Estimating a Statewide Transportation Funding Shortfall Using MPO Long Range Plans

Alexander Bond and Jeff Kramer 1

1 Estimating a Statewide Transportation Infrastructure Funding Shortfall
2 Using Metropolitan Planning Organization Long Range Plans
3
4
5
6 Corresponding Author:
7 Alexander Bond, AICP
8 Center for Urban Transportation Research
9 University of South Florida
10 4202 E. Fowler Ave, CUT 100
11 Tampa, FL 33620-5375
12 Phone: (813) 974-9779
13 Fax: (813) 974-5168
14 ALBond@cutr.usf.edu
15
16
17 Jeff Kramer, AICP
18 Center for Urban Transportation Research
19 University of South Florida
20 4202 E. Fowler Ave, CUT 100
21 Tampa, FL 33620-5375
22 Phone: (813) 974-1397
23 Fax: (813) 974-5168
24 Kramer@cutr.usf.edu
25
26
27
28
29
30 Submission Date: 11/5/2009
31
32 Word Count: 4,236 (3,237 text, 3 tables, 1 figure)
33


1 ABSTRACT
2 The information contained in metropolitan planning organization (MPO) long range plans (LRTP) can be
3 amalgamated to estimate a statewide, metropolitan, twenty-year transportation infrastructure funding
4 shortfall. This article describes the methodology used to calculate such a shortfall in Florida, using
5 information from all twenty-six MPOs in the state. Information on the cost of projects needed and the
6 dollar amount of anticipated revenue was extracted from each MPO plan. The difference between the two
7 figures is the shortfall from that MPO. The methodology included steps taken to normalize the data for
8 differing plan lengths, analysis base years, and rates of inflation. The results of the study show Florida is
9 expected to experience a shortfall of $62.5 billion over the period 2005-2025. This is an annualized
10 shortfall of $3.1 billion, and represents a total statewide shortfall of 42.9%. The study concluded that
11 Florida’s shortfall has been increasing since the study was first conducted in 1997. Further, the data
12 suggests the rate of increase may be accelerating. Shortfalls were not uniform from MPO to MPO. In
13 fact, shortfalls were observed to be smaller in MPO regions that had slower population growth rates or
14 dedicated sources of local funding such as impact fees or fully-enacted local option gas taxes. Florida’s
15 transportation leaders have found this project useful in communicating the funding circumstances in the
16 state. A statewide shortfall can help decision-makers see how dramatic the shortfalls are, and direct
17 available resources toward urban areas.
18


1 INTRODUCTION
2 In 2007, the Florida Metropolitan Planning Organization Advisory Council (MPOAC) undertook a study
3 to estimate the statewide metropolitan transportation funding shortfall over the next twenty years. This is
4 the third study in the series, and each edition has proven beneficial when communicating with state and
5 local decision-makers. In addition, the study of statewide funding shortfalls using metropolitan planning
6 organization (MPO) information has led to a number of methodological improvements in MPO planning
7 practices across the state.
8 This study examined the statewide funding shortfall in metropolitan areas of Florida. Information
9 was drawn from the long range transportation plans (LRTPs) of the state’s twenty-six metropolitan
10 planning organizations. Taken together, the expected shortfall of all MPOs in a state yields a snapshot of
11 transportation needs and shortfalls in metropolitan areas of the state (1).
12
13 BACKGROUND
14 MPOs must be established in any area with more than 50,000 people, so they are an ideal source for
15 information on metropolitan areas of the state. Federal law requires MPOs to adopt a financially-feasible
16 plan that extends at least twenty years into the future. This plan must cover all surface transportation
17 modes. The law also prescribes eight planning factors that must be considered in the document. In the
18 programming phase, projects are selected from the plan for inclusion in the metropolitan Transportation
19 Improvement Program (TIP), which is a four to five year work program. The contents of the TIP are
20 required to be included in the statewide TIP (STIP).
21 Many MPO plans share a similar structure. The typical plan begins with a statement of guiding
22 principles, goals, and objectives. This policy guidance helps define the next section, which is an analysis
23 of needs. Often, the MPO will use a travel demand model to help estimate future demand. Most MPOs
24 look at the existing network, demographic trends, and projected demand to establish a pool of needed
25 projects. Many MPOs publish an official “need plan,” but this is not a requirement of Federal law. If
26 MPO does not adopt an official need plan, during the course of the planning process, a list of needed
27 projects is produced. The needs pool is compiled without regard to project cost, and represents the
28 MPO’s “wish list” if money for transportation projects was unlimited.
29 In Florida, MPOs have voluntarily agreed to adopt a needs plan that includes projected cost for
30 each project. In other states, a needs plan may not be adopted, or the projects contained in the list may
31 not have had costs assigned to them. In order for this methodology to apply to states other than Florida,
32 all MPOs must have crafted a list of needed projects and assigned costs for each project.
33 After the needs list is crafted, the list is subjected to iterations of scenario building to select
34 projects for inclusion in the cost feasible plan. The list of needed projects is screened for engineering
35 problems (physical constraints), environmental impacts, other policy constraints, and in some cases, air
36 quality impacts. The list is also screened for projects that may violate National Environmental Protection
37 Act (NEPA) standards, civil rights, Environmental Justice standards, or damage historic and cultural
38 resources. However, the most limiting factor is anticipated revenue. The MPO will use revenue
39 projections to determine how much money will be reasonably available from all sources—Federal, state,
40 and local. The MPO strives to build the projects that offer the greatest return on investment. In practice,
41 the price of the cost feasible project list is equal to the expected available revenue. However, some MPOs
42 choose not to allocate every dollar of available revenue.
43 Florida has twenty-six MPOs, the highest in the nation. Many of Florida’s MPOs are organized
44 around entire counties. Today, Florida’s MPOs cover about 47% of the state’s land area and more than
45 90% of the population. Figure 1 shows the planning area boundaries of MPOs in the state. Florida’s
46 MPOs are provided revenue estimates by an inter-agency cooperative effort between the Department of
47 Revenue and the Department of Transportation. This effort (dubbed the Revenue Estimating Conference)
48 uses historical data, current economic conditions, and future projections to estimate the amount of
49 revenue available in the state. Estimates are provided for each State DOT District, each MPO, and each
50 local government that has enacted statutorily-authorized local option taxes. MPOs may also collect
51 revenue information from transit agencies, local governments, toll authorities, and modal authorities.


1

2
3 FIGURE 1 MPOs in Florida.
4
5 METHODOLOGY
6 To arrive at the metropolitan 20-year shortfall, the research team collected financial and project
7 information from MPO long range transportation plans in Florida. The first piece of needed data was the
8 total projected cost of each MPO’s needs plan. The second piece was the reasonably anticipated
9 available revenue. As previously noted, the amount of anticipated revenue is roughly equivalent to the
10 dollar amount to build the projects shown in the cost feasible plan. The basic formula for calculating the
11 shortfall was to subtract the dollar amount of available revenues from the price of the needed projects list.
12 However, not all plans in the state could be directly compared due to differences in plan length and base
13 year of analysis. Each MPO’s shortfall needed to be recalculated using the following five-step process:
14
15 Step 1- Determine the Shortfall of Each MPO
16 The funding shortfall for each MPO is the difference between the cost of all projects in the needs plan and
17 the amount of revenue anticipated over the life of the plan. The cost of the needs plan includes expenses
18 slated for both capital and operations projects, although not all MPOs listed costs related to operations.
19 The expected revenue includes all funding sources listed in the plan, including local and toll-related
20 sources.
21
22 Step 2- Adjust to a Common Year
23 In order to compare and total the shortfall from each plan, it was necessary to normalize the results into a
24 common comparison year. The year selected was 2005, because that was the most frequently
25 encountered base year among plans in the state. The base year of plans varied from the year 2000 through
26 2006.


1 The inflation factor applied was the US Department of Commerce’s Consumer Price Index-All
2 Urban Consumers (CPI-U), which tracks the inflation of the US Dollar in urban areas over 50,000 people.
3 The CPI-U is calculated using the same component data as the oft-cited Consumer Price Index (CPI).
4 However, the CPI-U uses only data collected from Census tracts located in metropolitan areas. The CPI-
5 U was chosen over other inflation measures because the inflation factor more accurately reflected the cost
6 of materials and labor in urban areas, which is where MPOs are located. In practice, the CPI-U closely
7 mirrors the standard CPI, varying by less than a tenth of a percent during each year of the study.
8 The CPI-U has a base year of 1982, when it equaled 100.0. Each year after that, the CPI-U goes
9 up in lockstep with the inflationary forces on urban goods. The CPI-U from a given year can be
10 compared with the CPI-U from a different year to determine the percentage difference between the two.
11 The percentage difference between two years’ CPI-U is the same as the percent adjustment required to
12 bring two dollar figures into a common year. Table 1 below shows the base year, the number of plans in
13 those base year dollars, the CPI-U, and the percent adjustment needed to convert shortfalls from their base
14 year into 2005 dollars.
15
16 TABLE 1 Base Year of Plans and Adjustment
Number of Cumulative Percent
CPI‐U
Base Year Plans Adjustment
2006 2 201.6 ‐3.12
2005 9 195.3 0.00
2004 8 188.9 3.39
2003 3 184.0 6.14
2002 1 179.9 8.56
2001 0 177.1 10.28
17 2000 2 172.2 13.41
18
19 Step 3- Annualize the Shortfall
20 Federal law requires plans to look at least twenty years into the future. However, there is no requirement
21 that plans must be exactly twenty years long. Some documents have longer time horizons. Other plans
22 do not begin immediately, instead they begin in the year after the TIP currently in effect expires. Because
23 of the wide variety of plan effective dates, it was necessary to annualize the shortfall figures from each
24 plan document. For each LRTP, the shortfall amount from step 2 was divided by the number of years the
25 plan was in effect. This results in an annualized shortfall.
26
27 Step 4 - Multiply by Twenty
28 After the shortfall for each MPO has been put into a common year and annualized, it is ready for the final
29 calculation step. The first step is to multiply the annualized shortfall by twenty. This gives us a shortfall
30 for one MPO that estimates what the figure would be if the plan was exactly twenty years long and stated
31 in a common base year.
32
33 Step 5- Repeat for Each MPO and Total
34 Repeat steps 1 through 4 above for each MPO in the state. Since each shortfall is normalized to match its
35 peers, they can be directly compared to the shortfall of other MPOs. Shortfalls can then be totaled,
36 averaged, and projected into the future. The final step in calculating a statewide shortfall is to total the
37 shortfalls of each MPO in the state. This produces a statewide, 20-year, metropolitan funding shortfall.
38
39 A Hypothetical Example
40 A hypothetical example will help demonstrate the methodology applied during this study. Assume that
41 the hypothetical Key West MPO adopted their LRTP in 2002. This plan is effective through 2025, and
42 uses 2002 as the base year of analysis. The adopted Needs Plan would cost $300,000,000 in 2002 dollars.


1 However, the MPO estimates that only $200,000,000 (in 2002 dollars) will be available over the course of
2 the plan. This means there is a $100,000,000 shortfall in base year dollars. Viewed another way, the Key
3 West MPO must trim $100 million worth of projects from its needs plan in order to match anticipated
4 revenue.
5 Since the plan’s base year was 2002, the shortfall figure must be converted into 2005 dollars. If
6 the shortfall is not converted, the Key West MPO’s shortfall cannot be compared to its peers because
7 dollars were worth more in 2002 than in 2005. The CPI-U for the year 2002 was 179.9. In 2005, the
8 CPI-U had increased to 195.3. The difference between the two is 15.4, which is a change of 8.56 percent.
9 To convert the Key West MPO plan, the shortfall must be increased by 8.56 percent. Since the shortfall
10 was $100,000,000 in 2002 dollars, the adjusted shortfall would be $108,650,000 in 2005 dollars.
11 The Key West MPO’s shortfall still cannot be compared, because its plan does not have the same
12 length as others in the state. The Key West MPO has a plan that is twenty-two years long, because it was
13 adopted in 2003 and has a horizon year of 2025. Other MPOs have effective plan lengths as short as
14 fifteen years, some as long as twenty-five years. To compare, we must make all of the shortfalls appear
15 as though they are of equal length—twenty years. We divide the inflation-adjusted shortfall by the
16 number of years in the plan, which is 22 years. This gives us an average annual shortfall of $4,938,636.
17 Then, we multiply the average annual shortfall by 20 years. This gives us an inflation-adjusted, twenty-
18 year shortfall estimate for the Key West MPO of $ 98,772,727. This number can now be totaled with
19 others to create the statewide shortfall.
20
21 FINDINGS
22 There is a large and growing shortfall between transportation needs and reasonably available revenues
23 identified in MPO areas of Florida. The twenty-year statewide funding shortfall is estimated to be $62.5
24 billion in 2005 dollars. This is a statewide shortfall of 42.9 percent (total statewide needs divided by total
25 statewide revenue). Furthermore, this is an annualized statewide shortfall of just over $3.1 billion per
26 year. The shortfall includes roadway, transit, and bike/pedestrian networks.
27 This study has been performed twice before, in 1997 and 2002. Data from these studies can be
28 used to track the growth of the statewide shortfall over time, and the results of the comparison are shown
29 in Table 2. Since 2002, the shortfall has increased from an inflation-adjusted $42.7 billion to $62.5
30 billion, an increase of 46 percent. In 1997, the inflation-adjusted shortfall was $29.8 billion. This is a
31 cumulative increase of 110% in ten years.
32
33 TABLE 2 Growth of Statewide Shortfall
Review Shortfall in Percent Cumulative
Year 2005 Dollars Growth Growth
1997 $29.8 Billion ‐‐ ‐‐
2002 $42.7 Billion 43% ‐‐
2008 $62.5 Billion 46% 110%

Note: The 1997 and 2002 reviews have been adjusted into 2005
dollars to enable comparison.  The first review revealed a
shortfall of $22.3 billion in 1995 dollars.  The second review
34 revealed a $37.7 billion shortfall in 2000 dollars.
35
36 When shortfalls are compared, it becomes clear that some MPO areas are projecting a more
37 challenging fiscal environment than others. Table 3 compares the 2008 shortfall estimate to previous
38 estimates as expressed in 2005 dollars. Since 2002, the shortfall has increased by 46 percent. Between
39 1997 and 2008, the shortfall grew by a cumulative 110 percent. Some of Florida’s oldest and largest
40 metro areas rank near the bottom of the list in terms of percentage shortfall–that is, they expect to be able
41 to fund more of their transportation needs. The Pinellas MPO (St. Petersburg/Clearwater), Miami-Dade


1 MPO, and METROPLAN Orlando all project shortfalls of less than 15%. Meanwhile, newer MPO areas
2 like the Okaloosa-Walton TPO (Destin) and the Lee County MPO (Ft. Myers) forecast a shortfall greater
3 than 60%.
4
5
6
7 TABLE 3 Percent Shortfall by MPO
20‐year Shortfall Percent
MPO
(millions) Shortfall
Okaloosa‐Walton $6,399.2 85.3%
Gainesville $359.1 84.4%
Martin & St. Lucie $2,098.9 76.3%
Hillsborough $6,917.6 73.0%
Bay $4,230.3 72.3%
Florida‐Alabama $8,958.3 65.6%
Lee $4,668.6 63.5%
Polk $6,505.6 65.3%
Ocala‐Marion $781.8 59.2%
Brevard $935.4 57.4%
Charlotte‐Punta Gorda $716.6 53.6%
Pasco $1,644.4 51.4%
First Coast $3,166.8 47.2%
Hernando $498.9 47.1%
Collier $2,103.2 41.4%
Lake‐Sumter $683.3 38.9%
Capital Region $1,066.5 38.8%
Volusia $717.7 35.6%
Sarasota/Manatee $983.9 26.6%
Broward $2,245.0 24.2%
Palm Beach $1,565.0 22.2%
Miami‐Dade $3,260.6 14.3%
METROPLAN Orlando $1,244.5 12.7%
Pinellas $741.1 9.4%
Indian River ‐$19.8 ‐2.3%
8 Total $62,472.5 42.9%
9
10 This circumstance can be explained–in part–through pressures on both components of the
11 shortfall formula (needs minus revenues). Areas projecting relatively high growth rates anticipate
12 needing new, costly transportation infrastructure to serve growing parts of their region, placing upward
13 pressure on the transportation needs side of the formula. Urban areas with lower percentage shortfalls
14 tend to have enacted local sources of transportation funding, have experienced slower growth rates, or a
15 combination of the two. This allows infrastructure to “catch up” with already-completed development.
16 The shortfall disparity can be exacerbated by an absence of local sources of transportation revenue such
17 as fully-enacted local option gas taxes, relatively low transportation impact fees, or sales taxes enacted to
18 support transportation initiatives.
19 For example, Pinellas County voters have enacted a one-cent sales tax called “Penny for
20 Pinellas.” The sales tax, in concert with enactment of local option gas taxes and a relatively slow
21 population growth rate have limited the Pinellas MPO’s forecasted shortfall to only 9 percent.
22 Meanwhile, Escambia and Santa Rosa Counties (forming the Florida-Alabama TPO) have experienced


1 the “perfect storm” of conditions that have lead to a 66% anticipated shortfall: few dedicated local sources
2 of funding, not enacting all available local option gas taxes and high projected population growth in
3 currently under-developed areas.
4
5
6
7 CONCLUSIONS
8 Several other states have attempted to quantify shortfalls. The Iowa state legislature mandated a study
9 that found a $27.7 billion shortfall over the next twenty years (2), although the study only included
10 roadway needs. The California Transportation Commission estimated a $13.9 billion annual shortfall
11 (3). Connecticut estimates a $3.1 billion shortfall over the next decade (4). It appears that Florida’s
12 shortfall is not out of line with other states, and may in fact be slightly lower per capita. Although $62.5
13 billion is a large gap to overcome through any single action, it can be “chipped away” through a concerted
14 effort over many years. All levels of government need to undertake both immediate and long-term
15 actions that enhance revenue and reduce costs.
16 One important result from this exercise has been a standardizing of financial reporting across the
17 state. Using the Florida MPO Advisory Council (the project’s sponsor) as a communication forum,
18 MPOs agreed to a number of important financial guidelines. Among the most important was a
19 synchronization of plan horizon years. Another important agreement was for each MPO to adopt a formal
20 needs plan. Finally, all MPOs in Florida agreed to more realistic definitions of transportation needs. This
21 guideline was sought because some MPOs included “needed” projects that were outsized, unreasonable,
22 or otherwise extremely unlikely to ever be built.
23 The sizeable gap in transportation infrastructure funding tends to grab media attention, and these
24 statewide shortfall estimates garner substantial print media coverage each time results have been released.
25 Increasing public awareness is an important step to bringing down the shortfall, as educated voters may
26 be more inclined to vote for a pro-transportation politician or vote in favor of a transportation initiative.
27 The results are also useful when communicating with elected officials at all levels.
28 Once the acceleration of the shortfall is halted, progress can be made toward eliminating the
29 backlog of projects planned for the community. However, the shortfall cannot–and should not–be
30 completely eliminated. It is healthy for there to be a small shortfall, since this indicates the region is
31 growing, diversifying, or branching into new modes of transportation. However, unmanageably large
32 shortfalls indicate that the region is under-investing in infrastructure, which may stunt economic and
33 population growth in the long term.
34 This methodology for estimating statewide shortfalls can be replicated in every state. In fact,
35 most states have less than a dozen MPO documents from which to extract information. The results of this
36 project and its predecessors have proven useful to MPO directors and statewide associations when
37 communicating with state and federal elected officials. State officials often have year-over-year crises to
38 address, and can benefit from an occasional reminder of the long-term view of the transportation funding
39 situation. A statewide shortfall can help decision-makers see how dramatic the shortfalls are, and direct
40 available resources toward urban areas.
41


1 REFERENCES
2 (1) Mierzejewski, Ed and Jeff Kramer, “Innovations in Long Range Transportation Planning:
3 Observations and Suggestions.” Transportation Research Record: Journal of the Transportation
4 Research Board Volume 1858, 2003.
5 (2) Iowa Department of Transportation, “A Study of Iowa’s Current Road Use Tax Funds and Future
6 Road Maintenance and Construction Needs.” Publication No 4700. February, 2006
7 (3) California Transportation Commission, “California Transportation Commission Transportation
8 Funding Shortfall.” August 2004. Available from
9 http://www.catc.ca.gov/FinalUnfundedNeedscomb.pdf
10 (4) The Road Information Program, “Preserving Connecticut’s Highways and Bridges: The State’s
11 Challenge in Maintaining its System of Roads, Highways, and Bridges.” Washington, DC: TRIP.
12 2008.

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