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Domestic Scan Tour: Financial Planning & Fiscal Constraint

Salem, Oregon

Table of Contents

Executive Summary

FHWA conducted a domestic scan in 2002 and 2003 to gather information on financial planning and fiscal constraint in the statewide transportation planning process. The scan was conducted in two parts: 1) a TRB Peer Exchange on Financial Planning and Fiscal Constraint and Congestion Management Systems; and 2) technical visits by a U.S. Department of Transportation team to three States to assess the role of financial planning and fiscal constraint in statewide transportation planning and programming.

Planning officials from the three States described planning and programming processes and how financial planning is integrated into these processes. The State representatives also discussed challenges they face in balancing financial planning with long-range visions and strategies, high priority needs, and development of projects. State participants highlighted the following themes:

Domestic Scan

Financial Planning and Fiscal Constraint

Introduction

The transportation planning requirements in the Intermodal Surface Transportation Efficiency Act (ISTEA) in 1991 and its reauthorization under the Transportation Equity Act for the 21st Century (TEA-21) in 1998 call for development of comprehensive, coordinated, and collaborative statewide and metropolitan area transportation planning processes. The statewide and metropolitan processes include development of long-range Transportation Plans (the Plan), metropolitan area Transportation Improvement Programs (TIP), and Statewide Transportation Improvement Programs (STIP). The TIP and the STIP identify investments and strategies to implement the Plan. Additionally, the metropolitan Plan, the TIP, and the STIP must include financial plans identifying the source of funds from the public and private sectors that can reasonably be expected to be available to carry out the policies, strategies, and investments identified in these planning documents. In particular, the metropolitan Plan, the TIP, and the STIP must be fiscally constrained to demonstrate that identified policies, strategies, and projects can be implemented using revenues that are currently available or that can reasonably be projected for the future. The legislation in TEA-21 and associated regulations related to financial planning are summarized in Appendix A, and are available at the FHWA Office of Planning's Legislation web-site.

In 2000-2001, the Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) conducted an internal review of the STIP development process and the related TEA-21 requirement for fiscal constraint. As a follow-up to this review, the FHWA Office of Planning organized a domestic scan to examine how state DOTs and their planning partners are developing financial plans and demonstrating that STIPs are fiscally constrained.

Goals for the Scan

The FHWA Office of Planning, Environment, and Real Estate sponsored the first in the current series of domestic scans in 2002. The FHWA undertakes domestic scans to gather in-depth information on a single high priority topic from a range of States or local areas. The scans allow the FHWA and FTA to work with state representatives to identify emerging transportation issues and concerns. These topics are selected based on their importance to FHWA, FTA, and their state and local partners. The scans are conducted to collect information on how transportation is being planned and develop insights into how transportation planning practices might be improved. State representatives are able to identify tools, training, and other resources that FHWA and FTA might provide to assist states to improve planning and better meet the TEA-21 planning requirements. This information is collected to assist FHWA, FTA, and their partners to work together to strengthen transportation planning nationwide.

One of the top priority issues FHWA and FTA field planners and state DOTs are dealing with is fiscal constraint. This issue adds a critical element of financial realism to long and short-range planning processes, and increases the likelihood that planning is a major contributor to state decisions on policies, investments, and strategies. Fiscal constraint is particularly important during periods of national economic slowdown and recession both nationally and in individual states. The purpose of this scan was to learn how individual states apply fiscal constraint and revenue forecasting within their planning process, and in particular, within the process to program funds to projects.

The scan provided FHWA and FTA with opportunities to discuss current planning practices, issues, and concerns at a substantive level with the state planners directly responsible for this work. This summary report documents the information collected, including current and noteworthy practices.

Scope and Two Stages of Scan

The domestic scan was conducted in two parts.

Part One was the Transportation Research Board (TRB) Statewide Multimodal Transportation Peer Exchange held at Wood's Hole, Massachusetts July 14-16, 2002. The TRB Committee on Statewide Multimodal Transportation Planning (A1D01) organized this workshop.

Representatives from eleven States participated in the Wood's Hole Peer Exchange, which focused on two subjects: Financial Planning/Fiscal Constraint and Congestion Management Systems (CMS). The following States participated:

The results of the TRB workshop are presented in a separate Transportation Research Circular, Number E-CO62, Addressing Fiscal Constraint and Congestion Issues in Statewide Transportation Planning (PDF, 892KB).

Appendix B summarizes key points from TRB Peer Exchange report for the States that were not included in the FHWA financial planning and fiscal constraint scan.

Part Two was a scan conducted by a team of USDOT and State DOT experts in financial planning. The team visited three States to discuss financial planning and fiscal constraint in the context of statewide and metropolitan planning and programming and to explore the state-of-practice in additional detail. The scan provided the opportunity for candid and focused exchanges between federal and state planning staff, and among State DOT peer practitioners. This report is the summary of the scan.

FHWA selected three States for site visits in October and November to review a range of experiences with and approaches to financial planning:

Scan Participants

FHWA invited representatives from the respective FHWA Division and FTA Regional offices to participate in each state visit. The core team consisted of staff from the FHWA Office of Planning and the USDOT's Volpe National Transportation Systems Center and peer experts from other State DOTs. The team brought together the following individuals with a broad range of interests and experiences related to financial planning:

The core team members and participants in the Oregon, Arizona, and Pennsylvania reviews are identified in Appendix C.

Structure of the Domestic Scan -- Research Questions

The TRB workshop provided a set of discussion questions to participating States in advance of the peer exchange. Each State answered the following questions:

  1. How does the State address financial planning in your statewide planning?
  2. How does the statewide plan document financial planning issues?
  3. How does the State demonstrate fiscal constraint in its STIP?
  4. How is the current fiscal/economic environment situation reflected in the State's long-range statewide planning and programming processes?
  5. What, if any, of the performance measures used by the State have a financial basis?

The domestic scan began with a similar set of questions, which were then expanded and developed in additional detail. The expanded set of discussion questions is provided in Appendix D. The questions were provided to the State DOT staff in advance of the site visits and were used to structure the agenda and discussion during the visit.

The following sections summarize information and insights from each of the three state reviews. References to technical reports for participating States, with web locations, are included in the text and in Appendix E.

Updated: 03/26/2013
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