The Virginia Department of Transportation has reduced the amount of state and federal revenues it expects to receive over the next six years, possibly leaving as much as $700 million less for new construction projects over that time period.
Changes in the federal transportation funding program are responsible for most of the decline, according to John Lawson, VDOT’s chief financial officer. Lawson briefed the Commonwealth Transportation Board on the new projections last week.
After reviewing the changes, VDOT estimates that it will receive nearly $550 million less from federal sources than the agency had included in its six-year plan last year.
Essentially, VDOT had been in the habit of assuming a small increase in federal funding each year.
However, when the last big federal transportation funding bill ran out in 2009, the agency saw flat federal funding for several years, until the new federal highway bill was approved in July.
The new spending authorization only includes funding for fiscal 2013 and 2014, so VDOT amended its budget projections to not count on an increase in federal highway dollars in the subsequent years, Lawson said.
“Given the trend that we have now seen, with no growth since 2009, we felt that it was prudent to project no growth beyond 2014,” he said.
The forecast does not account for any reduction in funding that might come from federal budget cuts.
In addition, while state gas tax revenues are up by about 3.5 percent in the current fiscal year, Lawson said that the state Department of Taxation does not expect that to continue.
“That doesn’t look like a trend. As we look down the road, that is not a growing revenue source,” he said.
For fiscal years 2013 to 2018, VDOT is now projecting $218 million less in state revenues than previously expected. In addition to the anticipated decline in the gas tax, state officials are planning for up to a $100 million decline in fees from insurance premiums, which are used to back bonds.
“It is a potential that we would have to delay the sale of some bonds that we have planned,” Lawson said.
The reduced revenue forecast would directly take about $530 million out of the VDOT’s already lean six-year construction program but, if the state has to delay bond sales, that figure could reach $700 million, Lawson told the CTB.