PROVIDENCE (February 2016) – Today, the Rhode Island Public Expenditure Council (RIPEC) released an analysis of the truck tolling proposal and RhodeWorks infrastructure improvement program currently being considered by the General Assembly (H. 7409/S. 2246). The report includes a cash-flow analysis of the current proposal, as well as three alternative models for financing the RhodeWorks program. According to RIPEC’s analysis, the current proposal consisting of $300.0 million in additional borrowing and $45.0 million in new tolling revenue annually would generate substantial long-term funding for transportation projects, but may not provide sufficient revenue in the short-term.
To analyze the RhodeWorks proposal, RIPEC conducted a cash-flow analysis comparing the Rhode Island Department of Transportation’s (RIDOT) publicly-stated expenditure needs with available funding. This analysis found that RIDOT faces an estimated funding gap of approximately $450.6 million over the six years from Fiscal Year (FY) 2016 to FY 2021. The transportation finance proposal currently pending before the General Assembly is intended to eliminate this funding gap through a combination of increased borrowing and placing tolls on large commercial trucks traveling over a number of bridges throughout the state. RIPEC’s analysis finds that the proposal does not provide sufficient resources to meet RIDOT’s annual cash flow requirements in FY 2020, FY 2021, and FY 2022. However, the proposal does provide sufficient resources to meet RIDOT’s entire ten-year funding requirements over the FY 2016 – FY 2025 period. Furthermore, the current proposal would result in a substantial accumulation of unprogrammed funds at the end of the FY 2016 – FY 2032 period.
The report also includes cash-flow models for three alternative financing plans developed by RIPEC for the FY 2016 – FY 2025 period, as well as for an extended time period from FY 2016 – FY 2032. Each of these three alternative plans provides sufficient funding for the RhodeWorks program, including bridge repairs and maintenance, reconstruction of the Route 6/10 Interchange and all other proposed transportation programs and projects, for each of the years included in the analysis. RIPEC Model 1 includes increased borrowing only, with no tolling program or other sources of new or increased revenue. RIPEC Models 2 and 3 consider the implications of reducing the $45.0 million tolling program and increasing the size of the $300.0 million GARVEE bond currently under consideration.
A comparison of the current proposal and the three RIPEC models finds that the current proposal entails the greatest local cost over the FY 2016 – FY 2036 period. Under the assumption that a minimum of 40.0 percent of the tolling cost will be borne by local entities, and including interest costs, the current proposal is estimated to have a total local cost of $531.4 million between FY 2016 and FY 2036. RIPEC Model 1, which assumes a GARVEE borrowing of $515.0 million and no tolling, was found to have a total local cost of $282.2 million over the same time period. RIPEC Model 2, which assumes a GARVEE borrowing of $435.0 million and $20.0 million in tolling revenue annually, was found to have a total local cost of $368.3 million. RIPEC Model 3, which assumes a GARVEE borrowing of $400.0 million and $30.0 million in tolling revenue annually, was found to have a total local cost of $409.3 million.
RIPEC’s analysis of the current proposal also found that while it may not generate sufficient revenue to meet RIDOT’s capital needs in the short-term, it would result in a large unprogrammed surplus over the long-term. By the end of the FY 2016 and FY 2032 time period, the current proposal would result in an unprogrammed surplus of approximately $701.7 million. Each of the three RIPEC alternative models would also result in a unprogrammed surplus by FY 2032, though to a smaller degree than the current proposal.
According to legislation introduced in the General Assembly (H. 7409/S. 2246), the tolling program would consist of several elements:
• The Rhode Island Turnpike and Bridge Authority (RITBA) would be authorized to operate tolling facilities on behalf of the Rhode Island Department of Transportation (RIDOT);
• Tolls would only be collected on “large commercial trucks,” defined in the legislation as any vehicle classified by the Federal Highway Administration (FHWA) as being in Classes 8 through 13;
• The collection of tolls on any other class of motor vehicles is expressly prohibited;
• Toll collections are to be deposited in a new Rhode Island Bridge Replacement, Reconstruction and Maintenance Fund;
• The director of RIDOT is authorized to designate any Rhode Island bridge on the National Highway System as a toll bridge;
• Toll amounts are to be determined based on the costs of replacement, reconstruction, maintenance and operation of the state’s network of bridges;
• The maximum toll that any one vehicle may be assessed in a single day is set at $40.00, and the maximum toll for a one-way trip through the state on Route 95 from Connecticut to Massachusetts, or vice versa, is $20.00; and
• Although not specified in the legislation, RIDOT estimates that a tolling program of this size would generate approximately $45.0 million in toll revenue annually.
The legislation under consideration also authorizes RIDOT and/or the Commerce Corporation to refinance and/or restructure the state’s existing GARVEE debt. Additionally, the bill authorizes RIDOT and/or the Commerce Corporation to issue up to $300.0 million maximum in additional GARVEE debt for transportation purposes. The term of the new GARVEE debt is limited to 15 years and total debt service is limited to $490.0 million.
