1. 1 Financing Transportation Improvements Issues and Options Transportation Strategy Board November 17, 2010

2. 2 Context Unfunded Transportation Needs – System Preservation – Strategic Investments Connecticut is Not Alone – Massachusetts – Rhode Island Future Federal Support Uncertain

3. 3 Context Special Transportation Fund – Required to be balanced Current Revenues vs Current Expenditures Debt Service Coverage Requirements – Outlook FY 2012, Projected $ 37.7 million deficit FY 2013, Projected $ 12.0 million deficit Impact of General Fund Issues – GF Transfers to STF – GRT Transfers to STF

4. FINANCING METHODS 4

5. 5 Financing Methods STF Appropriations – Currently primarily operating expenses and debt service – Long term cost less than bonding STO Bonds – Limited Capacity without new revenue GARVEE Bonds – Secured by future federal funds – Greatest benefit to state’s with limited ability to issue bonds. – Can be used to expedite projects – Reduces future federal funding

6. 6 Financing Methods Federal Funds – Currently about $650 million per year – State match requirements – Reauthorization Current law has expired – Extended month to month – Gas Tax Dispute – Outlook unclear Large funding increase appears unlikely

7. 7 Financing Federal Funds – Discretionary Funding Various match requirements – Earmarks Various match requirements

8. 8 Financing Methods Tolls – Specific Projects Proceeds used to pay capital and operating costs – Congestion Mitigation Proceeds used to pay operating and capital costs of mitigation and of transportation alternatives – Revenue Proceeds used to support transportation programs – Federal Rules and Restrictions – Timing Five to seven years to implement

9. 9 Financing Methods Public Private Partnerships – Alternative Design and Construction Agreements (Design/Build) – Alternative Design, Construction and Operation Agreements (Design/Build/Operate) – Toll Facility Leases

10. PROJECT TIMING 10

11. 11 Timing Timing expenditures spreads cost over time, reducing the initial costs Projects can be timed in at least three ways: – Based on the availability of funds For example $20 million a year – Based upon the need for funds Driven by project schedule – Combination of both methods Bond Issuance and Debt Service Based upon Timing

12. REVENUE SOURCES 12

13. STF FY 2010 Revenue Sources 13

14. Projected STF Revenues 14

15. 15 Possible Sources of Revenue Increased Gas Tax Inflation Responsive Gas Tax Transfer Gross Receipts Tax to STF Increase Gross Receipts Tax and Transfer Transfer Sales Tax on Motor Vehicles to STF Increase DMV Fees Vehicle Miles Traveled (VMT) Taxes Emissions Fees Local Option Taxes