In fiscal year 2009, the Commonwealth launched a new capital investment program known as the “Accelerated Bridge Program” (the Bridge Program). The Bridge Program is a $2.984 billion, eight-year program to rehabilitate and repair bridges in the Commonwealth that are structurally-deficient or that would otherwise become structurally-deficient within the next few years. The Bridge Program will be financed with a combination of two sources: (1) special obligation gas tax bonds of the Commonwealth, and (2) federal grant anticipation notes.
The following table shows the current estimate of annual Bridge Program spending between fiscal years 2010 and 2015 to be funded with a combination of gas tax bonds and federal grant anticipation notes.
|Fiscal Year||Gas Tax Bond Bridges Spending||Federal GANs Bridges Spending||Projected Accelerated Bridge Program Spending|
In addition to addressing the public safety and transportation concerns posed by the Commonwealth’s backlog of structurally-deficient bridges, the Bridge Program is an intentional effort on the part of the Commonwealth to generate hundreds of millions of dollars of cost savings by doing these needed bridge projects sooner than it otherwise would. These savings will result from avoided cost inflation and avoided costs of further deferring maintenance and repair of the bridges.
In an effort to achieve the public safety and cost savings benefits through the acceleration of investment in structurally-deficient bridges, the amounts to be borrowed and expended for the Bridge Program over the next few years will be in addition to the bond cap for the regular capital program. The debt service impact of the Bridge Program financing is, however, taken into account for purposes of determining the affordable level of debt to fund the regular capital program each year within the 8% of budgeted revenue limit described herein. Specifically, the principal and interest payable on any special obligation gas tax bonds and the interest payable on any federal grant anticipation notes issued to finance the Bridge Program will be included in the total debt service payment obligations that must be constrained within 8% of budgeted revenues (principal on the federal grant anticipation notes will be payable from future federal grants which are not included within budgeted revenue). This treatment of the Bridge Program gas tax bond and federal grant anticipation note debt service is consistent with the manner in which this debt affordability analysis treats the Commonwealth’s other outstanding gas tax bonds and federal grant anticipation notes.
The impact of the Bridge Program will be to constrain the bond cap in future years. As the debt service impact of the debt issued to finance the Bridge Program increases over the next few years, there will be less capacity than there otherwise would be to issue new debt to fund the regular capital program within the 8% limit. The reduced future capacity will result in less funding for transportation capital projects in future years than there otherwise would be. However, by accelerating this future borrowing capacity (as well as accelerating the future federal grant spending capacity through the issuance of the federal grant anticipation notes) to invest in structurally-deficient bridge projects that must be undertaken throughout the Commonwealth, the Bridge Program will ensure that these projects are done cheaper and sooner than they otherwise would be.