Future Financing Options to Meet Highway and Transit Needs (2006)

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NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs E-1 Appendix E Transit Funding Analysis This appendix summarizes the findings of the transit revenue analysis of the National Transit Database (NTD) data for years 1993 through 2004, and the results from an annual survey of state funding for public transportation prepared by the Bureau of Transportation Statistics (BTS).1 It provides detail on the revenue sources used to fund transit expendi- tures by level of government. It should be noted that there are some differences in the esti- mates of state funding for transit in the NTD and the BTS reports. For purposes of detailed analyses in the report, we have used the NTD as the primary source since it covers transit funding at all levels of government and provides greater detail on revenue sources. „ Transit Revenues by Level of Government and Funding Source State Funding General fund allocations, dedicated sales tax, and other revenues are the main sources of state funding for transit. In 2001, there was a major shift between general fund allocations and dedicated sales taxes; in that year, the MBTA in Boston move to what they called “Forward Funding”: a one-cent statewide sales tax was dedicated to the MBTA, and the agency became financially responsible for its expenditures. Before that, the State would allocate money to cover the agency’s expenditures (including debt service). Following is a summary of state transit funding sources from the NTD: • Average general fund allocations over the last four years are estimated at approxi- mately 28 percent of the total state revenues. Actual general fund allocations over the last 10 years have fluctuated between $1.9 and $2.1 billion, with an average annual growth rate of 0.2 percent over the last 10 years. • Other funds’ share is estimated at 23.7 percent over the analysis period. Over the last 10 years, the average annual growth of this funding source is estimated at 5.7 percent. 1 U.S. Department of Transportation, Bureau of Transportation Statistics. Survey of State Funding for Public Transportation (2005). Available at both AASHTO web site http://www.transportation.org and at APTA web site http://www.apta.com.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs E-2 • Gas tax revenues at the state-level account for an average share of 7.8 percent of state funding for transit, although the share has been declining slightly in most recent years. The average annual growth of gas tax revenues for transit is estimated at 1.5 percent over the past 10 years. • Income tax revenues at the state-level account for an average share of 3.7 percent of the total state funding for transit. As with the gas tax, the share has been declining over the last 10 years. In 2004, income tax contributions to transit were estimated at $187.0 million, compared to $270.0 million in 1994. • Property taxes provide the lowest share of dedicated funds for transit at the state level, accounting for an average of approximately 1.0 percent of the total revenues. Actual allocations have declined over the years, although there has been an increase in the past two years. • Sales taxes have become one of the main revenue sources at the state-level in recent years. The average share is estimated at about 25 percent over the last four years. Prior to 2000, the average annual growth of sales tax revenues was estimated at 6.5 percent; 2001 and 2002 revenue growth was impacted by the shift from general revenues to dedicated state sales tax for the MBTA. Between 2002 and 2004, the aver- age growth rate is estimated at 2.5 percent, which may account for a slow economy in recent years. • The share of “other dedicated taxes” has increased from 9.5 percent in 1993 to 13.4 percent in 2004. The average annual growth rate is estimated at 8.7 percent over the last 10 years. • In regard to how the revenues are used at the state level, the share used for operating expenses has increased from 72.5 percent in 1993 to almost 77.5 percent in 2004 with a proportionate decrease in the share used for capital purposes. Figures E.1 and E.2 show transit revenues by source at the state level, in terms of funding share by source and actual revenues, respectively from the NTD.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs E-3 Figure E.1 Transit Revenues State (Share by Source) – Fiscal Years 1993 to 2004 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year 0 5 10 15 20 25 30 35 40 45 50 Percent General Funds Other Funds Gas Tax Income Tax Property Tax Sales Tax Other Taxes Source: FTA National Transit Database. Figure E.2 Transit Revenues State (Millions of Dollars) – Fiscal Years 1993 to 2004 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year 0 500 1,000 1,500 2,000 2,500 Dollars (in Millions) General Funds Other Funds Gas Tax Income Tax Property Tax Sales Tax Other Taxes Source: FTA National Transit Database.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs E-4 Table E.1 shows the total funding provided by states for public transportation in 1990, 1995, 2000, and 2005, as reported by BTS. State funding for transit increased by approxi- mately $2.0 billion in the last five years. Compared to 2000 data, in 2005, 30 states increased funding for transit, and 10 states provided less funding. Four states (Alabama, Colorado, Hawaii, and Utah) have not provided funding for transit over the last five years. Table E.2 shows the major sources for overall transit funding in 2005, as reported by the BTS state survey. The survey indicates that 19 states used general funds, 15 states used gas taxes, 9 states used vehicle/rental car sales taxes, 8 states used bond proceeds, 8 states used registration/title/license fees, and 6 states used general sales taxes. In Georgia, Illinois, Kentucky, Mississippi, Missouri, Ohio, and West Virginia, all state transit funding comes from the states’ General Fund. State transit funding in South Carolina and Tennessee comes entirely from gas tax revenues. All state funding for transit in Iowa comes from one-twentieth of a 4 percent use tax on motor vehicles. In North Dakota, all transit funding from the State comes from vehicle registration fees. Finally, sales taxes are the only state funding source for transit in Indiana, dedicating a 0.775 percent sales tax. Table E.1 State Funding of Public Transit 1990, 1995, 2000, 2005 State 1990 1995 2000 2005 Alabama $453,600 – – – Alaska $1,128,607 – – $59,850,000 Arizona $382,961 $445,000 $329,096 $20,068,000 Arkansas $400,000 $331,900 – $2,800,000 California $113,579,750 $340,162,248 $1,344,778,819 $1,399,800,143 Colorado – – – – Connecticut $87,614,575 $113,241,041 $163,266,135 $206,440,541 Delaware $7,406,200 NR $35,685,145 $72,600,000 District of Columbia $115,007,775 $123,051,000 NR $212,050,288 Florida $23,214,100 $89,510,720 $92,724,263 $149,738,231 Georgia $1,295,589 $1,892,582 $306,393,067 $8,222,757 Hawaii $350,000 – – – Idaho – – $136,000 $312,000 Illinois $266,813,600 $264,992,700 $467,622,300 $445,600,000 Indiana $16,623,895 NR $29,201,270 $37,046,940 Iowa $5,367,893 $7,464,513 $10,411,432 $10,140,000 Kansas $390,000 $1,000,000 $6,000,000 $6,000,000 Kentucky $468,098 $612,196 NR $1,400,000 Louisiana $3,000,000 NR NR $4,962,500 Maine $1,949,042 $392,000 $420,000 $1,555,000 Maryland $271,066,348 $349,848,000 $273,843,580 $727,433,000 Massachusetts $357,508,623 $531,895,787 $771,356,465 $1,197,137,541 Michigan $132,816,959 $124,400,599 $187,197,690 $195,149,300 Minnesota $38,071,015 $47,988,633 $80,289,455 $254,527,000 Mississippi $32,000 – $115,185 $800,000

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs E-5 Table E.1 State Funding of Public Transit (continued) 1990, 1995, 2000, 2005 State 1990 1995 2000 2005 Missouri – $1,495,000 $17,029,357 $6,600,000 Montana $71,250 $75,000 $75,000 $415,197 Nebraska $1,500,000 $1,529,843 $1,539,135 $1,500,000 Nevada $320,000 $437,748 NR $95,000 New Hampshire $1,166,756 $12,208 – $225,000 New Jersey $235,225,000 $458,704,000 $509,237,000 $910,584,000 New Mexico – NR – $2,830,000 New York $1,422,752,000a $1,356,600,000 $1,926,571,085 $2,169,005,000 North Carolina $5,934,875 $22,138,279 $38,246,921 $111,724,897 North Dakota – $761,329 $1,665,933 $2,203,657 Ohio $32,350,882 $29,232,523 $42,348,466 $18,300,000 Oklahoma $259,042 $951,497 $3,530,125 $3,250,000 Oregon $6,933,258 $44,689,000 $15,553,262 $26,140,529 Pennsylvania $425,666,677 $628,400,000 $731,800,000 $835,223,000 Rhode Island $15,253,694 $19,121,259 $36,822,442 $34,847,617 South Carolina NR $4,140,384 $4,234,189 $5,943,000 South Dakota – $300,000 $397,061 $1,891,229 Tennessee $9,860,000 $12,458,000 $22,291,000 $34,196,000 Texas $8,831,085 $17,200,000 $27,945,051 $29,741,067 Utah NR $139,929 – – Vermont $668,644 $860,917 NR $6,266,976 Virginia $73,555,000 $78,248,186 $163,959,344 $157,600,000 Washington $2,220,900 $6,434,900 $84,455,509 $30,423,000 West Virginia $1,261,903b $1,537,898 $1,395,489 $2,258,243 Wisconsin $53,439,491 $77,321,415 $100,448,100 $109,438,341 Wyoming – $976,736 NR $2,955,511 TOTALS $3,742,211,127 $4,760,994,970 $7,499,314,371 $9,517,290,604 Source: Bureau of Transportation Statistics. a Calendar-year 1989 figures. b $374,972 of this figure represents direct state operating assistance to public transit. $697,281 is provided by the West Virginia Department of Health and Human Services and the West Virginia Commission on Aging, and is used for the provision of specialized services to the elderly and handicapped. $90,000 is used by the small urban and rural properties as fare box revenue to offset operating expenses.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs E-6 Table E.2 Major Sources for Overall Transit Fundinga State General Fund Gas Tax Motor Vehicle/ Rental Car Sales Tax Registration/ License/ Title Fees Bond Proceeds General Sales Tax Interest Income Otherb Alaska 98.9% 1.1% Arizona 0.3% 99.7% Arkansas 100% California X X X X Connecticut X X X X X Delaware X X X District of Columbia 79% 21% Florida X X X Georgia 100% Idaho 100% Illinois 100% Indiana 100% Iowa 100% Kansas 100% Kentucky 100% Louisiana 100% Maine 68% 32% Maryland 34% 33% 23% 10% Massachusetts X X X X Michigan X X X X Minnesota X X Mississippi 100% Missouri 100% Montana 18% 82% Nebraska X X Nevada 100% New Hampshire 56% 44% New Jersey 31% 66% 3% New Mexico 100% New Yorkc 1% 6% 2% 21% 7% 63% North Carolina X North Dakota 100% Ohio 100% Oklahoma 69% 31% Oregon X X X X Pennsylvania X X X X X Rhode Island 97% X X South Carolina 100% South Dakota 100% Tennessee 100% Texas 100% Vermont 100% Virginia X X X X X Washington 100% West Virginia 100% Wisconsin X X X Wyoming 30% 70% These four states do not use state funds for public transit: Alabama, Colorado, Hawaii, and Utah Source: Bureau of Transportation Statistics. a A percentage figure is shown when the share or contribution of a particular source could be discerned. Where the exact share cannot be computed, an “X” is placed to illustrate the state’s reliance on that source. b “Other” includes state highway funds, trust funds, miscellaneous revenues, fees, taxes, lottery funds, tolls, or other types of assessments. c New York provided updated information as part of this NCHRP study.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs E-7 Local Funding At the local government level, the majority of funding for transit comes from general fund allocations and dedicated sales taxes. • General Fund – The share of general fund revenues has declined over the last 10 years, from 48 percent in 1994 to 34 percent in 2004. The average annual growth of general fund allocations at the local-level is estimated at 1.2 percent. • Other Funds – The share of “other funds” increased significantly in 2001, but increased only slightly thereafter. Annual growth rate over the last 10 years is estimated at 10.4 percent. • Gas Taxes – On average, gas tax revenues account for only 1.3 percent of the total transit funds at the local level; however the funding share has increased from 0.6 percent in 1994, to almost 2.0 percent in 2004. The average annual growth rate is estimated at 17.0 percent over the last 10 years, due mainly to additional transit agen- cies (in Florida and California) dedicating more local gas tax levies to transit. • Income Tax – Income taxes accounted for 1.2 percent of the total local revenues in 2004. The funding share has fluctuated between 0.1 and 4.2 percent over the last 10 years. The highest allocation of income tax revenues occurred in 1998, but it seems to be a one-time event; otherwise, income tax revenues account for approximately 1.0 percent of the total local revenues. • Property Taxes – Property taxes at the local-level account for 3.6 percent of the total local revenues for transit. The average annual growth rate over the last 10 years is estimated at 2.8 percent. • Sales Taxes – The share of sales taxes at the local-level for transit has fluctuated throughout the analysis period from a low of 29 percent in 1993 to a high of 40 percent in 2000. The actual revenue increase in 2000 could be the result of passed referenda to levy sales taxes for transit. The average annual growth rate over the last 10 years is estimated at 5.1 percent. • Other Taxes – The use of other dedicated taxes for transit at the local-level has increased over time. In 1993, the share of other taxes at the local level was 2.3 percent compared to other local revenues, increasing to 6.7 percent by 2004. • In regard to how the revenues are used at the local level, the share used for operating expenses has decreased from 78 percent in 1993 to almost 71 percent in 2004 with a proportionate increase in the share used for capital purposes. Figures E.3 and E.4 show transit revenues by source at the local level, by share and by actual revenues, respectively.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs E-8 Figure E.3 Transit Revenues Local (Share by Source) – Fiscal Years 1993 to 2004 Year 0 10 20 30 40 50 60 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Percent General Funds Other Funds Gas Tax Income Tax Property Tax Sales Tax Other Taxes Source: FTA, National Transit Database. Figure E.4 Transit Revenues Local (Millions of Dollars) – Fiscal Years 1993 to 2004 Year 0 500 1,000 1,500 2,000 2,500 3,000 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Dollars (in Millions) General Funds Other Funds Gas Tax Income Tax Property Tax Sales Tax Other Taxes Source: FTA National Transit Database.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs E-9 Agency Funding At the agency level, most revenues come from fares (user fees). Fares accounted for almost 57 percent of the total agency revenues for transit expenditures in 2004. The share of fare revenues has declined over time, as shown in Figure E.5. The average annual growth of fare revenues is estimated at 3.5 percent. • Other Operating Funds – This source include operating revenues such as lease income, concessions, and parking fees. This funding source accounts for 11.7 percent of the total agency revenues over the last 10 years, increasing at an annual growth rate of 6.6 percent. • Other Funds – The share of “other funds” has fluctuated significantly over the analysis period, from a low of 10.4 percent to a high of 21.1 percent. • Gas and Income Taxes – Dedicated revenues from gas and income taxes at the agency-level do not show a consistent pattern over time. • Property Taxes – Property taxes account for an average of 1.8 percent of the total agency revenues. Actual revenues have increased at an average rate of 5.1 percent per year. • Sales Taxes – Sales taxes dedicated at the agency level account for 12.5 percent of the agency revenues. The annual growth rate of sales taxes over the last 10 years is esti- mated at 6.6 percent. • Other Taxes – Other taxes account for an average of 1.3 percent of the agency reve- nues. Revenues from this source have increased at almost 10 percent annually over the last 10 years. • In regard to how the revenues are used at the agency level, the share used for operating expenses has decreased from 90 percent in 1993 to almost 83 percent in 2004 with a proportionate increase in the share used for capital purposes. Figures E.5 and E.6 show transit revenues by source at the local level, by shares and actual revenue respectively.

NCHRP 20-24(49) – Future Financing Options to Meet Highway and Transit Needs E-10 Figure E.5 Transit Revenues Agency (Share of Funding) – Fiscal Years 1993 to 2004 YearFares Other Operating Funds Other Funds Gas Tax Income Tax Property Tax Sales Tax Other Taxes 0 10 20 30 40 50 60 70 80 1993 1995 1997 1999 2001 2003 Percent 1994 1996 1998 2000 2002 2004 Source: FTA National Transit Database. Figure E.6 Transit Revenues Agency (Millions of Dollars) – Fiscal Years 1993 to 2004 Year 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Dollars (in Millions) Fares Other Operating Funds Other Funds Gas Tax Income Tax Property Tax Sales Tax Other Taxes Source: FTA National Transit Database.