Call to Order and Roll Call
The third meeting of the Budget Review Subcommittee on Transportation of the Interim Joint Committee on Appropriations and Revenue was held on Thursday, October 27, 2016, at 11:00 AM, in Room 129 of the Capitol Annex. Representative Leslie Combs, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Max Wise, Co-Chair; Representative Leslie Combs, Co-Chair; Senators Christian McDaniel, Dennis Parrett, and Robin L. Webb; Representatives Dennis Keene, Sal Santoro, and Jim Stewart III.
Guests: Morgan Judy, Chairman, Kentuckians for Better Transportation and Executive Vice President, Judy Construction; Andrew Aiello, General Manager, Transit Authority of Northern Kentucky; Beecher Hudson, President, Kentucky Public Transit Association and Chief Executive Officer, Louisville Wheels Transportation, Inc.; Juva Barber, Executive Director, Kentuckians for Better Transportation; and, Robin Brewer, Executive Director, Office of Budget and Fiscal Management, Kentucky Transportation Cabinet.
LRC Staff: Justin Perry, Jeffrey Schnobrich, and Spring Emerson.
Effect of Toll Credits on Public Transportation
Morgan Judy, Chairman, Kentuckians for Better Transportation (KBT) and Executive Vice President, Judy Construction, provided a brief overview of KBT. Beecher Hudson, President, Kentucky Public Transit Association and Chief Executive Officer, Louisville Wheels Transport, provided an overview of public transportation in the Commonwealth. Andrew Aiello, General Manager, Transit Authority of Northern Kentucky (TANK), discussed funding for public transportation in the state and at TANK, provided a comparison of per capita funding for public transportation in Kentucky relative to other states, and discussed the effect of toll credits on TANK.
In response to questions from Senator McDaniel, Mr. Aiello explained that the Federal Highway Administration (FHWA) and the Kentucky Transportation Cabinet (KYTC) had an agreement whereby the state earned toll credits for expending state dollars in certain specific circumstances. As a result, FHWA provided Kentucky hundreds of millions of dollars in toll credits, to be used in future federal projects as matching funds. There have been discussions between the FHWA and the KYTC about how that toll credit amount was determined, what formula was used, and what the proper balance of those toll credits is. It was previously thought that the credits would last for decades, but a recent recalculation has indicated that balance to be considerably lower than expected. It is estimated that the balance of toll credits will be gone by the year 2020.
In response to a question from Senator McDaniel, Ms. Barber said toll credits used for transit flow through the Office for Transportation Delivery at KYTC. Ms. Brewer explained that toll credits are treated as a separate pot of funding. She said there is a maintenance of effort test, which requires that the amount of state funds spent on long-term capital improvements and investments in the highway system increase from year to year. If that test is passed, then it becomes possible to qualify for toll credits in that year, if long-term capital improvement investments in a toll facility are made.
In response to a question from Representative Keene, Mr. Aiello said both metro and rural areas will be impacted by the loss of toll credits.
In response to a question from Representative Santoro, Mr. Aiello said local counties may have difficulties finding additional revenues to match federal funds, if toll credits are not available. He stated that part of his goal in raising this issue is that no one be surprised in 2020 when difficult decisions will have to be made.
In response to a question from Representative Santoro, Mr. Hudson emphasized that rural transit agencies will be affected, and that limits to the availability of public transportation could become an economic development issue.
In response to a question from Chair Combs, Ms. Brewer said the Transportation budget would not be impacted until mid-2020. She added that fiscal year 2016 is the last year KYTC will earn toll credits and all of that is from the Louisville-Southern Indiana Ohio River Bridges project in the amount of $215 million to $218 million.
In response to a question from Representative Keene, Mr. Aiello said in order to raise public transit fares in Northern Kentucky, the governing board of TANK would have to approve the increase. This is typically done when fuel prices increase. If fares are increased by a considerable amount, ridership will decrease.
In response to a question from Chair Combs, Ms. Barber said public-private partnerships could be considered for capital improvements.
A motion was made by Co-Chair Wise to approve the minutes of the June 23, 2016 and September 19, 2016 meetings. The motion was seconded by Representative Keene, and the minutes were approved without objection.
Update on Road Fund
Robin Brewer, Executive Director, Office of Budget and Fiscal Management, Transportation Cabinet, provided a summary of FY16 financials and discussed Road Fund Cash Balance projections for FY17 and FY18.
In response to a question from Chair Combs, Ms. Brewer said the plan is to accelerate projects from the Pause 50 program as the cash balance improves. She explained that August is the most difficult month due to the cyclical nature of Road Fund cash, due to large amounts going out for payments on bonds, Revenue Sharing, and other large amounts. The beginning cash balance is lower now than it has been in previous years.
There being no further business before the subcommittee, the meeting was adjourned at 12:00 PM.