You have been forwarded an email from the Florida Department of Transportation District IV Secretary James Wolfe concerning misconceptions regarding the $2 car rental fee. I would appreciate the opportunity to clarify some of the misconceptions that have been cited.

Background: Chair Bruno Barreiro, South Florida Regional Transportation Authority (SFRTA) Governing Board, approached the legislature requesting an increase to the existing $2 car rental fee. While this appeal was rejected by leadership, it was suggested that securing the existing $2 would leave both the FDOT and the SFRTA in a position to jointly approach the legislature in future years for an increase. The Chair sought to reduce any financial impact to the FDOT by going after the existing $2 and agreeing to give the FDOT back approximately half of the monies it generates within the three counties; this, at a time when the three counties remain donors to the state of more than $500 million in State Intermodal System funds, alone, over the existing work plan.

Secretary Wolfe states that if the three counties are released from their funding obligation to SFRTA (approximately $21 million) and FDOT is relieved of its obligation to match the counties and fund maintenance and dispatching on the South Florida Rail Corridor (SFRC) (approximately $25 million[1]), there will be no net gain in funding for the SFRTA if it receives $41 million from the $2 rental car fee.

A more detailed explanation is required to fully understand the funding picture. Currently, only $13 million of FDOT's $25 million funding contribution comes to SFRTA in the form of an operating subsidy as its match of the operating subsidies provided by the three counties. An additional $1.3 million has been allocated in District IV's Work Program as a partial subsidy for the cost of dispatching the New River Bridge (the total cost is actually $3 million, which FDOT has committed to fund). The balance of the FDOT's $25 million is used by FDOT to fund maintenance of the South Florida Rail Corridor, which is currently preformed by CSX Transportation, Inc. (CSX). CSX also dispatches all trains on the corridor (with the exception of the New River Bridge, which is dispatched separately and paid for by FDOT).

Pursuant to an agreement negotiated with CSX, FDOT can assume both the maintenance and dispatching functions from CSX (a long-time goal of SFRTA) provided SFRTA agrees by the end of this year to assume those obligations for FDOT.

Should SFRTA agree to assume the maintenance and dispatching functions on the SFRC, its operating expenses would increase to $45 million and would, in fact, exceed the $41 million in revenue from the rental car fee.

What the Secretary fails to take into account is that SFRTA would be able to add Amtrak revenues and Outdoor Advertising Revenues, which currently are used by FDOT to fund corridor maintenance, to SFRTA's federal preventive maintenance funds to offset the deficit of approximately $4 million. Therefore, SFRTA would not need to seek an increase in the surcharge for its operations; however, it has indicated it would support FDOT in seeking an increase in the rental car fee to replace the FDOT revenue that has been redirected to SFRTA.

Secretary Wolfe also states that each county must simply continue to provide its annual support of $4.3 million to SFRTA, as required by statute, and FDOT will continue to match these amounts in order to maintain current Tri-Rail operations.

That may be true, but it does not provide any funding to SFRTA to fund its assumption of maintenance and dispatch functions. Because of the deadline included in FDOT's agreement with CSX, SFRTA cannot wait until next year's Legislative session to seek additional funding nor can SFRTA simply rely on a promise of funding from FDOT[2] - with the hope of future action by the Legislature - in order to take on this major long-term financial obligation.

The $4.3 million figure Mr. Wolfe uses includes $2.67 million that is not used to fund operations, but is set aside for the purpose of matching federal funds. The counties are only required by statute to provide $1.565 million to SFRTA as operating funds. The counties have agreed over time to increase their operating subsidies to SFRTA as the authority's operations and expenses have increased to their current level of $4,366,950.

Because of the severe budget shortfalls facing each county, at least one county administrator has already indicated that his county intends to cut back its operating subsidy to the minimum $1.565 million. Other counties, per the interlocal agreements would make the same reduction, which would result in FDOT reducing its subsidy by a corresponding amount.[3] The reduction in subsidies would then total $18 million under this scenario, which would be devastating to Tri-Rail operations. It would lead to a reduction of service from 50 trains per day to 20 trains daily with no weekend service and would place SFRTA in violation of its Full Funding Grant Agreement with the Federal Transit Administration. This could have severe consequences for both SFRTA and the State of Florida. All of this comes at a time when Tri-Rail ridership continues to rise and sets all-time ridership records.

Mr. Wolfe indicates that of the $25 million that would be freed up by dedicating the $2 rental car fee to SFRTA only $5 million per year would be returned to South Florida for road project. This is an issue that should be addressed by the Legislative Delegations of the three counties with FDOT's Secretary. This is only a small part of a larger issue regarding how transportation dollars are allocated in the state.

In conclusion, we agree with Secretary Wolfe that FDOT has been very supportive of SFRTA over the years. We also appreciate Secretary Wolfe's support of SFRTA eventually obtaining a dedicated funding source and his efforts to come up with creative solutions that would allow us to maintain current operations until that occurs. However, we are concerned that creative solutions will not be enough to allow SFRTA to absorb the coming funding cut backs and to undertake new obligations for maintenance and dispatch without a dedicated funding source now.

Joseph Giulietti Executive Director SFRTA

Notes:

[1] FDOT current costs for the SFRC:

$13.08 million – Match of county contributions toward Tri-Rail operations

$8.75 million – Corridor Maintenance

$3 million – Cost to Dispatch New River Bridge (as well as entire corridor).

Total: $24.83 million

2 FDOT has made it clear it does not want to continue funding transit operations. At the April 28, 2007, meeting of the SFRTA Governing Board, Secretary Wolfe said, "As far as the elimination of the annual operating subsidy, that's a new FDOT policy affecting all current and future commuter rail agencies. The commuter rail line being planned in Central Florida has already been told not to expect the state's help beyond seven years. The DOT needs to be in the business of building roads and transit systems, but not paying for long-term operations."

3 FDOT legally can only fund 50% of SFRTA's operating costs not to exceed the counties' local match.