Federal, state, and local transportation budget allocations and performance

¶ … public budgeting comparisons of the federal, state and local budget distributions. This thesis will be focused on whether or not the increased budget allocations for transportation in the federal, state and local government will enhance travel security, efficiency, performance measures and R&D development in the domain. The thesis will start off with a proposal for an agency that works across and is allocated budget in all the federal, state and local legislatures. The agency chosen for the thesis is the United States Department of Transportation. The proposal will include a detailed overview of the chosen agency inclusive of some financial data in recent years for the agency and a comparative analysis of the performance measures accomplished with those measures that were not completed. This will be followed by the details and comparative analysis of the budgetary performances of the federal, state and local budget departments in the United States which is the primary focus of the thesis. This will include relevant theory of budget distribution and will be complemented by some relevant financial statistics. The last part of the thesis will present a proposed strategy for efficient budget distribution for future transportations projects. This will be a PowerPoint presentation and will present strategies-based conclusions and analysis made in the prior two sections. The paper will aim to prove or refute the following hypotheses: 1) increased budget allocation in transportation across all legislatures (federal, state and local) may lead to increased security; 2) increased budget allocation in transportation across all legislatures (federal, state and local) may lead to increased efficiency; 3) increased budget allocation in transportation across all legislatures (federal, state and local) may lead to increased accomplishment of performance measures; and, 4) increased budget allocation in transportation across all legislatures (federal, state and local) may lead to increased R&D efficiency and accuracy.

Agency Name

United States Department of Transportation (DOT or Department) is the agency that has been selected for this paper. An overview of the financial performance of the United States Department of Transportation (DOT or Department) has been explained in the Agency's Financial Report (AFR). This report provides the financial information for the fiscal year (FY) 2011 and coming years (U.S. DOT, 2011).

DOT Mission

It is the mission of the Department to enhance the lives of the people of United States by providing them with a better, efficient, safe and accessible transportation system. The Department aims at not only enhancing and improving the present of the people of United States but also their future by ensuring that the transportation system meets their requirements and needs (U.S. DOT, 2011).

DOT Values

Professionalism: DOT considers itself a responsible public servant. It is very important to DOT to demonstrate respect, highest standards of integrity and excellence in their working environment (U.S. DOT, 2011).

Teamwork: DOT as an organization is united. It respects and considers the ideas and differences of other people and it is very important to them that they work in a united fashion.

Customer Focus: It is important to DOT to provide its customers with the services that they want. For this reason DOT believes in bringing innovations and being creative to accommodate their customers in the best possible manner (U.S. DOT, 2011).

History

DOT was developed in 1967. It works in collaboration with the United States private and local sector partners and it has made the Federal transportation policy with the help and agreement of all these sectors. DOT's main goal is to ensure that the transportation whether its railways, airways, roads or seaways is secure, efficient, safe and fast. It is also the goal of DOT to ensure interconnected National transportation all over the U.S. DOT uses all these goals as the guidelines towards ensuring the establishment and maintenance of the ideal transportation system for the people of U.S. (U.S. DOT, 2011)

There are approximately 60,000 people all around the country who have been employed by DOT. These employees are located in the Office of the Secretary of Transportation (OST) as well as the bureaus and the twelve Operating Administrations (OAs). The OST, OAs and the bureaus all have their own organizational structure and management (U.S. DOT, 2011).

The Office of the Secretary of Transportation works as the leader. All the major management guidelines, programs for consumer protection, economic guidelines and administrative support are provided by the Office of the Secretary of Transportation. Although the Surface Transportation Board (STB) and the Office of Inspector General (OIG) are a part of the DOT structure, but according to the law they are independent (U.S. DOT, 2011).

Proposal Name

In order to get to understand and get to know about the Department's performance with regards to the budgetary resources, the financial reporting and the performance AFR is being done. It has become a requirement under the Office of Management and Budget's Program to have the AFR delivered among many other reports. The purpose behind this is to get to know about the Alternative Approaches regarding Accountability Reporting and the Performance. This is a voluntary program in which the Department is participating and it's the second year that this has been done. The Department is aiming at providing a more transparent and accountable system that can provide detailed information about the resources and the performance of the system to its readers. The strengths, highest priorities of the Department as well as the challenges being faced by it are also mentioned in the report (U.S. DOT, 2011).

Financial Details (All financial data was retrieved from U.S. DOT, 2011)

Fiscal Year 2007-2011

In the table below, the data has been presented on the overall research and development that was completed by DOT for the fiscal year 2007 to 2011.

In the table below, we see a comparative analysis of DOT's budget with the Federal U.S. Budget allotted to transportation.

Fiscal Performance -- Past, Present and Future

In the graph below, we see the FAA allocation of capital fund for DOT for the year 2008 to 2016 showing steady growth in the trust in the abilities of DOT to deliver on the safe transportation facilities for the masses in the United States (U.S. DOT, 2011).

Measure of Success

The Strategic Plan of the Department for the Fiscal Years 2006-2011 is "New Ideas for a Nation on the Move." This is the last year that the Department will report on this strategic plan. The strategies and measures that have been mentioned in the upcoming pages have been followed by the Department to improve the performance and efficiency of the system. However, some of those measures might have been dropped by the Department while it adopts new ones since its main goal is to bring more and more improvement to the system (U.S. DOT, 2011).

The preliminary results for this year show that approximately 80% of the performance targets that had been set by the Department were met. However, there still exist some areas that need some improvement (U.S. DOT, 2011). Given below is a concise explanation of the results regarding the strategic objectives:

Safety Performance

The main purpose of Safety Dot is to keep a track of safety of the American people who are travelling through airways, roads or railways. It was observed from the preliminary results that about 9 out of 10 safety goals were achieved. The decline of the general aviation (GA) fatalities didn't take place as quickly as it was being imagined. It was observed that most of these fatalities took place in the experimental aircrafts. The fatal accidents in the GA accounted for approximately 26% of the fatalities. A lot of different approaches are being taken by the FAA in order to address this issue (U.S. DOT, 2011). Please refer to the details below for performance measures on safety performance (U.S. DOT, 2011).

Reduced Congestion

It is one of the strategic objectives of DOT to make sure that the congestion in the modes of transportation is reduced. DOT is trying to make this happen with the help of various factors such as ensuring that it gets proper funding to maintain the highways in good state, by efficiently managing the air traffic and by trying to persuade the people to use mass transit. However, it is being observed by the DOT that the trend of mass transit being used by the people has been declining for two continuous years now. There are many reasons that are responsible for this decrease such as the unemployment, inflations, economic decline and the decline in the local and state tax revenues that were used to ensure that the mass transits were in good states (U.S. DOT, 2011). Please refer to the details below for performance measures on reduced congestion (U.S. DOT, 2011).

Global Connectivity

Global connectivity not only helps the American economy but also enables the American market to stay in touch with the markets all around the world. This is done by the transportation of vehicles, products and goods by trying to keep the delay to the minimum. The St. Lawrence Seaway is a major seaway with the help of which the upper West stays connected to the global markets. In the FY 2011 it was mentioned that the St. Lawrence Seaway remained open for 99% of the time during the shipping season. Continuous efforts are also being made to ensure that the flow of traffic on the roadways is improved as well. Although decrease in delay was noticed in many areas but these results were not very clear due to the delays that took place on the borders. It was noticed that in NY, WA, Buffalo and Blaine, the delays increased. However, five crossings were observed and it was noted than from among those, in three, the delay decreased (U.S. DOT, 2011). Please refer to the details below for performance measures on global connectivity (U.S. DOT, 2011).

Environmental Stewardship

When it comes to the environmental factors and the transportation, the transportation can prove to be a very serious issue. However, DOT tries to ensure that no environmental issues take place with regards to the quality of the transportation. It has been noticed that for four years in a row now that no standards regarding the air pollution have been violated by the Department (U.S. DOT, 2011). Please refer to the details below for performance measures on environmental stewardship (U.S. DOT, 2011).

Security, Preparedness and Response

Although when it comes to the security of the public transportation, the Department of Homeland Security is the one that is responsible. However, DOT has and still does ensure that it has the ability and capability to keep functioning with in a crisis situation. It is through the Maritime Administration that during the military mobilization the role of being a supporter of the Department of Defence was played by DOT. DOT has been exceeding their requirements for the commercial ports and shipping capacity for four years in a row now (U.S. DOT, 2011). Please refer to the details below for performance measures on security, preparedness and response (U.S. DOT, 2011).

Organizational Excellence

As DOT's administration pays a lot of attention to how DOT is making use of the tax payers' money, they keep a record of the costs that are associated with the major infrastructure projects and major system purchases. DOT doesn't make the cost estimate for the huge infrastructure projects as whole but it is being observed that a lot of individual projects are improving and performing well. The cost estimates, finance plans and project management plans will continue to be reviewed by the DOT administration.

Required Changes

It is essential for the smooth and efficient running of DOT that it tries to find out and study the factors or risks that can make it difficult for DOT to reach their objectives. In order to manage the identified risks, DOT needs to improve the internal controls of the system. In order to manage the risks in a proper manner DOT needs to manage its performance through the risk indicators. Some of the risk indicators are: observing exactly how we are identifying the risks that are involved in the internal control and how we are addressing these challenges, what are the rates and amounts of improper payments etc. Activities such as audits that are conducted by the Department's Office of Inspector General could be used to bring these above mentioned challenges to the attention of the management. The inputs from the current businesses should be used to formulate and improve risk management strategies. In order to modernize their Financial Systems the feasibility of different paths should be monitored continuously. In order to ensure consistency and standardize the financial management processes it is important that the DOT makes use of the information from the prior reports and work conducted.

In future, the DOT administration should plan on improving the Department with the help of the accomplishments in the financial management department. Along with this ensuring the availability of secure and efficient transportation will remain the Department's most important concern. With the help of their financial system DOT plans on promoting economic growth with the help of the availability of jobs.

Scholarly Activity 2

Introduction

The recession is finally ending after giving the American Nation a very difficult time for two years. These two years have been the toughest that the American people had to face in generations. There is no more danger of the U.S. financial system collapsing or of a second Great Depression starting. The swift and aggressive actions that were taken to cope with the recession have proved to be fruitful as the economy of the Nation is now recovering. The main reason for the jump-start of the economic structure is the boosting of the macroeconomic demand that was done by the American Recovery and Reinvestment Act (the Recovery Act). The dangerous recessionary cycle to the Administration's Financial Stability Plan was broken with the help of this step. Hence, the confidence of other organizations was restored in the U.S. markets and the financial institutions. This step greatly helped the government in saving the automobile industry. There were some extraordinary choices and decisions made by the President, some of which weren't very popular among the people either. However, time has proved that those policies and decisions played a very important role in making the economy start its journey back to recovery (Budget.gov, 2012).

Although the economy is now in its recovering stages but that doesn't mean that all the problems have been solved. There are still so many people in America who remain unemployed, a lot of businesses that still need some time to recover from the losses that they had to face due to the recession. There are still towns and cities in America that have been affected by the recession to such an extent that they are still having difficulties in providing their residents with jobs (Budget.gov, 2012).

Careful measures have to be taken in order to ensure that the recovery process doesn't have to face any more setbacks. It has been observed through various studies that the longer the recession stays the longer and more dangerous its side effects become. According to some studies the unemployment of parents affects the educational and the professional achievements of their children. Similarly, some studies also show that the people who start their jobs in the recession period get underpaid not only in times of recession but many years after that too. There are still some studies that have shown that recession not only affects the societies but the individuals too and in a negative fashion. Therefore, in order to make sure that the U.S. economy and Nation face long-term economic growth it is important for them as a Nation to invest in the infrastructure and capabilities of their workforce (Budget.gov, 2012a).

Right now we as individuals as well as a society need to make choices that will benefit their Nation as a whole. In order to make sure that the U.S. economy becomes one of the strongest ones in the world the government needs to make sure that it invests in the education, transportation, infrastructure and innovation of the American Nation. By doing this they will be able to make the Nation able enough to compete in the global market. However, to achieve all this some serious and tough decisions have to be made. Hence, in the federal, state and local budget some of these decision such as making necessary investments and cuts have to be discussed. All these steps are essential for the American economy as these will enable the availability of jobs and better investment and business scenarios in the upcoming months (Budget.gov, 2012).

In the next few pages we will discuss the federal, state and local budget distribution to the department of transportation in the rebuilding process for the past two to five years, i.e. during and after the recessionary period.

Federal, State and Local Budget

The budget forecasting for States is very difficult at the moment due to the severe recession that it recently came across as wells as the frail economic recovery that it has recently started. The State Budget for the State Fiscal Year (SFY) 2010-11 was four months late as it was enacted on August 3, 2010. It was also overly optimistic as it relied heavily on the projections from tax revenues for the budget balance. The initial projections of the All Funds tax revenue got lowered by about $343 million in the Mid-Year Financial Plan that was released in November 2010 by the Division of the Budget (DOB). In February 2011 these projections got further reduced to $690 million. Therefore, in just over a period of six months there was a $1.0 billion reduction in the expected tax revenue. It has been noted that there has been a shortfall in the All Funds tax revenue collections by approximately $8.3 billion than what had been projected at the time of the budget enactment (Budget.gov, 2012a).

The spending plan of the State is made by keeping the revenue projections that are mentioned in the Financial Plan in view. When there are shortfalls in the collections, they lead to unanticipated deficits and in scenarios like these corrective actions have to be taken. In order to compensate for the $8.3 billion shortfall, U.S. had to reduce the spending, temporary resources, nonrecurring actions as well as federal stimulus. For example, 500 million in Personal Income Tax refunds and $2.1 billion in school aid payments were delayed in the SFY 2009-10 because there weren't enough funds available (Budget.gov, 2012a). See table below for more differences between the Executive Budget and the Enacted Budget (DiNapoli, 2011):

With regards to the transportation funding no major changes have been made to the Executive Budget by the SFY 2011-12 Enacted Budget. The appropriations that have been proposed by the Executives for State Operations, Capital Projects and Aid to Localities are accepted by the Legislature. Some of these are detailed below:

State Transportation Capital Spending

According to the Enacted Budget it is evident that the two-year 7.0 billion capital program is in continuation. This program began in SFY 2010-11. The fact is that the $25.8 billion five-year program which was proposed in October 2009 by the Department of Transportation (DOT) would have averaged at $5.1 billion per year. This is approximately $1.6 billion more each year than the current annual funding of $3.5 billion (Budget.gov, 2012a).

It was Governor Paterson who rejected the original DOT plan according to which the roads and bridges of the State would be kept in good condition. The reason given by the Governor for rejecting this plan was that it was too expensive since the State was facing fiscal challenges. However, he asked for the transportation capital funding to continue at the same level. Due to this the planned distributions of the capital from the State's transportation capital plan were about $1.5 billion lower than it was approximated by the DOT in October 2009 in order to keep the roads and bridges of New York in a good state (Budget.gov, 2012a).

Support for Local Highways and Bridges

For the Consolidated Highway Improvement Program (CHIPS) the bonding authorization is maintained at $363 million and $39.7 million for the Marchiselli program according to the Enacted Budget. This is the same as it was for SFY 2010-11. The Marchiselli and CHIPS spending is not included in the Financial Plan of the State as, the funds for them are raised by the New York State Thruway Authority's bonds that are issued. Therefore, the spending for CHIPS and Marchiselli is completely off budget (Budget.gov, 2012a).

Supports Sustainable Communities and Innovative Infrastructure Planning

One of the main goals of the Budget is to ensure the development of Sustainable Communities. There is an amount of $150 million included on the Budget which is going to be spent on the communities to help them in creating better transportations to avoid and reduce the greenhouse gas emission, make sustainable development possible and increase the transit- accessible housing. Recently, 100 grants were awarded to the communities all over the country by the Environmental Protection Agency (EPA), HUD and the Department of Transportation (DOT). Added to those 100 grants this $150 million will be able to help many communities all over the country (Budget.gov, 2012a).

Major sources of revenue

Funding Highlights:

In 2012, $13.4 billion are to be provided in discretionary resources. This is a $1.3 billion decrease from the levels of 2010. (In this figure the $109 billion are not included which were for the surface transportation plan's obligation limitations. The total budgetary resources of the Department of Transportation comes up to be $53 billion over 2010, this includes the obligation limits of the surface transportation).

There is a reauthorization plan of six-years whose goals are to enable the economy of the State to grow by providing more jobs as well as modernizing the transportation infrastructure of the country. This plan has a budget of approximately $556 billion. The President is going to be working with the Congress in order to ensure that the deficits are not increased by this plan.

With the help of $50 billion funding in 2012 the investments and job-growths will get a jump-start.

In order to achieve the goal of the President to provide about 80% of the Americans with an efficient railway system $8 billion will be provided in 2012 and $53 billion over a period of next six years.

In order to build a National Infrastructure Bank which will be investing in projects that will have national and regional importance to the economy, there will be $30 billion funded over a period of next six years.

To motivate and persuade the local and State partners to follow important transportation policy reforms Transportation Leadership Awards will be initiated.

Investments will be continued in Next Generation Air Transportation System which is a modernization of revolutionary level in our aviation system.

Funding for the Airport Grants will be reduced. The smaller airports will be provided with the Federal support. The larger airports will be given additional flexibility so that they can create and increase their resources (Paulais, 2009; also see Budget.gov, 2012a).

Budget and Mission

In the tables below (taken from Budget.gov 2012) we see the overall federal funding grants allocated for transportation and other domain that were given to the state and local authorities. These show the overall drop and rise in the funding ratios based on economic structures of the past years. The tables also show expected allocations till the years 2016.

Budget Improvement

The transportation infrastructure was built decades ago because of which it is in severe need of repair and rebuilding. The President's Budget is a six years program according to which the reauthorization of highways, passenger rails, transit, National Infrastructure Bank and the highway safety will be carried out. This is a project on which $556 billion will be invested. This proposal has been designed not only to compensate for the lack of previous funding by the government. But it is also being carried out to ensure that the resources and the Federal dollars are being utilized in the right places and that they prove to bring long-term growth to the Nation. This proposal reflects the efforts being made by the government to ensure that the step being carried out to help the economy of the Nation brings long-term fruitful results. With the creation of jobs and economy being recovered the government will be able to balance out the fiscal discipline. With the help of this project the existing assets will be fixed which will help in the availability of cost-effective transportation systems. There are no earmarks present in this project and the government is planning on cancelling the long-dormant ones. The President will be working in collaboration with the Congress to make sure the deficits are not increased by the offset of the funding boost (Budget.gov, 2012a).

No particular action has yet been taken by the U.S. Government for the structural reforms. Right now the main focus of the Government is on the financial institutions, although the problems faced by the financial sector are far from being solved too. Huge losses are continuously being posted by the two GSEs for mortgage market refinancing. The main reason for these huge losses is the unpaid loans. Therefore, the GSEs are in continuous need of capital to be transferred from the Treasury Department. It has been reported that a separation of these two institutions is being prepared by the Administration. This separation will be carried out in such a manner that each of these institutes will be given a bad bank whose assets can be transferred (Zandi, Chen, de Ritis & Carbacho-Burgos, 2009).

This same technique which has been mentioned above is being considered by the monopolies too. In order to re-enter the municipal market bonds with the rating of AA or AAA, there are many credit enhancers who have been observed to separate their toxin assets in particular vehicles. However, many people have various views regarding these activities. The main reason behind this is the current distrustful reputation of the rating agencies. Fitch, Moody's, and Standard & Poor's are three of the world's largest agencies and all three of them have a de facto oligopoly. These agencies are currently facing the accusations of conflicts of interests as it has been proved that the methods through which they conduct analysis are flawed (White, 2009).

Proposals have been presented by the local governments to re-launch the bond markets through the mechanisms that are guaranteed. Federal Treasury would be allotted to the one that has been tried and tested. But the Treasury will be allotted on temporary basis in order to ensure that the bonds issued under the stimulus are municipal (Emergency Economic Stabilization Act of 2008). The second would be the one that will present an effective solution which will be sustainable as well regarding the creation of a mutual guarantee fund. The responsibility of this fund will be to insure new bonds which either have a connection to the revenue-generating services or are natural. This should be a non-profit instrument run by the local governments but on a national level. It was also proposed that a public-private infrastructure bank should be established on a federal level (Rohatyn, 2009).

Comparative Analysis

The table above (taken from Budget.gov 2012) shows the financial comparisons of federal outlays and funds to the state and local governments. These were funds that were given to either agencies for capital investments or individuals for domain of health or education. Here, the focus on the comparative analysis will be the ones made in capital investment as that includes the domain of transportation in this case. The comparative analysis also includes the percentage allocated to capital investments not just as the overall finances in millions or billions of dollars but also as a percentage of eth overall federal outlays for state and local government for the specific year as well as the GDP for the specific year. The table also shows comparisons of estimates for the federal outlays till the year 2016.

Revenue Changes - Future Alterations

Federal, State and Local

Boosts Spending by $50 Billion in the First Year

In order to trigger the growth of jobs and to start the multi-year investments, the state has provided a $50 billion worth of six-year Administrative Plan. These $50 billion are apart from the spending that are going to be done in order to improve the transportation system. With the help of these $50 billion hundreds of thousands of jobs will be created in the first few years. Many industries that have been suffering from the ill effects of recession will be able to recover from this Administrative Plan. Therefore, with the help of this Budget the transportation system as well as the job market will get a lot of help. Along with this the Federal taxpayers will be able to get advantage from the competitive pricing in construction that has been there for a long time now (Paulais, 2009; also see Budget.gov, 2012a).

Supports High-Speed Rail Service as Real Transportation Alternative

The intercity passenger rail program is being included in the multi-year reauthorization proposal for the first time. The main goal of this program is to ensure that 80% of the Americans have access to high-speed passenger rail system. This project is being estimated to be completed in the next 25 years. As a part of the national integrated strategy an amount of $53 billion will be provided by the Budget in order to fund the high-speed railway programs as well as the other railway programs. This $53 billion will be provided over a period of next six years. In the hopes of building a competitive and large System Preservation the Amtrak's stand-alone subsidies will be merged with the high-speed rail program (Budget.gov, 2012a).