorrow SHIFT Kentucky Ahead Strategic Highway Investment Formula for Tomorrow

More Projects Than Dollars For many years, Kentucky’s highway plan has overpromised More than 1,400 projects in the Highway Plan Only half are even partially funded, mostly with federal dollars Result: Undermines public confidence because you can’t count on projects in the plan Kentucky’s Highway Plan has overpromised for many years Only half of the 1,400 projects are even partially funded The public doesn’t have confidence in the plan

State Projects Vastly Exceed Funding More than 90 percent of the state-funded projects in the current Highway Plan don’t have state dollars to pay for them In other words, Kentucky has 10 TIMES as many state-funded highway projects budgeted as dollars available Overpromising creates expectations that cannot be fulfilled for many years – if at all Kentucky is overpromising state dollars for projects. We only have money to pay for 10 percent of the $7.1 Billion of projects promised with state funds in the Highway Plan. As you can see, the comparison is stark. The promises are far greater than the $690 Million in state dollars we anticipate to be available in this time frame This includes the $50 Million in the current biennium

Loss of Flexibility Means Fewer Projects Federal funds require state matching dollars Since 2002, Kentucky has met the state match with earned credits (dollars invested to build our parkway system) By 2020, earned credits will run out and Kentucky must use state dollars to match federal dollars Result: The number of state-funded projects will be drastically reduced The problem of over programming will soon go from bad to worse To get federal funding, Kentucky must provide a match (typically 80/20 or 90/10) For 15 years, Kentucky has met the required state match for federal dollars by using earned credits, dollars invested decades ago in the state’s parkway system Because Kentucky built national highway system roads with state-generated dollars, we earned credits But in 2020, Kentucky will run out of earned credits That will require us to use $100 million in state funds annually to meet the federal match This will drastically reduce the dollars and numbers of state-funded projects

Gap Between Promises and Funds to Grow Without program reforms, the combination of overpromising and the end of earned credits will further widen the gap Unless we act, 95 percent of state-funded projects in the 2018 Highway Plan will not have any state dollars to pay for them So in the 2018 General Assembly, the end of earned credits will exacerbate the problem of overpromising. As a result, the gap will widen between what we promise in state-fund projects and what we can deliver with available dollars Without changes in the system, as much as 95 percent of state projects in the Highway Plan will be unfunded

SHIFT Kentucky Ahead Strategic Highway Investment Formula for Tomorrow The result of the Cabinet’s work is called SHIFT The Strategic Highway Investment Formula for Tomorrow

SHIFT Focuses on Capital Improvements Projects Included Projects Outside of SHIFT Safety Improvements Rural and Municipal Aid Road Widening MPO Dedicated Projects Reconstruction Other Federally Dedicated Projects (safety, bike/ped, congestion, etc.) New Interchanges Maintenance Projects (pavement, bridges, etc.) New Routes SHIFT will be used to evaluate and prioritize capital improvement projects The formula won’t affect Rural and Municipal Aid funds or federally dedicated projects, such as safety, bike/ped and MPO projects It won’t be used for system preservation projects such as pavement and bridge replacements and repairs

Proposed Statewide Funding Formula Priority Score Improve Safety 25% Reduce Congestion 20% Fuel Economic Growth Spend Tax Dollars Wisely (benefit /cost) Preserve Infrastructure (asset management) 15% TOTAL 100% We will score projects using two formulas – one for projects of statewide impact, including interstates and projects on main roadways This formula relies solely on quantitative data, again information such as crashes, project benefit to cost ratios, etc.

Proposed Regional Funding Formula Priority Score Improve Safety 20% Reduce Congestion 10% Fuel Economic Growth 15% Spend Tax Dollars Wisely (benefit/cost) Preserve Infrastructure (asset management) SUBTOTAL 70% District Priorities (KYTC) Local Priorities (ADD/MPOs) TOTAL 100% The second formula will be used to prioritize the use of regional funding This formula includes significant qualitative data (the informed opinion of KYTC district staff, and local leaders in ADDs and MPOs) In this formula, 70 percent of the score relies on quantitative data and 30 percent on qualitative data

Developing The Next Highway Plan KYTC Develops Initial Project List District, Local Leaders Identify Needed Changes KYTC Calculates Scores for Statewide, Regional Projects District, Local Leaders Provide Input on Regional Projects KYTC Develops Draft Highway Plan for Governor Governor Finalizes, Presents Plan to General Assembly General Assembly, Governor Enact Highway Plan SHIFT provides a collaborative process that involves district and local officials throughout the process It begins with KYTC developing an initial list based on the current Highway Plan, a baseline if you will District and local leaders have the opportunity to suggest changes – additions, deletions – and involve citizens in the discussion With the revised lists, KYTC will use the formulas to score the projects KYTC will share those results with district and local leaders They will then have a chance to weigh in on which regional projects should move up in the priority rankings With this data and revenue estimates, KYTC will develop a draft Highway Plan to present to the Governor The Governor will finalize the plan and present it to the General Assembly for action

Pause 50 Funding Pause 50 has served to stabilize the Road Fund Transitioning to prioritization model SHIFT model will be used to guide decisions about spending limited dollars in the 2018 fiscal year We’re already working to use this data-driven approach to prioritize the very limited dollars from Pause 50 in the current biennium The result will likely include a combination of different project phases (design, right of way, utilities and construction) We will have about $50 million in available funding for these new starts in the 2017-2018 fiscal year

Strategic Highway Investment Formula for Tomorrow SHIFT Kentucky Ahead Strategic Highway Investment Formula for Tomorrow