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 Bob Taft, Governor, State of Ohio

Gordon Proctor, Director, Ohio Department of Transportation

March 2005


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Ohio Department of Transportation
2006-2007 Budget Testimony

Before the House of Representatives Finance and Appropriations Committee
and the Senate Highways and Transportation Committee

Mr. Chairman, members of the House Finance and Appropriations Committee, and the Senate Highways and Transportation Committee,
Good afternoon. I am Gordon Proctor, director of the Ohio Department of Transportation. On behalf of Gov. Bob Taft, it is my pleasure to present you with the transportation budget for the 2006-2007 biennium.

Two years ago, this Committee and the entire Ohio General Assembly enacted a very historic ODOT budget – one which financed a 10-year effort to steadily improve the state and local transportation network in Ohio. This budget continues what Gov. Taft and the Ohio General Assembly began two years ago. In many ways this is a continuation budget but what this budget continues is not ordinary. This budget continues the second biennium of a historic 10-year program to modernize Ohio’s transportation system. This plan represents the largest and most comprehensive investment in transportation since the original interstate highway construction program of the 1960s.

This budget also continues for the 12th year ODOT’s commitment to fiscal constraint in its payroll and operating expense budget. This budget continues to ensure basic maintenance standards remain high. This budget continues to focus on addressing high-crash, high congestion locations to make them safer. And this budget continues Ohio’s effort to complete a comprehensive rural highway network to link every region of the state to a modern highway facility. This budget also continues the investment of record amounts of state and federal funds into county, township and city roads.

As you know, the Ohio General Assembly agreed two years ago to raise Ohio’s motor fuel tax by six cents and to raise certain license and registration fees. The increases were phased in over three years. For 2004 and 2005 an additional $236 million was provided for Ohio’s local governments. That comprised $53 million additional for Ohio townships, $85 million additional for Ohio counties and $98 million additional for its cities. Once fully implemented in 2008 fiscal year, it will raise $293 million annually for Ohio’s city, county and township roads.

So far this biennium, ODOT received an additional $328 million in state motor fuel tax revenue. In keeping with the 10-year Jobs and Progress Plan, ODOT leveraged that revenue with additional bonding in SFY 2004 and 2005 to produce a total of $570 million in new construction in the two years. At a time when the Ohio economy was struggling to improve, this provided a much-needed boost which, according to federal figures, probably created 15,700 additional jobs.

Governor Taft’s Jobs and Progress Plan provides unprecedented fiscal stability and predictability by producing a stable $500 million annual New Construction program for a decade, from 2005 through 2014. If any of you have experience with major transportation projects in past years, the major impediment for these projects was the long-term uncertainty of the state’s new construction program. These projects take years to develop. However, the state never had a long-term, stable new construction budget which allowed ODOT and local communities to plan predictably and reliably. Now, we do.

This plan, and this budget, continues the significant transportation expansion progress made in recent years. Long-planned corridors such as U.S. 35 are now complete from Dayton down to the Ohio River at Gallipolis. Major progress was made on the U.S. 33 corridor from Columbus to Ravenswood, West Virginia. All of U.S. 30 from the Indiana line to east Canton will be four-lane soon thanks to recent ODOT projects. SR 8 in Akron was reconstructed and the Euclid Corridor in Cleveland is under way.

The Transportation Review Advisory Council acts as the board of directors for ODOT’s New Construction program. Thanks to the Legislature’s approval of stable, long-term revenue, the TRAC has approved work on another generation of major projects. In Northwest Ohio, the improvement of U.S. 24, of I-475 and of I-75 are progressing. The Cleveland Innerbelt and Shoreway are on track for more than $600 million worth of improvements. I-77 from downtown Canton to the Copley area on the north side of Akron are under construction, or under project development. The Akron Central Interchange is under development, as are the much needed improvements to SR 8 from the SR 303 to I-271.

In Youngstown, the long-awaited SR 7/SR 11 connector is under construction, as is the SR 46/I-80 interchange. The widening of I-80 over the Meander Reservoir is set for next year.

The highly congested I-70/I-71 split in Columbus has been approved for funding, as have the dangerous interchanges on Columbus’s northern leg of I-270. The complete re-building of I-75 in downtown Dayton, as well as the completion of the massive I-70/I-75 interchange are funded in the Miami Valley.

In Southwest Ohio, the widening of I-75 from northern Warren County all the way to the approaches of the Brent-Spence Bridge on the Ohio River are funded and are progressing. The rebuilding of the SR 32/I-275 interchange in Clermont County also is funded.

In every corner of Ohio, the most congested and accident-plagued locations have been ranked and reviewed by the Transportation Review Advisory Council. Based upon the Jobs and Progress Plan revenue, the TRAC has approved $3.6 billion worth of projects to be funded between 2004 and 2009. In later years, the TRAC will make additional decisions to complete the Jobs and Progress Program through 2014.

The plan relies on state and federal bonding in the early years as the revenue is phased in. Then in the middle years of the plan it relies on state and federal fuel tax receipts to guarantee the $500 million annually for new construction. Then in the later years, the bonding increases as ODOT’s maintenance needs grow. This is the approach described to the Ohio General Assembly last biennium and I am pleased to report that plan is proceeding as proposed.

Ohio also has had significant progress on the federal half of its funding picture, as well. The Jobs and Progress Plan is predicated roughly on $250 million annually in state revenue and $250 million in federal revenue to fund the $500 million new construction program. A major Ohio victory was scored this year when Congress addressed the “ethanol penalty” which cost Ohio $150 million in lost federal fuel tax revenue annually. Because this fuel was taxed at a lower rate, the more of it that Ohio used, the less federal revenue Ohio earned. After a great deal of hard work by Gov. Taft and the Ohio Congressional Delegation this contradictory federal penalty was eliminated in last October’s federal corporate tax overhaul legislation. This effort provides 60 percent of the federal increase that Ohio seeks for the Jobs and Progress Plan, even though the federal transportation bill has not been re-authorized.

As Congress takes up the federal transportation bill again this year, our first priority will be to protect this new ethanol revenue and to ensure it is returned to Ohio.

Our goal of a $250 million federal increase is justifiable. As noted, $150 million would come to Ohio just by eliminating the illogical ethanol penalty. Then, increasing Ohio’s rate of return from 89 cents on the dollar to 95 percent would raise an additional $50 million annually. Finally, the natural growth in federal transportation expenditures should provide another $50 million. Ohio’s Congressional delegation has been diligent and aggressive in seeing that these gains are secured for our state. We are confident that with the leadership of our delegation, we will reach these financial goals for the state.

Success in this matter is critical. Transportation is disproportionately important to Ohio. Ohio’s economic health has always depended upon its ability to produce and distribute goods and services. Ohio has a huge logistics industry which takes advantage of Ohio’s position of being within a day’s drive of 70 percent of North America’s manufacturing plants. Because of its reliance on transportation Ohio has developed an especially large transportation system.

Here in Ohio we have the 10th largest highway network, the fifth highest volume of traffic, the fourth largest interstate system and the second largest number of bridges. By value, 14 percent of all freight that moves in the United States moves in, through or out of Ohio, the third greatest amount of any state.
This budget continues the rational, long-term strategic direction of ODOT which will ensure Ohio’s transportation system meets the state’s 21st century needs. This budget reflects another two years of progress toward implementing a 20-year long strategy to improve Ohio’s transportation system while streamlining the Ohio Department of Transportation.

With term limits and turnover, all members may not be familiar with ODOT’s past performance. Beginning in 1995, ODOT began to re-engineer itself into a leaner, more customer-focused and efficient organization. Since then, ODOT has downsized from 7,800 employees to 6,031. ODOT is spending $132 million less each year on payroll and benefits compared to what it would be spending if it were still at 7,800 employees. Between 1994 and 2004, the absolute payroll expenditures at ODOT rose by only 8 percent total, or an annualized 11-year rate of .78 percent annually. Since 1995, non-payroll operating budgets have been held to an annual 2 percent increase.

Districts have been given budgets and allowed to keep any operational efficiencies they generate and to invest those savings back into road and bridge improvements. This has create a cost-conscience, entrepreneurial mindset among managers and employees alike. ODOT has adopted a comprehensive set of performance measures and business objectives which drive our operations.

Although ODOT is 24 percent smaller in terms of employees compared to 1995, it has increased production and performance in every major area of operation. Since 1997, freeway pavement deficiencies have been reduced by 79 percent. Two-lane pavement deficiencies have fallen by 62 percent. The structural deficiencies in ODOT’s bridge inventory has fallen by 74 percent. ODOT county crews have cut guardrail deficiencies by 70 percent, signing deficiencies by 69 percent, shoulder drop offs by 88 percent and pavement marking deficiencies by 61 percent.

Snow and ice efforts have improved in terms of professionalism, in terms of equipment, in terms of strategy and in terms of materials. Project delivery has risen from $700 million in 1995 to $1.3 billion in SFY 2004.
Most importantly, in 2003 Ohio saw a reduction of 141 fatalities on its highways, compared to the number in 2002. That represents a reduction of 10 percent and it represents the second-highest number of fatalities reduced by any state in the country. Those reductions are in large part because of the tighter drunken driver standard you adopted in 2002, it is a tribute to better enforcement and education by Ohio law enforcement agencies and it is a result of safer roads in Ohio. So far, it appears the 2004 fatalities are even lower.

By every major measure, the men and women of ODOT are performing better today than they did 10 years ago, or even last year. They will be even better next year.

Mr. Chairman, members of the committee, we at ODOT are far from perfect. Any one of you could walk into any one of our 200 buildings or one of our 600 construction sites and you could find something to improve. We always can get better. I can say, however, ODOT has drastically improved in the past 10 years and that is a testament to our people and to the leadership of our Governor and to changes the General Assembly has encouraged us to make over the years.

In summary, you will review a $5.6 billion biennial ODOT budget that may appear very complex. But in reality it is based upon some very simple principles. Those principles are to keep our expenses down, to keep our maintenance conditions high and to squeeze out as much money as possible to make the transportation system safer and less congested. Those are our principles and that is what this budget helps us accomplish.

This budget makes only marginal changes to the last budget. Our lack of changes is not because of inertia or disinterest but rather because we are on track to reach our short-term and long-term goals. This budget represents one step of many along our well-planned path. With your help, I am sure we will reach our collective goal to make Ohio safer, to make our communities more attractive and to make our economy stronger.

Mr. Chairman, I would be happy to answer any questions.


T h e   O h i o   D e p a r t m e n t   o f   T r a n s p o r t a t i o n   ( O D O T )

Ted Strickland, Governor |  James Beasley, P.E., P.S., Director
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