Funding Guide

Influencing Funding Decisions

Whether you agree with the late U.S. Senator from Illinois about what constitutes "real money," rest assured that it takes considerable sums of it -- in the multi-million or even billion dollar range more often than not -- to build a transportation project. So how do you tap into the sources outlined in the preceding chart for a particular project?

In the transportation lexicon, the means of linking projects with funding is known as "programming." In this way, dollars are committed to projects under a set schedule. Mother Nature has her seasons, and the transportation funding realm has its cycles. Generally, programming covers a period of several years (longer for the more complex projects), while funds are actually "allocated" to projects -- meaning money is released for use by project sponsors -- on an annual basis. Many funds have "use it or lose it" restrictions. This means that once funds are allocated, a project sponsor must "obligate" them (put their projects under contract) within a specified time period (three years, for example) or lose the money. For larger projects, sponsors frequently must dip into multiple funding sources in order to secure enough funding to build their project. And often, larger projects are built in several phases, so funding is allocated accordingly.

How and when can a project sponsor or interested citizen influence decision-makers? Citizens who feel strongly about a project should be involved right at the outset, when they can have the most impact in shaping a project from its inception.

The best place for public input to begin is at the project definition or project review stage, usually at the local government level. This can involve meeting with staff and testifying at a city council, transit agency board, county board of supervisors, or county congestion management agency meeting -- all of which are open to the public. MTC also holds regular public meetings at later funding stages of a project, which members of the public can attend and give comments on projects being discussed. During the development of MTC's major programming and planning documents, public hearings are held throughout the region to ensure that public concerns are heard.

When you get right down to it, there are really four key methods for making transportation investment decisions in the Bay Area: three that directly involve MTC, and one that takes place at the county level. Following is a brief description of each.

1. The TIP
The federally required Transportation Improvement Program, or TIP, is a comprehensive listing of every transportation project that receives even a penny of federal funds or that is subject to a federally required action, such as a review for its impact on air quality. MTC prepares and adopts the TIP every two years, with help from local governments, public transit operators and Caltrans (the state Department of Transportation). By law, the TIP must cover at least a three-year period.

Central to developing the TIP is MTC's process for deciding how best to invest "flexible" federal dollars -- meaning those funds that can be used on a variety of transportation needs, be they local streets, rail extensions, a new freeway interchange or bicycle and pedestrian routes. To develop a plan for spending funds in the federal Surface Transportation Program (STP) and Congestion Mitigation and Air Quality Improvement Program (CMAQ), MTC works closely with local partner agencies and advisory committees to develop regional priorities.

MTC has adopted a policy to use these moneys in a way that complements programming of state funds and to give priority to preservation and more efficient operation of the existing transportation system. MTC's policy also calls for funding projects that would not be eligible for other funding sources, such as small-scale, community-oriented development linking land use and transportation.

The TIP also includes federal funds that return to the region by statutory formula for transit capital and, in very limited instances, operating purposes. These funds constitute a baseline of revenue for transit operators, who are also able to compete for other discretionary funds.

2. The STIP
The State Transportation Improvement Program, or STIP, is a blueprint for spending available federal and state funds reserved primarily for projects that increase the capacity of transportation systems throughout California. It is updated every two years and covers a period of four years.

The bulk (75 percent) of the STIP consists of spending programs developed at the regional level throughout California, called Regional Transportation Improvement Programs (RTIPs). The California Transportation Commission (CTC), a state-level panel appointed by the governor, releases a Fund Estimate telling each region how much money it can expect to receive from various sources. This estimate is guided by statutory requirements that direct how the funds are divided up throughout the state.

Working from the CTC's estimate, MTC prepares the Bay Area's RTIP based on its adopted Regional Transportation Plan (see page 1), on priorities established by county congestion management agencies, and on comments from interested citizens and project sponsors. In developing the RTIP, MTC works closely with an organization known as the Bay Area Partnership, a group of major transit agencies, congestion management agencies, cities, ports, and other regional, state and federal transportation and environmental protection agencies.

Once MTC adopts the RTIP, it is forwarded to the CTC. In turn, the CTC must accept the RTIP or reject it in its entirety and send it back to the region for revision. Meanwhile, Caltrans proposes another element of the STIP for the CTC to adopt, known as the Interregional Transportation Improvement Program, or ITIP. The ITIP comprises the remaining 25 percent of STIP funding. It is intended to address transportation infrastructure needs that cross metropolitan boundaries and link the state's transportation system -- for example, intercity rail, interregional highways and the like.

3. MTC Allocations
Another process where certain transportation projects or programs receive funds is through MTC allocations, which are usually granted on an annual basis. MTC administers and allocates State Transit Assistance and local Transportation Development Act funds for public transit agencies (some of the TDA funding also goes to bicycle/pedestrian projects and local streets and roads). Transit operators and other project sponsors submit claims for these funds, which MTC reviews, and then votes to allocate the money according to statute. Similarly, MTC - acting as the Bay Area Toll Authority - allocates toll revenues from state-owned toll bridges for general upkeep of the structures as well as for new capital projects in the bridge corridors under the voter-approved Regional Measure 1 program. Finally, MTC allocates a portion (25 percent) of a permanent half-cent sales tax measure for the three BART counties (Alameda, Contra Costa and San Francisco), referred to as "AB 1107" funding. AC Transit, San Francisco Muni and BART are eligible to receive these funds. (BART keeps the remaining 75 percent of these funds for its own operations).

4. County Sales Tax Expenditure Plans
The AB 1107 revenues mentioned above, authorized under 1977 legislation to make permanent a temporary half-cent sales tax imposed for BART in 1970, launched a trend toward local self-sufficiency in the transportation finance arena. Close on the heels of AB 1107, Santa Clara and San Mateo counties each passed permanent half-cent sales taxes for public transit. The bulk of these revenues go to transit operations and maintenance, but the money can be used for capital improvements.

By 1984, in another major leap for local initiative, voters in Santa Clara County approved Measure A. The first temporary county-level half-cent sales tax, Measure A financed a package of major highway improvements in the county over 10 years. Since then, 16 other counties in the state -- commonly referred to as "self-help" counties -- have approved similar measures. However, subsequent measures typically finance both highway improvements as well as transit capital improvements and operations over a number of years (usually 15 or 20).

Prior to placing a proposal before voters, county officials develop detailed plans for spending the potential new revenue. The projects often need state and federal funding to complement the local contribution. These plans face tough scrutiny by cities, counties, transit agencies and interested citizens within the jurisdiction. An agency with a governing board (typically local elected city and county officials) is designated to administer the program and allocate the funds (often the county congestion management agency or transportation authority).

MTC's Advocacy Role
Despite the considerable sums of money -- some $4 billion annually -- spent in the various programming and allocation exercises mentioned above, the region still faces significant funding shortfalls over the coming decades. To close these funding shortfalls, MTC has taken a three-pronged approach:

0. squeeze more efficiency out of existing dollars;
   
1. make existing funding more flexible; and
   
2. seek new revenues for transportation projects.

The first strategy involves not only ensuring that transportation projects are delivered on time and on budget, but also increasing investment in programs such as roving tow truck patrols and signal timing that speed traffic flow at much lower cost than major road expansions.

Equally important is ensuring that the limited dollars coming into the region are as flexible as possible to meet the Bay Area's diverse transportation needs. MTC worked toward this end by advocating for the reauthorization of federal surface transportation law (known as TEA 21, or the Transportation Equity Act for the 21st Century) and reform of California's State Transportation Improvement Program (STIP) process in order to preserve and enhance the funding flexibility essential to an efficient and effective transportation system.

To seek new revenue for transportation projects, MTC successfully sponsored state legislation in 1997 that will allow voters to consider imposing a regional gas tax of up to 10 cents per gallon to fund improvements to the Bay Area transportation system. A regionwide election on this measure could take place in the future.

All of these efforts help to ensure that the Bay Area will enter the next century with an effective transportation system. As MTC advocates in Sacramento and Washington on these issues, the continued support of Bay Area residents and organizations -- public and private -- will be a key factor in achieving our goals.