Minutes of a Public Meeting

 

MINUTES OF REGULAR MEETING

OF THE

DEFINITION OF NEEDS, RESOURCES AND REVENUES COMMITTEE

8:30 a.m., Thursday, April 22, 1999

Arizona State Capitol

Executive Tower

Phoenix, Arizona

The Definition of Needs, Resources and Revenues Committee met in official session for a Regular Meeting at 8:30 a.m., Thursday, April 22, 1999, with Chairperson Barbara Ralston presiding. Other members present were Vice Chairperson John Mawhinney, Joe Herrick, Gary Knight, Valerie Manning, Jim Simmons, Lela Steffey, Frank Thorwald, Steve Wheeler and Sharon Megdal. Also present was Stephanie Bondeson, Transportation Planner.

Pledge of Allegiance, Welcome

Ms. Ralston called the meeting to order and all present joined in the Pledge of Allegiance.

Ms. Ralston outlined the charge of the committee, noting the flexibility they will have to allow their work to evolve as necessary and design their workplan. She suggested that the responsibility of the members is to follow the participation guidelines, be prepared for each meeting and be willing to set aside preexisting positions in order to advance a consensus. The tasks of the committee at this time under the Governor’s order are to identify costs, recommend alternative funding sources/strategies, consider multi-modal projects, determine priority needs versus a wish list, and do so within a limited time frame to accomplish the goals set forth. She emphasized that the committee’s recommendations should not be driven by December’s interim report.

Presentation and Discussion: Highway and Road Revenues

Ms. Suzanne Sale, Chief Financial Officer, Arizona Department of Transportation, reviewed the department’s current highway revenue data approach. She provided an overview of previous highway revenue studies done in Arizona. In 1994/95 a comprehensive review was performed. That was updated in 1997, and this plan will be very important information relative to establishing a baseline on highway revenues in Arizona and how they compare to other states. The second task of the data approach will be to document all available revenue sources at the state, local and federal levels. Task three is to develop long range projections, a 20-year plan. Based on direction, task four would identify and evaluate alternative revenue resources and explore innovative financing opportunities to allow the maximum use of existing and future revenues.

Ms. Sale explained that the agency has developed models to determine changes in revenues in the HURF and RARF funding mechanisms, which are based on population growth and economic activity. The agency’s models have demonstrated a good level of accuracy. At the federal level a more constant approach is used after 2003 when TEA-21 expires. Forecasts after 2003 are based on current authority levels and assume no federal increases. She stressed the need to consider the impact of alternate fuel use on fuel revenues.

Ms. Sale referred to the committee members’ books and noted that the Wilbur Smith Study was included for their information. That document identifies alternative revenue sources, documents past revenues, forecasts total future highway revenue estimates, and identifies requirements related to needs. She stated that the study provides a good framework for an approach. The study did not look at other federal programs. The only federal revenues that were evaluated as part of the study were generated from the Federal Highway Trust Fund, but other programs could be examined and documented.

Mr. Thorwald asked if funding opportunities to finance a high-speed rail system between Phoenix and Tucson had been looked at. He also asked if flex time and public/private partnerships were considered. Ms. Sale confirmed that the agency does and will continue to look at innovative financing opportunities, including public and private partnerships.

Ms. Steffey commented on the issue of the shift from state to local control. She suggested that the group keep in mind the current movement to eliminate the Vehicle License Tax and the impact this would have on transportation.

Ms. Sale stated that a comprehensive overview of TEA-21 had been included in the committee’s packets. She stated that there is a federal category for discretionary funding available to supplement the formula programming in Arizona.

Mr. Thorwald suggested that the contradiction between a surplus in funds in the state and the $9 billion shortfall in transportation should be addressed.

Presentation and Discussion: Transit Revenues

Mr. Jim Shipman, Executive Director, Arizona Transit Association, reported that the association had recently completed a comprehensive transit study. A broad overview of that report was presented, and the conclusions were shared. In summary, a flexible state policy is required to meet the needs in the various part of the state, mobility of the population should be considered, public transit is not a dying industry, transit funding impacts cost of living, transit makes a difference on city’s arterial traffic, and traffic growth threatens metropolitan transportation. Mr. Shipman outlined projected growth in population and travel to 2020 as compared to 1995. He stressed that public transit is a practical alternative that will work. He reviewed funding approaches in general and stressed the federal matching dollars that are available. He stated that public transit is part of Arizona’s future modal needs, stressing that transportation costs are second only to housing costs and will increase. Finally, Mr. Shipman indicated that there are varied urgent needs throughout the state in both metropolitan and rural areas.

 

Mr. Bryan Jungwirth, Director of Grants and Contract Services, Regional Public Transportation Authority, reported that the urbanization of Arizona creates a need for transit. He reviewed the current network and outlined the goals of transit. Currently $6 billion is spent on transportation in the Valley alone, with approximately $60 million spent on transit. He would look to increasing corridor service during peak hours. He noted that the Valley’s freeways are filling up as quickly as they are built and emphasized that the state cannot build its way out of congestion. He outlined forecasts for travel growth and indicated that Phoenix is the only major city without a dedicated funding source for transit. Mr. Jungwirth stated that the time is now to try to find a way to fund transit, and he described current efforts to do so, outlining the potential impact of H.B. 2565 as well as the affect of eliminating the VLT. He reiterated that there are federal funds, which will provide capital matching for transit. However, the biggest need is for operating funds to run the system. He described the mechanisms used by other states to fund transit and listed possible funding mechanisms through new taxes. He suggested ways to distribute funds without new government. He suggested that a regional approach works best to guarantee a coordinated system between the different jurisdictions but also noted that the RPTA is highly supportive of individual city efforts to fund transit in Maricopa County. The State Transportation Needs Assessment outlined a $1 billion need for transit. Mr. Jungwirth stated that he believed the $1 billion transit need was understated because the Needs Assessment only surveyed existing transit

operators, did not assume any system expansions, did not include fixed guideway transit, and assumed growth only. The threats to funding that currently exist were listed.

Mr. Jungwirth confirmed that the transit system receives some money from social agencies, adding that the fare box only pays one-third of the operating cost. He stated that 80 percent of riders are transit dependent.

Mr. Shipman stated that the economic development issue in terms of transit is quite significant, i.e. the need to provide transportation to new jobs being created.

Mr. Mawhinney asked if any type of transit efficiency measure had been developed. Mr. Shipman explained that an exact measure was not available, but he cited one example. If the busses were taken off Grand Avenue, there would be a 15-20 percent increase in vehicles. Mr. Jungwirth added that while there is not a readily subscribed formula, what they have noticed in terms of ridership as services are increased is that express and targeted services are addressing latent demand.

Mr. Jungwirth confirmed that he has a long-range transit plan with funding sources, and it is currently on MAG’s agenda for consideration. There is no statewide plan.

Mr. Thorwald stated his belief that TEA-21 matching funds can be in-kind contributions. Mr. Jungwirth explained that the matching funds are typically set up for planning projects. Mr. Thorwald asked if there are figures available for people who have driver’s licenses but no cars. There are not. Mr. Shipman confirmed for Mr. Thorwald that the association is making a strong case for funding to the legislature. He suggested that a transit policy is needed at the state level.

Ms. Megdal commented on the impact of the Tucson bus drivers’ strike the previous year. She contrasted transportation in Arizona to that on the East Coast. She suggested that the state consider details, such as bus pullouts to improve the transit system.

Chairperson Ralston asked that staff coordinate the existing plans and recommendations from existing agencies.

Presentation and Discussion: Aviation Revenues

Mr. Gary Adams, Aeronautics Division Director, Arizona Department of Transportation, provided an overview of the key difference between aviation and typical modes of transportation in terms of funding. He reviewed the aviation component of the needs assessment performed in 1995. They are also updating that study. Mr. Adams reviewed the federal, state and local aviation revenue sources. The primary source of funding for airports is through the F.A.A. This source is fed by the domestic air passenger ticket tax, the domestic air cargo tax and aviation fuel taxes. Federal CIP funds averaging $45 million are awarded to Arizona airports each year, with the bulk of that going to Sky Harbor.

Mr. Adams listed the six taxes that represent the state’s aviation fund revenue sources. Estimated revenues for FY 1998-99 from all six sources total $14,656,000. He explained the impact of the legislature’s redirection of 50 percent of the flight property tax to the general fund on the airport program. He compared fiscal year 96/97 to 97/98, and described efforts to reverse this action. They are proposing a two-thirds/one-third split in S.B. 1076 and H.B. 2600. The impact on the program would be $2 million annually.

Mr. Adams discussed a study done by ASU on the economic impact of aviation in Arizona, including total employment and tax revenues generated by the aviation industry. He discussed funding for cities and towns for airports and stressed the difficulties experienced by smaller airports relative to operating expenses and capital improvement needs. He stated that public/private funding partnerships are also benefiting airports. Mr. Adams emphasized the state’s role in assisting local communities to ensure a safe/viable airport system.

Mr. Thorwald asked Mr. Adams to comment on the recent study, which indicated a need for major investment in Arizona’s airports. Mr. Adams agreed with the need for major investment and commented on the need for balance between the F.A.A. and airports. He noted the proposal to divest the F.A.A. from the Department of Transportation. He expressed concern with potential hub lock on the ground without additional capital investment.

Closing Remarks and Preview of Next Meeting

Chairperson Ralston provided an overview of the next meeting, where individual plans will be addressed.

Mr. Simmons suggested that the committee needs to identify needs before revenues and resources to solve the transportation problems in Arizona. He suggested that the credibility of the plans presented would need to be assessed.

Mr. Thorwald requested information relative to the impact of flex time and telecommuting on the needs of the state, if it is available. He suggested that California and Nevada entities have indicated that they would be happy to share information with Arizona.

Ms. Megdal requested that all suggestions to the staff and chairpersons be channeled through Ms. Bondeson.

A member of the audience expressed concern that there were no public speaker cards available. Chairperson Ralston explained that no public input opportunity was provided at this meeting. Ms. Bondeson clarified that there was no opportunity for verbal public input at this meeting, but there was an opportunity for members of the public to submit written comments during and after the meeting.

Adjournment

The meeting adjourned at 10:06 a.m.

BARBARA RALSTON, Chairperson