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Status of the Nation's Highways, Bridges, and Transit:
2002 Conditions and Performance Report

Chapter 8: Comparison of Spending and Investment Requirements
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Index
Introduction
Highlights
Executive Summary
Part I: Description of Current System
Ch1: The Role of Highways and Transit
Ch2: System and Use Characteristics
Ch3: System Conditions
Ch4: Operational Performance
Ch5: Safety Performance
Ch6: Finance

Part II: Investment Performance Analyses
Ch7: Capital Investment Requirements
Ch8: Comparison of Spending and Investment Requirements
Ch9: Impacts of Investment
Ch10: Sensitivity Analysis

Part III: Bridges
Ch11: Federal Bridge Program Status of the Nation's Bridges

Part IV: Special Topics
Ch12: National Security
Ch13: Highway Transportation in Society
Ch14: The Importance of Public Transportation
Ch15: Macroeconomic Benefits of Highway Investment
Ch16: Pricing
Ch17: Transportation Asset Management
Ch18: Travel Model Improvement Program
Ch19: Air Quality
Ch20: Federal Safety Initiatives
Ch21: Operations Strategies
Ch22: Freight

Part V: Supplemental Analyses of System Components
Ch23: Interstate System
Ch24: National Highway System
Ch25: NHS Freight Connectors
Ch26: Highway-Rail Grade Crossings
Ch27: Transit Systems on Federal Lands

Appendices
Appendix A: Changes in Highway Investment Requirements Methodology
Appendix B: Bridge Investment/Performance Methodology
Appendix C: Transit Investment Condition and Investment Requirements Methodology
List of Contacts

Transit Capital Spending Compared with Investment Requirements

2000 Capital Spending and Estimated Average Annual Investment Requirements

Total Capital Spending

In 2000, combined capital investment in public transportation by Federal, State, and local governments was $9.1 billion, below the requirements estimated by the Federal Transit Administration (FTA). FTA estimates that an additional investment of $5.7 billion annually (63.8 percent above actual capital investment in 2000) would be required to Maintain Conditions and Performance and an additional annual investment of $11.5 billion annually (127.5 percent above actual capital investment in 2000) would be required to Improve Conditions and Performance. [See Exhibit 8-7].

This comparison, however, overestimates the gap between capital investment requirements and future funding for transit capital investment. This overestimation results because of lag that occurs between the authorization of capital funds, the obligation of these funds and actual capital spending. Since TEA-21, annual obligations by FTA for capital investment have grown rapidly to $7.2 billion in FY 2000 from $4.1 billion in FY 1998. Higher levels of authorizations have not yet worked their way through the process into capital spending. As these higher levels of authorized funds are obligated and spent, capital investment will rise and the gap between actual capital spending and estimated annual capital investment requirements will decrease.

    
Exhibit 8-7

2000 Transit Capital Expenditures Versus Estimated Average Annual Investment Requirements (Billions of 2000 Dollars)
  ESTIMATED ANNUAL AVERAGE REQUIREMENTS MINUS EXPENDITURES IN 2000 PERCENT AVERAGE ANNUAL REQUIREMENTS ABOVE ACTUAL 2000 EXPENDITURES
Actual 2000 Capital Expenditures 2001-2020 Estimated Annual Average Requirements
$9.1
 
 
Cost to: Maintain Conditions & Performance
$14.8
$5.8
63.8%
Improve Conditions & Maintain Performance
$16.0
$6.9
76.6%
Maintain Conditions & Improve Performance
$19.5
$10.4
115.2%
Improve Conditions & Performance
$20.6
$11.6
127.5%
 

Capital Spending by Asset Type

In 2000, $2.8 billion was invested in transit vehicles and $6.2 billion in non-vehicle transit infrastructure, i.e., facilities, guideway elements, stations, and systems. Between 2001 and 2020, investment in transit vehicles would need to grow more rapidly than investment in the non-vehicle transit infrastructure to both Maintain and Improve the transit infrastructure conditions and performance [See Exhibits 8-8 and 8-9].

    
Exhibit 8-8

Average Annual Transit Investment Requirements Versus 2000 Capital Spending by Asset Type
 
  VEHICLES NON-VEHICLE ASSETS
BILLIONS OF 2000 DOLLARS PERCENT ABOVE ACTUAL SPENDING PERCENT OF TOTAL CAPITAL SPENDING/
REQUIREMENTS 1/
BILLIONS OF 2000 DOLLARS PERCENT ABOVE ACTUAL SPENDING PERCENT OF TOTAL CAPITAL SPENDING/
REQUIREMENTS 1/
2000 Capital Spending 2/
$2.8   31% $6.2   69%
Costs to:
Maintain Conditions & Performance 2/
$6.2 117% 42% $8.7 40% 58%
Improve Conditions & Performance
$8.1 184% 39% $12.5 101% 61%
1/Percent of total 2000 capital spending/ percent of total investment requirements to Maintain and Improve Conditions and Performance.
2/Note: numbers do not add due to rounding.
Source: Transit Economic Requirements Model and FTA staff estimates.
A Comparison of 2000 Transit Capital Spending with Average Annual Investment Requirements (Billions of 2000 Dollars)
Click here for text description of this exhibit.

Capital Spending on Vehicles

FTA estimates that capital investment in transit vehicles would need to be $6.2 billion annually to Maintain Conditions and Performance (117 percent more than actual expenditures in 2000) and $8.1 billion annually to Improve Conditions and Performance (184 percent more than actual expenditures in 2000). In 2000, there were estimated to be 6,770 overage rail vehicles and 16,000 overage buses, compared with 5, 381 overage rail vehicles and 17,681 overage bus vehicles in 1997. (The decline in the number of overage buses has largely resulted from an estimated decline in the number of overage vans.) The entire bus fleet will need to be replaced at least once during the period of 2001 to 2020 since large and medium-sized buses have an expected life of 12 years and small buses and vans have an expected life of 7 years. Commuter rail selfpropelled passenger coaches and heavy rail vehicles account for the largest percentage of overage rail vehicles—22 percent and 61 percent, respectively. Each of these modes will need to purchase a considerable number of new vehicles. These purchases will only need to be made once between 2001 and 2020, given an expected rail vehicle life of 25 years. Rail vehicle requirements to Improve Conditions are higher than in the 1999 C&P Report because, as discussed in Chapter 3, conditions for all rail vehicles except commuter rail have been revised downward from a “good” to an “adequate” level.

Capital Spending on Non-vehicle Infrastructure

TERM estimates that an annual capital investment in non-vehicle transit infrastructure of $8.7 billion (40 percent above 2000 capital spending) would be needed to Maintain Conditions and Performance of these assets and $12.5 billion (101 percent above 2000 capital spending) would be needed to Improve them. As discussed in Chapter 7, the bulk of this investment would be needed for guideway elements—elevated structures (bridges), tunnels, and track—and rail systems.

Investment Requirements versus Projected 2001-2003 Spending

Exhibit 8-10 provides estimated total (Federal, State, and local) capital funding available from 2000 to 2003 in current and constant 2000 dollars. Note that estimated capital funding available in 2000 is $12.4 billion, $3.4 billion higher than actual capital spending. In the case of formula funding this difference reflects a lag between authorizations and spending and in the case of flexible funding a lag between the obligations and spending. Exhibit 8-10 compares Federal capital funding levels from 2000-2003 in current and constant 2000 dollars.

    
Exhibit 8-10

Transit Capital Funding Levels, 2000-2003 (Millions of Dollars)

 
YEAR AVAILABLE CAPITAL FUNDING LEVELS IN CURRENT DOLLARS AVAILABLE CAPITAL FUNDING LEVELS IN CONSTANT 2000 DOLLARS GDP DEFLATOR*
2000
$12,484
$12,484
100.0%
2001
$13,319
$13,018
102.3%
2002
$14,150
$13,533
104.6%
2003
$14,985
$14,079
106.4%
*Chained price index. Converted from a 1996 to 2000 base.
Sources: Transit Economic Requirements Model and Budget of the United States FY2003.

Q.
How were capital funding levels from 2000-2003 derived?

A.
Total capital funding is calculated as the sum of capital funding allocated through the five FTA formula programs and through flexible funding, Title 23 (FHWA), plus a State and local matching amount. Funds authorized under Section 5308, 5309, and 5310 programs are used exclusively for capital needs. Based on recent grant obligations trends, it has been assumed that 93 percent of the Section 5307 authorizations and 46 percent of the Section 5311 authorization levels will be allocated to capital investment. The percentage of Section 5307 authorizations assumed to be for capital investment was increased to 93 percent from 84 percent, which was used in the last edition of this report. This revision reflects the fact that since TEA-21, Section 5307 funds have been precluded from being used for most operating expenditures and hence a larger percentage of these funds has been spent on capital investment. The amount of flexible funding used for transit is assumed to equal $1.0 billion per year, the average annual amount of these funds obligated by FTA since TEA-21. Earlier editions of this report did not include flexible funds in estimates of total funding levels. The amount of flexible funds used for transit was considerably lower in those years. State and local governments are assumed to match federal funding levels, in line with the split between “Federal” and “State and local funding” in recent years. In 2000, State and local governments provided 47 percent of all capital funding and, in 1997, 54 percent. Authorized funding levels for 2001 to 2003 are deflated to a 2000 constant dollar using the chained GDP price index reported in the 2003 Budget of the United States for comparison with estimated transit investment requirements, which are in 2000 dollars.

A Comparison of Authorized Capital Expenditures with Estimated Investment Requirements (2000-2003)

Projected available funding levels for the duration of TEA-21 are lower than estimated investment requirements, with the gap declining over the period. [See Exhibit 8-11]. In 2003, investment requirements to Maintain Conditions and Performance are estimated to exceed available authorized funding levels by 9.6 percent, and those to Improve Conditions and Performance by 52.2 percent.

    
Exhibit 8-11

Projected Transit Available Capital Funding Versus Investment Requirements, 2000-2003 (Billions of 2000 Dollars)

 
YEAR PROJECTED AVERAGE ANNUAL AVAILABLE CAPITAL FUNDING COST TO MAINTAIN CONDITIONS AND PERFORMANCE COST TO IMPROVE CONDITIONS AND PERFORMANCE
ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL PERCENT ABOVE PROJECTED AVERAGE ANNUAL AVAILABLE CAPITAL FUNDING AVERAGE ANNUAL PERCENT ABOVE PROJECTED AVERAGE ANNUAL AVAILABLE CAPITAL FUNDING
Actual Capital Expenditures
2000
$9.06
 
$14.84
63.9%
$20.62
127.7%
Projected Available Capital Funding
2001
$13.02
$13.02
$14.84
14.0%
$20.62
58.3%
2002
$13.53
$13.28
$14.84
11.8%
$20.62
55.3%
2003
$14.08
$13.54
$14.84
9.6%
$20.62
52.2%
Projected Transit Available Capital Funding Versus Investment Requirements, 
  2000-2003 (Billions of 2000 Dollars)
Click here for text description of this exhibit.

Sources: Transit Economic Requirements Model, TEA-21, and FTA staff estimates.

Comparison with Previous Reports

Exhibit 8-12 compares the percentage difference between current spending levels and investment requirements in 2000 to the same percentage differences provided in the 1995, 1997, and 1999 Conditions and Performance Reports. As a result of methodological changes, estimated investment requirements are not directly comparable from year to year. The ratio of investment requirements to actual spending to Maintain Conditions and Performance increased to approximately 60 percent in the present report from approximately 40 percent in earlier reports. The increase in this ratio between 1997 and 2000 reflects increases in vehicle acquisition costs and increased purchases in general as a result of expansion in infrastructure size. The increase in the ratio of investment requirements to actual expenditures under the Improve Conditions and Performance scenario resulted in part from the downward revision in the average condition of rail vehicle conditions based on re-estimated decay curves. Again these differences will narrow in the future as obligated funds are invested.

    
Exhibit 8-12

Average Annual Transit Investment Requirements versus Current Spending, 1995, 1997, 1999 and 2000 Conditions and Performance Reports

 
REPORT YEAR SPENDING YEAR INVESTMENT REQUIREMENT FORECAST YEARS Percent Above Current Spending
COST TO MAINTAIN CONDITIONS AND PERFORMANCE COST TO IMPROVE CONDITIONS AND PERFORMANCE
1995
1993
1994-2013
37.6%
124.4%
1997
1995
1996-2015
38.3%
102.9%
1999
1997
1998-2017
41.0%
110.2%
2002
2000
2001-2020
63.8%
127.7%
Source: Transit Economic Requirements Model and FTA staff estimates.
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