Fund Activity Summary: Required Questions FormAgency: Ohio Department of Transportation (DOT)
This form should be completed online at the Budget Portal.https://obm.sp.ohio.gov/sites/budget_center/
Fund Number: / 7002 / Fund Name: / Highway Operating Fund
1. Explain the legal authority of this fund. (e.g. Ohio Revised Code, temporary law, or Controlling Board action) and provide the relevant sectionor Controlling Board request number.
The fund was established through the authority granted by section 5735.291 of the Ohio Revised Code. The primary sources of revenue for this fund are from ODOT’s share of the State Motor Fuel Tax, funding from the Federal Highway Administration and Federal Transit Administration, as well as local government project participation. In addition to these sources of revenue, the fund receives revenue from the State Motor Fuel Use tax, Vehicle Registration Fees, Interest Income to the fund, and other miscellaneous department revenue activities.
The State Motor Fuel Tax has been 28 cents a gallon since Fiscal Year 2006. The Federal Highway revenue is based on estimates of an extension of SAFETEA-Lu funding levels, which was the 6 year reauthorization bill that expired at the end of Federal Fiscal Year 2009. Current extension of SAFETEA-Lu is through December 31, 2010. Federal revenue is projected to grow by 1.5% in FY11 and by 3% in both FY2012 and FY2013.
2. Explain factors influencing historical revenues to this fund. (e.g. 50% fee increase in FY 2010; 10% decrease in fiscal year 2011 due to a decrease in number of licensees)
The State Motor Fuel Tax has been 28 cents a gallon since Fiscal Year 2006. The revenue generated from the state motor fuel tax has been flat or less than flat over the course of the past few fiscal years. The Federal Highway revenue is based on estimates of an extension of SAFETEA-Lu funding levels, which is the 6 year reauthorization bill that expired at the end of Federal Fiscal Year 2009. Federal revenue is projected to grow by 1.5% in FY11 and by 3% in both FY2012 and FY2013.
3. Explain assumptions used in developing revenue estimates for fiscal years 2011, 2012, and 2013. (e.g. proposed 25% fee increase in fiscal year 2012; historical pattern indicates a 2% increase each year)
For the state motor fuel tax revenue, final consumption figures for FY2009 came in at 3% below FY 2008, and final consumption for FY2010 came in at 0.5% above FY2009. We are expecting FY2011 consumption to come in equal to the FY2010 levels. Our budget submittal is based on 0.5% consumption growth for FY 2012 and 1.0% consumption growth for FY 2013.
The federal revenues are based on the extension of SAFETEA-Lu levels projected for FY2011. It is uncertain when the next federal reauthorization bill will pass. Currently, funding is provided through a temporary extension, through December 31, 2010. Our budget submittal assumes the federal revenue for FY2012 and FY2013 will grow by 3% each of those years, anticipating that a new reauthorization bill will be passed by the end of Federal Fiscal year 2011.
4. Identify and explain patterns in revenue flow. (e.g. all revenue received in May and June due to seasonal nature of facilities; revenues received evenly throughout the fiscal year)
Our state motor fuel revenue is received throughout the year and follows the flow of consumption (i.e. motor fuel consumption is typically higher in the summer months so the revenue is greater in the summer months). One other factor is that our debt service for the state highway bonds is removed from the top of the state motor fuel distribution and remitted to the Treasurers sinking fund before we receive our share of the distribution. This deduction for debt service costs occurs during the months of September thru February so cash flow for those months is typically lower than the rest.
5. Explain the source or recipient and the legal authority for any “transfers-in” or “transfers-out” shown on the Fund Activity Summary.
We primarily have transfers out. There are several recipients of those transfers including the following:
Department of Development (Temp law, currently sec. 207.10 HB2)
Public Safety for ODOT’s portion of the debt service associated with the Hilltop Complex (Temp law, currently sec. 205.10 HB2)
Local Government fund – Township formula (ORC 5735.291(B)(3))
Local Government fund (Temp law, currently sec. 512.20 HB2)
Inspector General (Temp law, sec.512.40 HB2)
Governors Energy Office (Temp law, currently sec. 213.20 HB1)
OPWC for LTIP (Temp Law – currently sec. 512.30, HB2)
Public Safety – Highway Patrol ( Temp law - currently sec. 506.20 HB1)
Transfer in: There could be transfers in from the SIB Fund 2120 on occasion to cover ODOT construction inspection labor charges on a SIB funded project.
Other transfers as needed: ODOT may need to transfer funds from the Highway Operating Fund to either Fund 7042 or 7045 to cover a gap between the time we are going to run out of cash in those two funds, and the time we expect to receive proceeds from a bond issuance. ODOT has temporary law which allows it to transfer cash into Fund 7042 or 7045, and then once the proceeds are received we would request the funds be transferred back to the Highway Operating Fund. This authority is granted to us under temporary law, currently HB 2.
6. Explain what your agency considers to be a reasonable cash balance for this fund and describe why.
We forecast the minimum cash balance in this fund to average between $800 and $950 million. The reason for such a high cash balance is due to the fact that we have cash sitting on our books which is covering not only the current year encumbrances but also prior year encumbrances. ODOT by law is required to encumber funds when a construction project is awarded to ensure we have sufficient funds set aside. And since it takes multiple years for a construction project to be completed the cash sits in the fund. The amount of outstanding encumbrances always far exceeds our current cash balance because the federal funds we receive are on a reimbursement basis only which means we have to first expend the cash and then request a reimbursement from the federal government.
FY 2012-2013 Biennial Budget Request
Fund Activity Summary: Required Questions Form