Opinion ID: 1191906
Heading Depth: 1
Heading Rank: 22

Heading: State Expenditures

Text: Should CDOT choose to sell TRANs, CDOT would have additional costs of issuing the notes and the interest charged for the use of the proceeds. The costs of issuing the notes, insurance, and the interest charged is not known. However, the bill would limit the annual payment for principal and interest that can be made to half of the previous year's total federal transportation funds received. The following information is provided for illustrative purposes only. Should CDOT issue notes to generate $1.0 billion for construction over a 15-year period, CDOT would have to issue approximately $1,114,460,000 in notes. A reserve fund would require approximately $101,924,547. The costs of issuance, underwriter's fee, and bond insurance would be approximately § 12,535,453. The following scenario assumes a level gross debt service with level monthly draws on the construction fund. The annual payment required to pay the principal and interest is estimated to be between § 97 and $102 million annually depending on whether interest earnings on the reserve fund (approximately $2.3 million annually) would be used to help pay off the notes. This would assume a Aa equivalent rating on the notes with interest charges ranging from 3.2 percent to 4.8 percent. The average interest charge would be estimated at 4.6 percent. The total interest paid over the 15 year period would be approximately $438,109,597. Under this scenario, CDOT may contract with a third party to handle the proceeds from the sale of the bonds or put the proceeds in the State Highway Supplementary Fund. Should CDOT choose the third party, there would be an additional cost of managing the proceeds. The minimum estimated cost of managing the proceeds is a one-time cost of approximately § 110,000. The amount of interest earned on the proceeds would be governed by the federal rules of arbitrage. Any excess arbitrage earnings would be returned to the federal government. However, if CDOT spends the proceeds faster than the arbitrage time constraints, the State Treasury may be able to generate more interest earnings at 6.0 percent than the private sector may generate at approximately 4.5 percent. The table on the following page provides a ten-year picture of the highway funds that would have been available for annual payments since FY 1994-95 if this bill had been in effect at that time. The table contains: . actual figures FY 1994-95 to 1997-98 and estimates from FY 1998-99 to 2004-05; . federal appropriations to Colorado for highways under ISTEA and TEA-21; . formula allocations from FY 1998-99 to 2004-05 increased at 12.2 % annually; . discretionary funds that are not guaranteed under TEA-21; and . discretionary estimates from FY 1998-99 to 2004-05 increased at 1.2 % annually. Highway Funds Available for Annual Payments had HB 99-1325 been in effect in FY 1994-95 ($ in millions) Fiscal Year 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 Formula Allocation $187.6 $203.9 $198.0 $236.1 $271.6 $304.8 $341.9 $383.7 $430.5 $483.0 $541.9 Discretionary Funds 23.8 23.3 10.8 32.0 41.8 42.3 42.8 43.3 43.8 44.3 44.9 TOTAL 211.4 227.2 208.8 268.1 313.4 347.2 384.7 427.0 474.3 527.3 586.8 Available for Payment $105.7 $113.6 $104.4 $134.0 $156.7 $173.6 $192.6 $213.8 $237.6 $264.3 $294.2 This table does not include an estimate of the possible transit funds and discretionary transit funds that may be available through an intergovernmental agreement with RTD. The transit funds that may be available are in addition to the highway funds CDOT may provide. The table below provides an indication of the amount of transit funds that may be available for payments should RTD and CDOT sign an intergovernmental agreement. The table contains: . actual figures from FY 1994-95 to 1998-99 and estimates for FY 1999-00 to 2004-05; . federal appropriations to RTD for transit under ISTEA and TEA-21; . formula allocations for FY 2003-04 to 2004-05 increased at 7.0 % annually; . fixed guideway funds that are not guaranteed under TEA-21; and . fixed guideway estimates for FY 2003-04 to 2004-05 increased at 18.3 % annually. Transit Funds Available for Annual Payments had HB 99-1325 been in effect in FY 1994-95 ($ in millions) Fiscal Year 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 Urban Formula $19.2 $15.9 $18.0 $22.1 $25.0 $28.5 $28.7 $30.8 $33.0 $35.3 $37.8 Fixed Guideway 0.4 0.4 0.8 0.9 1.1 1.3 1.6 2.4 3.0 3.5 4.2 TOTAL $19.6 $16.3 $18.8 $23.0 $26.1 $29.8 $30.3 $33.2 $36.0 $38.9 $42.0 Available for Payment $9.8 $8.2 $9.4 $11.5 $13.0 $14.9 $15.2 $16.6 $18.0 $19.4 $21.0 Local Government Impact The intergovernmental agreements which CDOT may reach with local governments are not known at this time. It is assumed that the agreements would use existing resources and revenues to fund projects under this bill and that there would be no fiscal impact to local governments. This bill would allow local governments to use existing resources for purposes other than what current law allows. This bill is assessed as having no fiscal impact to local government revenues or expenditures. It does allow local governments to use existing resources for different purposes. State Appropriations This fiscal note implies that no appropriation is required to implement this bill in FY 1999-00. Departments Contacted Transportation Revenue State Treasure OSPBRTD