Ohio Department of Transportation
Budget Testimony of James G. Beasley,
Director of the Ohio Department of Transportation,
before the Ohio Senate Highways & Transportation Committee
March 14, 2007
Good afternoon Madam Chairwoman and members of the Senate’s Highways and Transportation
Committee. My name is Jim Beasley, and I am the new Director of the Ohio Department of
Transportation. I thank you for the opportunity to present the proposed ODOT budget – part of
Governor Strickland’s overall Transportation Budget - for the fiscal years 2008 and 2009.
Since I am new to many of you, let me first share my basic philosophy when it comes to public
service. I believe – as I am sure each of you believe – that the citizens of Ohio deserve the best,
well-maintained and safest transportation system their tax dollars can provide. They want an
open, honest and transparent public process in how we prioritize our projects. And we should put
common sense and necessity before partisanship and ease.
The budget we submitted allows ODOT to maintain its tradition of excellence in service to
Ohio’s citizens, and in building and maintaining one of the most well-regarded road systems in
the United States.
Although Ohio ranks 35th in land size, we have the…
· 7th largest highway network and 4th largest interstate system
· 2nd largest inventory of bridges
· and 5th highest volume of overall traffic than any other state
But more than connecting points A and B on a map, the investments we make in our roads,
highways, and infrastructure contribute to job creation. They are critical to generating long-term,
high value jobs and the kind of economic development our state must support, as we work
together to turnaround Ohio.
This budget represents the financial challenges and fiscal realities we currently face, but it also
recognizes a priority to make ODOT a better, more reliable partner to our local communities.
The total Transportation Budget for fiscal years 2008 and 2009 is $3.9 and $3.8 billion
respectively. ODOT represents about eighty percent of that total, with appropriations of $3.2
billion in 2008 and slightly over $3 billion in 2009.
First, let me share a general overview of this budget. Then I would like to highlight some of the
initiatives proposed by the Governor, as we look to promote economic development, encourage
the preservation of our existing infrastructure, expand the capacity for all modes of transportation,
reduce traffic congestion, and enhance safety.
The appropriations for ODOT’s local government programs total $387 million and $385 million
for the two fiscal years. This funding provides for the replacement and rehabilitation of local
transportation infrastructure, and allows ODOT to partner with Metropolitan Planning
Organizations (MPOs) on many of the local projects across the state.
Senate Budget Testimony, March 14, 2007 1
Ohio Department of Transportation
We have also prioritized targeted investments in upgrading our existing roads and bridges. The
budget provides $801 million in fiscal year 2008 and $839 million in fiscal year 2009 for
ODOT’s Preservation, Pavement and Bridges Program.
Over the past several years, ODOT has streamlined its operations. Every single county garage,
work unit, and district is constantly innovating and economizing – looking to create greater
efficiencies and increase workforce productivity. The Operating Budget is $751 million in 2008
and $772 million in 2009.
Finally, our goal is to support new project construction priorities developed by the Transportation
Review Advisory Council (TRAC). The budget funds $770 million in 2008 and $531 million in
2009 for major new construction.
The dollars devoted to major new construction continue the record-setting commitment the
Legislature made to improve our transportation system. However, that commitment also
represents the core of our funding and spending challenge.
Based on its six-year construction and planning cycle, the TRAC faces a potential $1.2 billion
deficit by the year 2013.And to be clear: this $1.2 billion deficit only represents funding the
completion of all Tier I projects, plus about $250 million of development funds committed for
Tier II projects.
To give you some added perspective: if we include the development and construction of Tier Two
projects as well, it would require $7 billion more in funding.
Let me explain where that deficit comes from and how ODOT hopes to address the matter.
As late as December of last year, my predecessor Gordon Proctor testified before the Ohio House
on how extraordinary inflation – combined with lower federal funding – seriously affected
ODOT’s capital program.
Overall, ODOT has seen a 40-percent increase in construction prices in just the past four years.
On the revenue side, non-earmarked federal funds from the 2005-2009 highway bill came in $550
million less than initially projected.
This revenue inadequacy is only expected to continue, as work by both the National Governors’
Association and the National Conference of State Legislatures show that we can no longer count
on ever-increasing federal assistance for the various components of the nation’s transportation
infrastructure.
Even new revenue created by the increase in the state’s gas tax has been strained: inflation alone
will soon consume nearly half of the 6 cent increase.
Despite these major fiscal concerns, the TRAC made commitments to local governments that
severely outpaced likely revenue growth.
In fact, the TRAC exceeded its own policy on over-programming by crossing its 20-percent
threshold, and over-committing by 47-percent above projected funding levels.
Senate Budget Testimony, March 14, 2007 2
Ohio Department of Transportation
It was the approach of the previous administration to front-end or to accelerate several projects at
one time – based on being ready for construction – with hopes of avoiding high inflation at the
tail end, at a cost of borrowing and spending most of the money right now.
Unfortunately, some of the state’s most pressing – and likely most expensive and most
complicated – transportation needs were pushed to future years – when funding would be at its
tightest.
This rush to spend future money has been more successful building financial uncertainty than it
has needed roadway.
Local communities take commitments by ODOT very seriously. They base their bonding and
construction efforts on these major highway projects and work hard to build community support.
It is our view that over the years, the TRAC process left communities with a false impression that
once their projects made it on the TRAC list – Tier One or Two – that construction was assured.
To make ODOT a better, more reliable partner, we hope to address three key components of the
TRAC process: fiscal accountability, the criteria for funding priority, and better communication.
First, we must adjust the TRAC process to ensure it reflects our current fiscal realities, better
matching the revenue we have.
Part of this bill proposes a change to current law which clarifies ODOT’s ability to use gas tax
revenues to support the expanded use of GARVEE bonds, or Grant Anticipation Revenue
Vehicles, to help finance important projects.
Second, we believe the TRAC must revise the criteria by which projects are selected for future
funding priority, so that consideration of economic development is balanced with safety and
congestion factors.
When the legislation authorizing the TRAC was enacted, economic development was supposed to
be part of the criteria for evaluating projects. Since 2003, however, only 4 of the 88 Tier One
projects accepted by the TRAC included any credits for jobs creation.
I have already instructed my staff to canvass other state transportation departments to gather the
best practices for measuring economic development – moving us from an anecdotal “build it and
they will come” mentality to a targeted, thoughtful, and well-informed decision-making process.
And third, our transportation policy can renew and revitalize our cities and towns only if we
communicate with our partners every step of the way.
This will include evaluating at all areas of our budget and our operations to promote more
discipline, and to build a more reliable affiliation with local communities.
Madam Chairwoman, thank you for this time. With the assistance of my staff, I am happy to
answer any questions the committee might have.
Senate Budget Testimony, March 14, 2007 3