The state’s Transportation Fund likely will be fatter this fiscal year than last, but not as ample as the Agency of Transportation had hoped or expected.
Responding to July’s revised revenue forecast, the agency had to find $4.1 million in savings for fiscal year 2014. A scaled-back budget of $250.9 million was recently presented to the Joint Fiscal Committee.
VTrans had expected a little more revenue from the newly instituted gasoline tax increase, explained chief financial officer Lenny LeBlanc. But with people generally driving less and driving more fuel-efficient cars, returns are predicted to fall slightly short.
Economists projected in January, before the new gas tax, that the Transportation Fund would have about $233.7 million to work with. Based on the tax increase and a variety of other revenue assumptions, the Agency of Transportation calculated an extra $24 million would come its way. Economists Jeff Carr and Tom Kavet dialed that back by $4.1 million at the Emergency Board’s July meeting.
LeBlanc said the agency did its best to find savings and trim the budget as painlessly as possible. Agency officials blended federal grants, leftover money from prior years, project delays and a few gambles to trim the budget for the state fiscal year that started July 1.
Nearly one-quarter of the budget reduction turns out to be projected income from a real estate sale. The state purchased property on Shelburne Road in South Burlington in the early 1980s, LeBlanc said, with plans to connect the area to the Champlain Parkway project that currently is winding its way through Act 250 permitting. In the intervening years, the Shelburne Road connector was scrapped. The state is now ready to unload the property, which it no longer intends to use.
LeBlanc said the roughly 2.28-acre parcel abutting U.S. Route 7 on South Burlington’s southern edge cost about $135,000 and was appraised in June 2011 for $900,000.
Aside from that one-time income, the biggest line item reduction — roughly $711,000 — anticipates project delays, known as “slippage” in transportation circles. LeBlanc said that right-of-way issues and permit complications can slow projects down, in which case the money budgeted for them isn’t spent as quickly as planned. “We have some of this slippage typically every year,” he said.
The nature and dollar value of the delays varies widely, however. And occasionally other projects speed up, in which case the associated spending does, too. Last year, total slippage amounted to about $1.6 million — more than twice what’s now budgeted for FY14.
“We hope there are going to be sufficient delays to achieve those savings,” LeBlanc said. He acknowledged that it’s unusual to actually hope for slippage, and underscored that delays are simply inevitable. LeBlanc said that if delays worth more than $700,000 don’t occur, the state will be forced to deliberately put off projects to achieve those savings that are now worked into the budget.
Amtrak subsidy reductions deliver almost as much in savings, thanks to revised calculations based on newly available rates from the federal government. Instead of owing about $686,000 monthly, the state will pay closer to $630,000, achieving a savings of roughly $675,000 over the course of the year. The irony of this savings, however, is in the comparison to FY13, when the monthly subsidy rate was only $410,000, LeBlanc said.
Major capital investments by Lake Champlain Ferries also end up saving the state money. The company spent about $2.3 million in capital improvements, which the state can claim dollar-for-dollar in a federal highway program. LeBlanc explained that, because ferry traffic theoretically reduces highway traffic, the ferry investments count toward the state’s eligibility to claim federal toll credits that this year total just over $596,000.
Another half-million in savings counts on limited disaster response needs. LeBlanc said that originally $1.2 million was appropriated to help municipalities respond to disasters that aren’t eligible for FEMA aid. The agency is diverting half of the remaining $1 million to help fill the current year’s budget gap.
“So this kind of takes a gamble that we’re not going to have a big run of disasters and high need, and that current appropriations will hold through the rest of year,” LeBlanc said.
If the gamble proves wrong, municipalities will not lose, he said. “For disaster events that haven’t even yet occurred … we still commit to towns for those grants,” LeBlanc said. In other words, if all the money gets used up, the agency simply will find more through future budget adjustments. Officials feel confident that they won’t deplete the remaining funds, however. So many recent disasters have risen to the federal aid level that state aid appropriations have been less in demand.
Smaller line item savings include $200,000 of deferred maintenance on transportation buildings. The same amount will be allocated from excess funding left over from prior years for rail projects.
Extra money also is available from a municipal mitigation grant program, which in previous years has used less for administration than the agency had budgeted. After $150,000 is skimmed to help fill the budget gap, about $140,000 in excess funds from that program still will remain.
Nearly $100,000 of projected spending in FY14 is reversed thanks to $1.9 million in federal funding for the Stockbridge-Bethel project on Vermont Route 107. The Highways for Life grant will inject some breathing room into the state’s FY15 budget too.
LeBlanc said the most “real” budget impact will be felt by the Department of Motor Vehicles. DMV Commissioner Robert Ide assured LeBlanc that a $50,000 cut is manageable, LeBlanc said.
Finally, the agency will put less money into its own version of a rainy day fund this year than originally expected. That’s because a statutory equation calculates the “stabilization reserve” allocation to equal 5 percent of the previous year’s appropriations. The state ended up spending about $561,000 less in FY13 than it planned, which allows the agency to set aside $28,485 less than it planned for a rainy day.