Financially constrained planning for the Highway System Plan

By James Detke

In our previous post on the Highway System Plan (HSP), we shared how we engaged with residents to make sure our highway funding recommendations met their needs. Before the HSP team developed funding scenarios for the public to engage with, we needed to know how much funding might be available for the highway system over the next 20 years. While nobody can accurately predict exactly what will happen in the future, we can create realistic reference points based on past events and trends. This is called financially constrained planning. It helps to make our recommendations more realistic.

To come up with likely funding levels over the next 20 years, we worked with a group of financial experts made up of our own employees and transportation planning partners from around the state. This Financial Technical Advisory Group used historic and current funding levels, along with recent revenue forecasts, to develop three possible funding levels to use in our scenario planning.  The three possible funding levels were:

• Current law funding: This baseline funding level assumes that there is no major change to current revenue, which would amount to $48.9 billion over 20 years.
• Future increases mirror past increases: This funding level assumes that two new funding packages will be added to the baseline funding level over the next 20 years. Based on previous funding packages, this funding level would be $69.3 billion over 20 years.
• Ambitious-but-reasonable: This funding level of $91 billion assumes that increases to new revenue will be greater than past revenue increases, but still within reason.

Funding scenarios over 20 years. Analysis for 2021-2040 is based on the Nov. 2020 forecast and current debt service. All revenues are in current dollar values, which is the year our state receives the revenue.

Fuel tax revenue is an important contributor to transportation funding. These taxes mean that people driving more means more funding, but more driving results in greater wear and tear on the roads. Due to trends of increasing fuel efficiency and increasing electric vehicle adoption, the total revenue from the fuel tax is decreasing, and all funding levels assumed that these trends would continue. Shifting towards lower emissions is necessary to meet state emissions limits but will reduce transportation revenue with current funding mechanisms.

Another key assumption in all scenarios was that we would not take on additional debt and would pay off debt that has already been issued for past projects. This is based on recommendations in the Washington Transportation Plan to develop more sustainable transportation funding mechanisms. Loans can be a useful tool for advancing projects forward, however, they end up costing taxpayers more in the long run.

The technical advisory group recommended that we use the Ambitious-but-reasonable funding level for developing our program funding scenarios. This recommendation was based upon the group’s professional judgement as well as funding proposals discussed in the 2022 legislative session, the Governor’s 2021 revenue proposal, federal funding packages, and other financial information.

For more about financially constrained scenario planning for the Highway System Plan, check out the Highway System Plan on our website.

Creating scenarios within possible highway investment

Once we had an estimate of how much funding could be available for the highway system plan over the next 20 years, the team could develop scenarios that explore how the money is distributed among the programs at our agency. In our analysis, we grouped programs into repair, safety and efficiency, and expansion based on how the public understands these programs. To learn more about how we developed scenarios and engaged with the community to come to a recommendation, catch our blog post on scenario planning that we’ll post toward the end of this month.

Let us know what you think about the draft Highway System Plan

The draft Highway System Plan is available for public comment, and we want to hear from you! Public comments will be accepted from Nov. 1 through 5 p.m., Dec. 18. Visit the HSP website to learn more, review the plan, and visit the online open house. There will also be a link to join the virtual public meeting from 2 to 3 p.m. on Nov. 30 where you can hear more about the plan and provide direct feedback.

Your comments help us make recommendations that best serve the diverse communities affected by transportation decisions. You can provide comments on the website, by emailing hsp@wsdot.wa.gov, calling 360-704-6371, or sending mail to the address below.

WSDOT Multimodal Planning and Data Division
310 Maple Park Ave. SE
Olympia, WA 98504-7370