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Relationships Between Asset Management and Travel Demand:
Findings and Recommendations from Four State DOT Site Visits
Chapter 5. Relationships Between Asset Management, Long-Range Planning, Long-Range Budgeting, And Travel Demand
5.1 Introduction
In many respects, the process of designing and preparing an SLRP encompasses many of the primary components of the TAM process (see Exhibit 5-1) and then encapsulates the results within the confines of a single document. Specifically, most long-range plans include most, if not all, of the following asset management-related processes:
- Identification of long-range vision, goals, and objectives
- Evaluation of current condition and performance
- Identification of preferred investment strategies to attain desired outcomes
- Evaluation of total investment needs
- Budget allocation and project prioritization
- Performance monitoring
Exhibit 5-1: Similarities between TAM and SLRP processes (Description)
More than just paralleling the overall asset management process, long-range transportation plans and their accompanying budget analyses should ultimately be viewed as key and active components in the asset management process. Long-range plans and budgets are obviously of limited value if their objectives and strategies are not tightly coordinated with an agency's asset management process. Rather, a comprehensive long-range plan should serve as a key reference material or "road map" documenting the goals, objectives, strategies, and financial constraints of the overall asset management program. This document should also help agencies conduct a strategic analysis of their preferred allocation of funding across maintenance, preservation, capacity improvement, and other investment needs - a key asset management function.
This chapter reviews the SLRPs and related long-term budgets of each of the four study states. Specifically, the review documents the aspects of each state's long-range plan as it relates to asset management processes and objectives. Consistent with the goals of this study, this review will place emphasis on how the sample agencies are planning for future travel demand and preparing long-term budgets.
5.1.1 Background
The asset management programs studied do not perform strategic analyses consistent with the time frames considered in the SLRPs. As discussed above, many existing asset management programs are primarily focused on short-term issues (e.g., within the next 5- or 10-year period), with less focus on the longer-term period (i.e., 20-plus years) covered by the SLRP. Moreover, the DOT divisions responsible for production of long-range plans (usually within the planning department) are often independent of those departments or staff responsible for asset management (although asset management staff can and do contribute to SLRP production). For these reasons, the following analyses of each state's SLRP within the context of asset management principles should not be viewed as a review of the long-term component of each state's "official" asset management program. Rather, in the absence of explicit, long-term asset management processes, the SLRP provides an official statement of each state's long-term transportation goals, objectives, strategies, needs, and expected financial capacity. In this sense, the SLRP is considered to be at least an implicit component of each state's existing asset management programs and as such provides valuable insights into the state's intended long-term vision and strategies.
5.2 Long-Range Goals and Objectives
As outlined in Exhibit 5-1, the identification of clear policy goals and objectives represents a key foundation to a successful asset management program. While some goals and objectives may address short-term issues, strategic asset management requires identification of long-term goals and objectives as required to attain desired long-term outcomes. Moreover, these long-term goals and objectives must be consistent with and support each DOT's mission statement.
Similarly, the SLRP development process also includes the identification of clear goals and objectives as a means to help identify preferred investment strategies and to guide future resource allocation. Moreover, as a key strategic document, SLRPs have both the input and endorsement of top agency staff. Following are descriptions of the statewide long-range planning goals and objectives of the four state DOTs participating in this study and their relation to long-term travel demand needs.
5.2.1 California
| Caltrans' vision statement: "California has a safe, sustainable, world-class transportation system that provides for the mobility and accessibility of people, goods, services, and information through an integrated, multimodal network that is developed through collaboration and achieves a prosperous economy, a quality environment, and social equity." |
The goals and objectives of Caltrans' current SLRP, California Transportation Plan 2025, reflect the input of diverse stakeholder groups including extensive public input through household surveys and outreach sessions. The plan's goals and objectives are also intended to reflect the goals and objectives of the Governor's Go California initiative, a program designed to decrease congestion, improve travel times, and increase safety, while accommodating future population and economic growth. Go California, now part of the Governor's Strategic Growth Plan, is an ambitious 10-year effort to invest in the state's transportation infrastructure. Specifically, Caltrans' current SLRP identifies the following transportation goals:
- Enhance Public Safety and Security
- Preserve the Transportation System
- Improve Mobility and Accessibility
- Maximize Efficient Use of Resources
- Reflect Community and Environmental Values
Long-Term Objectives Relating to Travel Demand
The detailed definitions for these goals make specific reference to several travel demand- and congestion-related objectives. These include the following objectives by goal:
- Enhance Public Safety and Security
- Improve pre-incident preparedness and post-incident recovery (to mitigate congestion)
- Improve Mobility and Accessibility
- Increase capacity of all modes such as adding more lane-miles and expanding transit service areas and hours
- Promote the use of advanced communications, such as teleconferencing, electronic shopping, and government, to increase accessibility and reduce the need for physical travel
- Maximize Efficient Use of Resources
- Reduce congestion and demand by promoting a shift to environmentally preferable transportation solutions such as pedestrian travel, bicycling, mass transit, and virtual travel.
5.2.2 Michigan
| MDOT's vision statement: "Michigan will lead the 21st century transportation revolution as it led innovation in the 20th century. We will move people and goods with a safe, integrated and efficient transportation system that embraces all modes, is equitably and adequately funded, and socially and environmentally responsible." |
MDOT is in the process of updating its SLRP (for the period 2005 to 2030) and is currently seeking input from a broad range of stakeholder groups to help establish the new plan's goals and objectives. Specifically, these stakeholders include households, regional planning agencies and councils of governments, chambers of commerce, environmental groups, state agencies, and an appointed economic advisory council (which includes representatives of industry, academia, and all levels of government). While the specific goals and objectives of the 2005-2030 plan have yet to be fully identified, the plan will represent an updated and refined version of the predecessor, 2000-2025 SLRP (developed using a similar process). The 2000-2025 SLRP identified the following transportation goals:
- Preservation
- Safety
- Basic mobility
- Economic growth
- Transportation services coordination
- Intermodalism
- Environmental protection and aesthetics
- Land use coordination
Long-Term Objectives Relating to Travel Demand
The 2000-2025 SLRP provides detailed definitions of each of the broad transportation goals identified above. These detailed definitions provide a general outline of desired plan outcomes, but do not make specific reference to travel demand, freight movement, congestion, travel delay, or related objectives. They do, however, provide some indirect reference to these objectives through their emphasis on the promotion of transportation system efficiency and economic development. For the Michigan SLRP, explicit consideration of travel demand, congestion, and related issues are more directly considered in the plan's strategies.
5.2.3 North Carolina
North Carolina's current Long-Range Statewide Multimodal Transportation Plan represents a bold departure from the state's prior long-range planning efforts. Based on the direction and leadership of the state's governor and Secretary of Transportation, NCDOT worked to develop a long-range plan that better defines the state's long-range goals and objectives as compared to prior plans. Moreover, the clear support of DOT upper management combined with improvements in the quality of the SLRPs supporting analyses (originating in part from the asset management program) has helped NCDOT better focus its internal resources on desired objectives and is also having a positive influence on the state's project prioritization process.
In addition to guidance from the governor and Secretary of Transportation, development of the current SLRP and its goals and objectives incorporates input from the NCDOT Board of Transportation, NCDOT Board of Transportation Planning Committee, a plan Steering Committee, other state departments (e.g., commerce, environment, and natural resources), and the public through outreach meetings. Specifically, NCDOT's current SLRP identifies the following transportation goals:
- Mobility
- System maintenance and preservation
- Economic development and efficiency
- Safety
- Efficient and balanced growth
- Modal options and intermodal efficiency
- Fiscal and environmental stewardship
- Coordination with transportation stakeholders
Long-Term Objectives Relating to Travel Demand
The detailed definitions for these goals make specific reference to several travel demand and related objectives. These include the following:
- Mobility:
- Reduce bottlenecks, congestion, and travel time
- Increase system efficiency through existing, new, and emerging technologies
- Economic Development and Efficiency:
- Provide improvements that increase system efficiency
- Modal Options and Intermodal Efficiency:
- Promote demand-management services in areas of high travel demand and potential
- Provide the appropriate infrastructure to encourage intermodal transfers for personal travel
5.2.4 Utah
| UDOT's vision statement: "We will provide ‘Effective/Efficient roadway maintenance through quality leadership and interaction with our partners/customers and team members.'" |
Utah's current SLRP is called Utah Transportation 2030. Selection of the goals and overall development objectives for the 2030 plan reflect input from multiple stakeholder groups including the Utah Transportation Commission, UDOT's Executive Director, the Planning team, and the Department's consultant team. This document also reflects considerable input obtained through statewide public outreach sessions (conducted via the Internet and through "town hall" meetings). Utah's current SLRP was developed using the following four strategic goals:
- Take care of what we have
- Make it work better
- Improve safety
- Increase capacity
Long-Term Objectives Relating to Travel Demand
The detailed definitions for these goals make specific reference to several travel demand and related objectives. These include the following:
- Make it work better:
- Make system improvements that can improve capacity
- Partner with other transportation agencies to meet transportation demand
- Increase capacity through:
- Travel Demand Management (TDM)
- ITS
- Access management
- Additional lanes
5.3 Current and Projected Conditions and Performance
Most SLRPs also document the current condition and performance of a state's highway network and other transportation modes as well as current and expected future transportation trends. This analysis is intended to provide a baseline evaluation of current issues and support the identification of preferred plan investment strategies.
The current SLRPs for each of the four study states include evaluations of current system condition and performance for each state. The following state-by-state descriptions focus solely on performance assessments relating to highway travel demand (both auto and truck), with emphasis on those travel demand issues the plan is intended to address via specific investment strategies.
5.3.1 California
California's Transportation Plan 2025 provides a summary of the projected increases in travel demand across all modes statewide over the period 2000-2025. This includes discussion of the projected increase in highway VMTs and congestion. The assessment also includes discussion of the projected increase in traffic through the state's large seaports and the implications for highway improvements as required to support related growth in the state's truck traffic volumes.
The plan also cites several of the underlying factors driving the growth in auto travel demand. These include increasing separation between home and work locations, increasing non-work VMTs (reflecting increased separation between home and non-work destinations), and increasing population. Each of these and other related factors yield a subsequent increase in congestion on all roadway types. Without the benefit of comprehensive statewide travel demand and truck demand models, the plan does not provide specifics on the magnitudes and locations of the major increases in travel demand within the state's roadway network. Caltrans is working to improve the quality of its statewide travel demand forecasting capabilities to better support these long-term strategic assessments.
5.3.2 Michigan
Michigan's current SLRP documents both the current level of congestion on state-controlled highways and the projected worsening of congestion over time. For example, as of 2000, roughly 13 percent of the state's maintained roadways were characterized as LOS F. By 2025, the percentage of roads LOS F is projected to increase to 17 percent. Contributing to this trend of deteriorating service is a projected increase in VMTs of 24 percent between 2000 and 2025 (see Exhibit 5-2). By 2025, the projected number of VMTs under congested conditions is projected to increase by 67 percent, by which time one in five miles traveled on state highways will be in congested conditions. The SLRP recognizes that this growing congestion is the result of ongoing growth pushing against zero or minimal growth in capacity.
Exhibit 5-2: Michigan: Congested Vs. UnCongested VMTs on State Controlled Routes (Description)
Similarly, the state's truck analysis capabilities and truck travel demand model support valuable analysis of both the magnitude and locations of recent and expected future commercial vehicle traffic growth. Based on this analysis, it is clear that the growth in commercial vehicle miles of travel (CVMT) has clearly outpaced auto VMT, thus helping to prioritize specific problems that need to be addressed by the plan. For example, over the period 1990 to 2000, auto VMT increased by 20 percent, whereas CVMT increased by more than 190 percent. This increase was driven in part by NAFTA (and the subsequent increase in traffic between Michigan and Ontario, Canada) and the adoption of just-in-time delivery practices in Michigan's manufacturing sector.
A clear strength of Michigan's assessment of current conditions and performance and future needs is the ability of the state's travel demand and truck models to evaluate future conditions within specific travel corridors. This allows the state to think strategically about where to focus long-term preservation and capacity investment funds. Other states could similarly benefit from the development of statewide travel demand and truck travel models.
5.3.3 North Carolina
North Carolina's Long-Range Statewide Multimodal Transportation Plan provides a concise description of historic and projected population growth. The plan also cites a 10-year increase in VMTs of nearly 40 percent over the decade between 1990 and 2000, but does not indicate the expected future rate of growth in VMTs or congested travel, or offer specificity about the location. Similarly, the plan recognizes the need to support expected increases in commercial vehicle traffic (both through and to/from the state) as a means of supporting the state's continued economic growth and that of the nation. However, without an existing truck travel demand model, the plan does not contain estimates of the projected increase in truck VMTs or the routes most likely to be impacted. The state is planning development of a truck travel model to meet this need.
5.3.4 Utah
The conditions and performance sections of Utah's Transportation 2030 SLRP focus primarily on the issue of projected growth in the state's population, with emphasis on the geographic disparity in the rates of population growth (i.e., with the vast majority of growth concentrated in the I-15 corridor centered around Salt Lake City). The plan then goes on to recognize the subsequent expected impact on travel demand, but without providing specific numeric analyses. The absence of projected increases in travel demand and congestion overall may reflect the absence of a statewide travel demand model. Similarly, UDOT's SLRP does not provide an assessment of projected CVMT growth. To help meet this need, UDOT is also planning development of a truck travel demand model.
5.3.5 Summary
System condition and performance analyses offer an important opportunity to assess the current characteristics of a state's highway infrastructure and its anticipated future condition and performance as well. With respect to the principles of asset management, the ability to forecast the magnitude of future travel demand (both auto and truck) within specific travel corridors provides critical information for the evaluation and prioritization of long-term investment needs. Each of the participants in this study has recognized that need and are either refining existing travel demand tools or planning development of new tools intended to better support this need.
5.4 Identification of Investment Strategies
Transportation investment strategies are designed to address the goals and objectives in light of the transportation system's current and projected condition and performance. This section reviews the strategies identified within each of the study state's SLRPs intended specifically to address travel demand-related problems, most notably congestion.
5.4.1 California
California's SLRP asserts that the state cannot address projected growth in highway travel demand and the subsequent increases in congestion through increases in highway capacity alone. This is a result of environmental, physical, and fiscal limitations. Rather, the state's SLRP focuses on a mix of supply side (i.e., capacity), system management, and TDM investments as the best means to mitigate further increases in congestion. System management investments are operational and ITS improvements intended to enhance the efficiency of the existing highway infrastructure. TDM strategies under consideration are intended to alter a traveler's behavior in terms of the timing, route, destination, or mode selected for a trip or the need for travel in the first place. The following are key investment strategies from the 2025 SLRP related to travel demand.
System Management Strategies
- Improve the operating efficiency, system management, and connectivity of California's transportation system using advanced transportation applications
- Continue to support and expand freeway service patrols to rapidly respond to incidents and restore traffic flow
TDM Strategies
- Provide greater access to information, products, and services without the need for physical travel
- Increase use of telecommuting, e-commerce, and e-government services
- Enhance connectivity between transportation modes
- Enable travelers to better manage their individual trips through better real-time traveler information (e.g., on modal options, travel times, costs)
System Capacity Improvement Strategies
- Expand existing and develop additional roadways
- Add lanes and roads where feasible and determined to be the best alternative
- Redesign and modernize interchanges to reduce or eliminate bottlenecks or restraints to smooth traffic flow, and to reflect current traffic-flow patterns
- Increase capacity on major arterial streets through improved design, grade separation, signal timing, and other innovative solutions
- Complete the HOV network and supporting facilities
- Expand and improve transit services
- Expand dedicated guideway, bus rapid transit service and facilities, smart shuttles, and shared car programs where proven effective
- Improve multimodal ground access to airports, including intercity bus service connecting small urban and rural communities to passenger air service
- Use technology to make vehicles "smarter"
- Allow more vehicles to safely share the road through advanced vehicle control and guidance systems
- Improve bus design and fare systems to more quickly move people in and out of vehicles for increased efficiency
5.4.2 Michigan
MDOT's 2000-2025 SLRP identified three strategies the state considered essential to attaining the long-range goals for the state's system of freeways, highways, and bridges. These strategies are:
- Continue implementation of an asset management process
- Focus investment on the corridors of highest significance
- Manage congestion
Each of these strategies is addressed in turn as they relate to travel demand.
Asset Management
The plan's description of asset management-driven investment strategies makes specific mention of the following strategies relating to travel demand:
- Bridges: Improvements to bridge widths to accommodate projected traffic volume increases, with emphasis on bridges with few alternative routes
- Truck: Implement new pavement and bridge design standards to accommodate changes in truck volumes, sizes, and weights
Corridors of Highest Significance
Investments in "corridors of highest significance" recognize that some travel corridors carry higher volumes of goods, services, and people than others. Therefore, investments in the corridors should be prioritized. Specifically, MDOT uses the following factors to select and rank these corridors, each of which relates either directly or indirectly to auto or freight travel demand:
- Total and commercial average daily traffic (ADT)
- International trade
- Total population and population density
- Total employment and employment density
- Tourism and convention centers
- Air carrier and general aviation airports
- Cargo port
- Carpool parking lots
- Intercity bus service
- Intermodal freight and passenger terminals
- Passenger and freight rail
- LOS E or F (congestion).
The identification and analysis of corridors of highest significance (including input from the state's travel demand models) allows MDOT to determine both the locations of highest need for capacity improvements as well as the severity of the problem to be addressed. In addition to identifying the need for roadway widening along specific state roadway segments, this investment strategy has also targeted several border crossings between the U.S. and Canada "of highest significance" in need of both capacity improvements and the introduction of operational efficiencies such as ITS investments (i.e., to ensure efficiency in the movement of goods and people across the Canadian border).
Congestion Management
Congestion management strategies cover a range of investments beyond those relating to bridge widening or investments in corridors of highest significance. Travel demand-related congestion management investment strategies include:
- Freeway Modernization:
- Roadway straightening
- ITS investments in real-time traveler information, video monitoring of incidents, and ramp metering to help maintain/improve traffic flow
- Access Management:
- Coordinated planning between MDOT and local agencies designed to provide or manage access to land development while simultaneously preserving traffic flow on surrounding road systems
- Interchange Strategy:
- Improvements to existing interchanges and construction of new interchanges in response to increasing traffic volumes
- Car Pool Parking Lots:
- Facilitating ridesharing to reduce both congestion and parking demand
- Land Use Strategy:
- Working with local agencies to provide or manage access to new land development while simultaneously preserving existing traffic flow
5.4.3 North Carolina
North Carolina's current SLRP does not identify specific investment strategies to address current and projected future condition and performance levels. Rather, the plan focuses on its projected investment needs, which are assumed to implicitly reflect NCDOT's investment strategies. These investments cover:
- Highways and bridges:
- Including backlog and ongoing maintenance, preservation, modernization, and expansion needs
- ITS investments:
- Traffic Management: Real-time adjustments to traffic control systems in response to changing conditions
- Emergency Management: Systems that improve the response time and effectiveness of emergency responders
- Information Management: Applications that improve real-time communication with system users
- Commercial Vehicle Operations: Applications that streamline and automate trucking enforcement
5.4.4 Utah
Similar to California's plan, UDOT's SLRP identifies a mix of capacity, operational, and TDM improvements as the best means to address Utah's current and projected travel demand concerns.
Increase Capacity
With the rate of population growth projected to continue, UDOT plans to continue to add new routes, widen existing corridors, construct new interchanges, and perform other work to increase capacity. Most of the anticipated need for capacity-increasing projects falls within the urbanized areas along the Wasatch Front (I-15 corridor), Cache County, and Washington County.
Operational Improvement Strategies
UDOT's operational strategies are designed to maintain or improve current performance of the existing highway system. Specific strategies being considered include:
- Continuation of incident management programs to reduce delays
- Improved signal coordination to optimize traffic flows
- Installation of freeway ramp meters to protect mainline capacity, where appropriate
- Implementation and maintenance of a comprehensive access management program to protect the existing highway system's carrying capacity
- Continuation of research of the effectiveness and feasibility of managed lanes on freeways and primary arterial highways
Transportation Demand Management
TDM-related strategies are intended to address UDOT's goals of "making the system work better" and "increasing capacity." TDM strategies aim to reduce vehicle travel by providing alternatives that meet travel demand needs. Strategies include flexible work hours, vanpools, teleconferencing, transit use, and promoting walkable communities. Additional TDM strategies identified for consideration include:
- Supporting, maintaining, and expanding the Commuter Link traveler information system
- Expanding the highway system
- Enhancing and expanding the use of ITS
- Expanding transit services
- Providing better pedestrian accessibility and designing walkable communities
- Planning and constructing bicycle networks
- Constructing Park-and-Ride facilities and intermodal hubs
- Providing employer incentives for alternative commute modes and telecommuting, teleconferencing, and flexible work hours
- Increasing on-line commerce, services, and permitting
- Making system operational improvements
- Ridesharing and van pooling
5.5 Long-Term Investment Needs and Budgeting
Using their investment strategies as guides, the SLRPs for each of the four states next identify a range of investment needs intended to support their goals and objectives. This includes investments in preservation, modernization, operational improvements, expansion, and safety. At this point, the analysis is typically unconstrained and the investments are not prioritized. The next step is to prioritize investments to reflect known or projected funding capacity.13 In support of this capacity analysis, each of the study states has conducted an analysis of current funding streams. In addition, Michigan, North Carolina, and Utah have projected current funding capacity into the future and prepared long-term budgeting analyses to assess future funding capacity relative to needs.
This section considers how each of the four study states evaluates its long-term investment and operating needs, how each constructs budgets to support those needs, and how each addresses any remaining funding gap. It is important to consider here that the state's primary objective in preparing these long-range needs estimates and related budget analyses is to complete the SLRP; this study was unable to identify an internal DOT audience for long-range budget information beyond the SLRP. Specifically, interviewees stated that there was no process for regularly reporting this information beyond the SLRP and, at present, upper DOT management do not commonly request it.
5.5.1 Long-Term Investment Needs
The processes used by the four study states to place a dollar value on unconstrained, long-term investment needs is fairly rudimentary and similar across the four states.
The following is a listing of the approaches taken by these states.
Preservation
The four states interviewed typically use a mix of approaches to evaluate long-term preservation needs. These approaches included the following:
- Analytical tools and methods: States obtain backlog, current, and future needs estimates from pavement management, bridge management, and other decision support tools (e.g., RQFS, Pontis, dTIMS). They may also perform "one-off" spreadsheet analyses to assess the needs of a specific asset type, with emphasis on those assets (e.g., guardrails or drainage) that may not be accounted for in their existing decision support tools.
- Engineering assessments: Regional/district engineering staff provide their evaluation of investment needs as required to address both the investment backlog, current needs, and anticipated future needs. These estimates represent the "best estimates" of staff in the field who are most familiar with existing infrastructure and its condition and performance.
- Consolidated analyses: The states frequently combine input from the two sources above (i.e., engineering and analytical tools) to develop "consensus" estimates of backlog and current period needs. Note that these two approaches offer differing strengths. Analytic tools tend to provide a more consistent analysis (i.e., across asset types and regions) than do engineering estimates performed by different engineering staff in dispersed locations. In contrast, analytic tools have no means of identifying special regional needs, which are often better identified by on-site staff (e.g., a recently failed structure). Many state representatives suggested that they prefer to rely on information from both sources when evaluating short-term needs, but intend to rely more on analytic approaches for longer-term needs.
Capacity expansion, operational, and other improvements
Beyond preservation, most other investment needs, including those for capacity expansion, are identified by staff working in the state's regional offices using traditional engineering methods. As discussed elsewhere in this report, the funding limitations and legislative requirements of the study states (most notably Michigan, California, and Utah) place strict constraints on the eventual project prioritization for capacity. Key exceptions here include the output of analyses such as Michigan's "Corridors of Highest Significance" process, which provides a valuable, analytic method of evaluating long-term capacity needs.
5.5.2 Long-Range Budgeting
A key objective of this study is to review the processes used by state DOTs in preparing their long-range budgets. This section reviews the long-range budgeting practices of each of the four sample states. In each case, long-range budgeting is performed as part of the regulatory fulfillment of the SLRP.
In principle, long-range budgeting should consider all sources and uses of capital and operating funds over an extended time horizon (e.g., 20 to 25 years). Capital needs should reflect both the ongoing preservation and improvement requirements of the existing transportation infrastructure and requirements for capacity expansion and operational improvements. Operating costs should reflect the current and expected growth in resource needs (e.g., staffing, materials, equipment) as required to effectively maintain an expanding network of highway, transit, and other transportation infrastructure. On the revenue side, the analysis should effectively apply analysis of economic growth, travel demand, and other tax base drivers to project future growth in dedicated tax revenues (e.g., fuel tax, registration and licensing fees, tolls) while utilizing reasonable assumptions regarding future levels of local, state, and federal funding. Finally, given the long time horizon, the analysis needs to incorporate the effects of inflation and provide for long-term uncertainties (in the form of contingencies and cumulative surpluses).
In practice, the long-range budgeting processes utilized by state DOTs are somewhat rudimentary and have the primary objective of supporting preparation of the SLRP. As noted above, the DOTs interviewed for this study have no regular "market" for long-range budget analysis beyond production of the SLRP (this information is not included in any regular reports to upper management). Moreover, unlike MPO long-range plans, SLRPs are not required to be financially-constrained (that is, demonstrate the likelihood that funds will be available to cover all proposed projects). Hence, the existing budget analysis within each of the study state's SLRPs represents their own efforts to generate a more comprehensive analysis and more informative document. These analyses are not required to meet any reporting requirements standards.
To further emphasize this point, Exhibit 5-3 reproduces a chart from FHWA's 2002 report entitled Evaluation of Statewide Long-Range Transportation Plans. This report reviewed the then-current SLRPs of 48 U.S. states, including the contents of their financial planning components. Roughly 60 percent of the plans analyzed included some form of revenue analysis, 50 percent identified the amount and sources of expenses, while fewer than 30 percent completed a funding gap analysis. Based on these results (and analysis from state DOT site visits), it is clear that states are not preparing a comprehensive cash-flow analysis of sources and uses of funds as described above. Rather, the practice of conducting comprehensive long-term budgeting is not universal.
Exhibit 5-3: Number of SLRPs containing various pieces of information (Description)
5.5.3 California
California's current SLRP provides a detailed analysis of recent and historical funding levels for each of its primary revenue sources through 2000 (including fuel taxes, truck weight fees, and local sales taxes). However, the plan does not similarly provide a projection of the expected future revenues from these sources and does not compare expected revenues with the roughly $40 billion in investment needs identified by the plan.
Rather, the plan emphasizes the challenges inherent in developing reliable, meaningful long-range forecasts of future funding levels and notes that revenues are highly sensitive to changes in inflation, fuel prices, and economic and budgetary conditions, as well as future legislative actions at the state and federal levels. Moreover, "in the face of the many unknowns and the uncertainty that could affect future funding levels available to the State and regional agencies, the California Transportation Plan 2025 recommends that a study be authorized to determine the reliability and viability of future transportation financing streams."
California has also produced the Governor's Strategic Growth Plan, which is a comprehensive transportation package designed to decrease congestion, improve travel times, and preserve and enhance the state's existing transportation networks. The plan calls for deployment of demand-management strategies and construction of new capacity to increase "throughput" in the transportation system. This plan will accommodate the transportation needs from growth in the population and the economy while reducing congestion. The plan also proposes public-private partnerships for joint ventures with the private sector to leverage public resources.
5.5.4 Michigan
MDOT's 2000-2025 SLRP is a partially financially constrained document (identifying both constrained and unconstrained investment needs) that contains comprehensive descriptions of the state's existing funding sources, existing funding capacity, and projected funding shortfall. The plan also includes discussion of potential future funding sources and increased tax rates for some existing sources. The underlying budgeting analysis relies on straight-line assumptions regarding the anticipated rate of growth in capital costs, state transportation revenues, and state and federal discretionary funds. Finally, the plan also provides both a financially constrained investment plan and a funding "gap" analysis indicating the volume of projects that cannot likely be addressed with reasonably projected funding capacity.
MDOT's Revenue Projections
The state of Michigan collects revenues from a variety of transportation-related revenue sources including fuel taxes, vehicle registration fees, auto-related sales taxes, title fees, license transfer fees, and interest. These tax revenues are deposited in the Michigan Transportation Fund (MTF) and then distributed among MDOT, counties, municipalities, and the state's mass transit operators. As with all state DOTs, MDOT also receives funds from federal-aid sources including those for Interstate Maintenance, National Highway System, Surface Transportation Program, Bridge Replacement and Rehabilitation, etc.
Using conservative assumptions regarding the real rate growth in funds from these sources, MDOT is projecting the availability of roughly $34 billion in highway revenue over the period 2003 to 2025, including $27 billion for road and bridge capital projects and $7 billion for routine capital maintenance.14 These figures are in 2003 dollars. To estimate escalated dollars, the plan assumes an average annual growth in revenues from these sources of 2.2 percent based on recent historical experience within the fund. Project capital costs are assumed to increase at roughly 3.5 percent annually. Note that the assumption of a higher rate of increase for project costs provides for a conservative financial projection and hence is generally considered sound financial planning.
Gap Analysis
MDOT's current SLRP identifies total "funded" investments of roughly $34 billion ($2003), an amount equal to the projected available revenues expressed in $2003. By definition, this constrained plan leaves a variety of projects unfunded, with the annual gap between funding capacity and identified investment needs anticipated to increase from roughly $500 million in 2003 to more than $2 billion by 2025. This increasing funding gap is depicted in Exhibit 5-4.
Exhibit 5-4: MDOT road, bridge and routine maintenance program (un-prioritized) (Description)
Alternative Funding Sources
Having identified a significant funding gap, MDOT has also worked to identify a range of potential additional funding sources to augment existing state and federal funds. However, while the state is working to identify potential new sources of funds, the state recognizes that these sources take time to develop and few potential sources are actually realized. Hence, these potential funds have not been included in any budget projections. Here again, the process of identifying potential sources represents sound financial practice.
Potential sources that have been considered include: (1) statewide tax solutions, (2) local tax solutions (to cover the cost of projects or road networks in specific areas), and (3) other finance alternatives that involve either cash management or alternative means of project delivery. Exhibit 5-5 presents the range of options considered.
| Statewide Sources | Local Sources | Cash Management and Project Delivery Alternatives |
|---|---|---|
|
|
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5.5.5 North Carolina
NCDOT's recommended investment scenario for its most recent SLRP is fiscally constrained. In preparing the analysis for this constrained scenario, NCDOT applied a budgeting process that was fairly rudimentary but effective for the purposes of the plan. Specifically, NCDOT first identified a set of conservative assumptions regarding the rates of increase in tax revenues and discretionary funds from state and federal sources. These assumptions were then used to generate forecasts of expected annual available funding for each year covered by the plan (i.e., 2000 through 2025). Next, working with internal and external groups including members of the state's Board of Transportation, an NCDOT planning team then prioritized the $83.7 billion in investments identified within the plan (based on the SLRPs stated goals and objectives) to identify a preferred investment scenario that fit the available funding capacity.
Revenue Assumptions and Funding Gap
In preparing its fiscally constrained plan, NCDOT utilized the following conservative assumptions to guide development of the baseline projection:
- No new revenue sources over the 25-year timeline
- Continued growth of current state user fee "transfers"
- Growth in federal-aid funding at an annual average rate of 1.8 percent
- Annual growth in state user fee revenues based on historical patterns - roughly 3 percent for motor fuels and 4 percent for registration and use tax.
Based on these assumptions, NCDOT estimates that a total of $55.5 billion will be available for transportation investment in North Carolina over the next 25 years. This leaves roughly $28.2 million in identified needs unfunded. The current plan does not identify alternative funding strategies or sources.
5.5.6 Utah
Transportation 2030 forecasts available revenue at more than $3.6 billion to put toward major reconstruction and rehabilitation projects, safety improvements, and capacity enhancements for the next 30 years. In contrast, total transportation needs are estimated at more than $13 billion. To address this issue, the current SLRP is financially constrained by year and is intended to provide sufficient financial information and projected revenues to determine which projects and strategies can be implemented over the plan's 25-year period of analysis. The plan also identifies those projects that are needed but are not scheduled to be constructed at this time due to insufficient funding. Sources and uses of funds in the SLRP are summarized in Exhibit 5-6.
| Sources of Funds |
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| Uses of Funds (Preservation of State System) |
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The appendix to Utah's SLRP contains a 28-year cash flow analysis for the financially constrained plan including all proposed sources and uses of funds through 2030. Because the plan is constrained and state legislation requires that asset preservation needs be met before UDOT can address any capacity improving investments (see Chapter 4), these constrained financial projections only reflect investments in system preservation (i.e., the analysis projects that there is insufficient funding to meet any needs beyond system preservation).
The SLRP states that the plan's revenue and expenditure projections were developed using historical data, predicted changes, and assumptions that account for inflation. The cash flow documentation supports this statement with descriptions of the assumptions used in the plan's development including the timing and percentage amounts of tax increases, assumed rates of growth in federal funds, and assumed inflation rates of capital investment components. These assumptions generally appear conservative, with the rate of inflation for costs being less than that of revenues. The cash flow analysis also includes a cumulative balance of funds (i.e., revenues are set higher than expenditures). This yields an ongoing contingency fund for project overruns and unexpected needs, and also represents sound and conservative financial planning.
5.5.7 Summary
In summary, the techniques used to construct long-term needs estimates and the related budgets are relatively rudimentary. A key reason for their simplicity is the fact that these products are primarily developed for use in the SLRP but generally lack a long-term audience beyond that document (e.g., based on the interviews conducted for this study, state DOTs are not currently making use of long-term needs estimates or long-range budget information beyond reporting them as part of the SLRP). FHWA and state agency asset management staff may wish to encourage development of more comprehensive and sophisticated long-term budgets and cash-flows as a means of better determining the gap between long-term needs and likely funding capacity.
Long-term capital needs: A specific example here would be the development of analytic tools (similar to HERS-ST) capable of estimating consistent statewide long-term needs for preservation and capacity improvements (i.e., without detailed input from engineering assessments). Such tools could also tie into travel demand forecasts to better evaluate long-term asset deterioration expectations (e.g., driven by VMTs), future capacity deficiencies, and future system performance expectations under alternate funding scenarios.
Revenue estimation: Similarly, none of the states interviewed currently uses long-term travel demand forecasting or related analyses to estimate long-term revenues from fuel taxes, vehicle licensing, or registration fees, each of which is a dedicated revenue source whose base is ultimately driven by the demand for transportation.
Operations and maintenance (O&M) cost models: Finally, none of the states interviewed used O&M cost models to estimate the cost of highway system operations and maintenance requirements. As with other analyses, simple two- and three-variable O&M cost models can provide greatly improved accuracy in long-term budgeting capacity and gap analyses.
5.6 Performance Monitoring
Transportation performance measures consist of a set of objective, measurable criteria used to evaluate the performance and effectiveness of the transportation system, as well as the effectiveness of government policies, plans, and programs. Performance measures are also used to gauge the extent to which each state's long-range transportation vision, goals, and objectives (as described above) are being achieved. Performance measures may include such indicators as changes in travel times, transportation-related injuries and fatalities, air and water quality, number or percent of system users in various modes, fuel usage, and travel quality. While not common to all SLRPs, many state DOTs identify their current long-range plans and describe their intended application as a means of measuring the effectiveness of the long-range plan (as eventually implemented) in addressing the plans' stated goals and objectives.
Among the sample of state DOTs selected for this study, only Caltrans and MDOT included a discussion of specific performance measures they intend to use to evaluate the effectiveness of the long-range plan (once implemented) in meeting the SLRPs' goals and objectives. The following describes those performance measures that relate directly or indirectly to auto and track travel demand for each of these states as identified in their SLRPs. These SLRP performance measures are consistent with the measures used elsewhere within their asset management programs.
5.6.1 California
Caltrans has worked actively with representatives of the state's RPOs and MPOs to identify a set of consistent, multimodal, statewide performance measures. Caltrans and its statewide partners have reached consensus on a core set of performance measures. The SLRP lists the types of measures to be considered. Exhibit 5-7 is a listing of those system performance measure "indicators" that correspond to auto and/or freight travel demand-related goals, objectives, and outcomes (as identified within the SLRP).
| Outcomes | Indicators | Data to Collect and Report |
|---|---|---|
| Mobility / Reliability / Accessibility | Travel Time (Mobility) |
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| Travel Delay (Mobility) |
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| Available Travel Choices (Accessibility) |
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| Percent On-Time Performance Travel (Reliability) |
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| Productivity | Throughput (persons and vehicles) |
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| System Preservation | Highways, Streets and Roads |
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| Transit and Passenger Rail |
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| Aviation |
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| Safety | Traveler Safety |
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| Environmental Quality | Air Quality |
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| Noise |
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| Energy Consumption |
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| Coordinated Transportation and Land Use | Key Indicators are included under the Accessibility outcome. |
5.6.2 Michigan
MDOT has organized the performance measures into three categories: system condition; accessibility, mobility, and safety; and operational and service performance. These categories and the individual performance measures relate either directly or indirectly to the state long-range plan. MDOT tracks more then 100 performance measures in all. The categories of "accessibility, mobility, and safety" and "operational and service performance" relate most closely to issues of travel demand.
Accessibility, Mobility, and Safety performance refers to monitoring how frequently the transportation service is offered, how efficiently it operates, and how many crashes are taking place. For highways, it answers the question, how congested is the system? Accessibility best describes the ability of people or goods to reach destinations, where mobility is the relative ease or difficulty with which the trip is made. Mobility is concerned with travel time, speeds, system usage, and system capacities. The most frequently cited performance measures relating to travel demand include:
- Level of service (A through F)
- Travel delay
- Vehicle miles of travel.
These performance measures relate indirectly to MDOT's SLRP goal of strengthening the state's economy and directly to the goal of basic mobility.
Operational and Service performance relates to how well the transportation system is meeting the needs of the traveling public. Key performance measures tracked by MDOT here include:
- Travel time
- Travel delay
- Congestion
- System utilization
- Facility access.
These performance measures relate directly to the SLRPs goal of transportation services coordination as an indicator of how responsive the service is to customer needs.
Notes
- As documented elsewhere in this report, analysis and project prioritization in most states begins at the regional/district levels prior to statewide analysis and prioritization. Back to Text.
- Real growth captures the growth in the underlying tax base for tax revenues feeding into the MTF (e.g., the rate of growth in fuel consumption driving fuel tax revenues), but excludes the impact of inflation. Back to Text.
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