1. Transportation Funding Overview Governor’s Commission on the Reform of the Department of Transportation October 29, 2007

2. Connecticut’s Spending Cap

3. Origin Of The Expenditure Cap Part of income tax compromise in 1991 Statutory and constitutional spending Goal: Restrain spending and avoid future budgetary crisis, such as necessitated the income tax The spending cap has been effective  In the 14 years prior to the expenditure cap, the state’s budget grew by 9.6% per year.  Since enactment of the cap, the budget growth rate has been cut almost in half. Growth In State Spending

4. Spending Cap Defined Appropriations Cap Applied to total appropriations, not each fund Limits total appropriations (all funds) based upon one of two major economic variables:  The 5 year average growth in Connecticut personal income or  Annual growth of the Consumer Price Index, whichever is greater Can only be exceeded if the Governor declares an emergency or the existence of extraordinary circumstances and three-fifths of each house of the General Assembly concurs

5. Funds Included Under The Expenditure Cap General Fund Special Transportation Fund Mashantucket Pequot & Mohegan Fund Soldiers’, Sailors’ & Marines’ Fund Regional Market Operating Fund Banking Fund Insurance Fund Public Utility Control Fund Workers Compensation Fund Criminal Injuries Compensation Fund Expenditure Cap

6. Spending Outside The Expenditure Cap Certain Types of Expenditures are exempted from the Expenditure Cap: Interest and principal on state debtInterest and principal on state debt First Year Expenditures for new federal mandates and court orders Statutory Grants to distressed municipalities that were in effect in 1991 Outside theExpenditure Cap

7. Spending Cap Growth Rates

8. Special Transportation Fund

9. STF History Current STF Created in 1984 Dedicated Fund Appropriated Fund  Subject to the Spending Cap Serves as the the funding vehicle for transportation operating AND capital programs

10. STF Revenues Motor Fuel Tax Motor Vehicle Receipts Licenses, Permits and Fees Interest Income DMV Collected Sales Tax General Fund Transfers  Petroleum Gross Receipts Tax

11. STF Revenues 1985-2007

12. Gasoline Tax Rates 1985-2007 15 16 1717 19 20 22 26 28 30 32 36 39 36 32 25 32 25

13. Annual Growth of Motor Fuels Tax Collections 1999-2007

14. Growth of STF Revenues and Expenditures

15. STF Revenues, Expenditures and Balance FY 2006 – FY 2012

16. Historic STF Uses DOT Operating Expenses Pensions and Fringe Benefits DMV Operations (FY 1992) Highway Patrol Operations (FY 1994-1999) Town Aid Road Grants Bonding  General Obligation Bonds  Special Tax Obligation (STO) Bonds

17. Special Tax Obligation (STO)Bonds Revenue Bonds  $2.7 Billion Outstanding  $250 Million planned for sale in October Supported by Transportation Fund Revenue Revenue Intercepts Covenants  Coverage – 2X Debt Service  Balanced Budget

18. GARVEE Bonds Revenue Bonds Pledged Revenues are future federal funding Allows projects to be expedited by making funds available sooner Reduces federal funding available in the future. 2006 state legislation authorized issuance of GARVEE bonds None have been issued as yet

19. Recent Transportation Initiatives 2005 Transportation Bill  $1.3 Billion in rail, bus and highway initiatives Funded through increase in Gross Receipts Tax (GRT) and increased transfer from the General Fund 2006 Transportation Bill  $ 1 Billion in State Funding Funded through increased transfer of GRT from the General Fund  $1.3 Billion in potential GARVEE Bonds Supported by Future Federal Revenues