FY 2023- 2024 County Road Revenue Forecasts – April Update

Executive Summary: The SHF, SRS, and STBG payments in FY 2024 are estimated to decrease by $6.9 million (-2%) over our previous estimates for FY 2024.

  • FY 2024 SHF estimate Decreased by $4.8 million (-1%) to $350.8 million.
  • FY 2024 SRS estimate Decreased by $2.1 million (6.4%) to $31.7 million.
  • FY 2024 STBG estimate stayed the same at $19.2 million.

Please Click here for the County Road Revenue Forecasts for Fiscal Year July 1, 2023 – June 30, 2024 April Update (County FY 2024).

State Highway Fund (SHF): SHF revenues are projected to decrease by $4.7 million (-1%) over January’s forecast for FY 2024 as the Oregon Department of Transportation (ODOT) has recalculated their estimate using updated metrics as motor fuels tax revenues have been projected down.

Motor fuels tax revenue is estimated using fuel prices, passenger vehicle stock, and fuel efficiency. Fuel efficiency is projected to rise, which reduces fuel consumption and motor fuels tax revenues. ODOT’s SHF forecast Factored in DEQ’s new Advanced Clean Cars II rule. This rule requires auto manufacturers to deliver increasing percentages of new zero emission light-duty vehicles. By 2035, all new passenger cars, SUVs, and light-duty pickup trucks must either be battery electric or plug-in hybrid electric vehicles. ODOT is estimating a reduction of about $200 million in fuel tax revenue compared to their October forecast.

Higher gas prices, and Inflation, lead to less spending and a weaker weight-mile forecast. With the final gas tax increase from HB 2017 going into effect in FY 25, ODOT is predicting a precipitous decrease in revenue. In the short term, the DMV outlook helps to balance this out.

  • FY 2024 SHF estimate Decreased by $4.7 million (-1%) to $350.8 million.

Secure Rural Schools: The SRS Act payments for Federal FY 2023 County FY 2024 are included in the county totals because Congress has taken action to reauthorize the program through the Infrastructure Investment and Jobs Act (IIJA). SRS Payments are authorized for the next county fiscal year and will not be subject to the typical 5% annual decrease. Instead, SRS payments will remain at the amount from Federal FY 2017 for FY 2021, FY 2022, and FY 2023. The FY 2022 and FY 2023 payments will be subjected to a 5.7% sequestration pursuant to requirements promulgated in the Budget Control Act of 2011. The FY 2021 payment was paid in full because funds were allocated after the sequestration order was issued. Future forecasts will assume sequestration will be implemented. Small changes in SRS payments occur based on changes in national median income.

SRS Payments are divided between Title I, II, and III, with Title I providing funding for roads. All Oregon counties completed their election allocations between Title I, II, and III by the deadline on September 30, 2022. Thank you for working with your Board of Commissioners to complete this process.

  • FY 2024 SRS estimate Decreased by $2.1 million (6.4%) to $31.7 million.

USFS Timber Receipts: The USFS estimates are based on 25% timber receipts (1908 Act 25-percent payments) from Federal Fiscal Year 2022 (County Fiscal Year 2023), which is the first updated data released by the Forest Service since 2018. Please remember that counties only receive USFS receipts if a county selects not to receive SRS payments, In most cases, this would represent the minimum budget option.

Counties can elect to receive USFS timber harvest receipts or SRS payments every two years. The next deadline for electing to receive SRS / USFS timber harvest receipts is August 1, 2023 and every odd year thereafter. For the vast majority of counties, SRS is estimated to be higher.

Surface Transportation Block Grant (STBG) / State Fund Exchange: STBG revenues as they have been administered under the status quo fund exchange program are projected to stay the same.

However, ODOT has proposed to reduce flexible state fund exchange available for counties by 50% in 2023, and possibly eliminate the program in coming years. Under ODOT’s proposal each county would receive $250,000 in state funds, and would then have to choose between taking the remaining funding either as federal dollars, or as HB 2017 state bridge funding.

The Association of Oregon Counties and OACES are engaged in discussions with ODOT and are pursuing a legislative fix, House Bill 2101, to secure this vital program. ODOT and AOC have negotiated a – 4 amendment. The amendment would fund a flat $35 million local program for cities, counties, and small MPOs, and only revert to federal funds if no state funds are available. $35 million is the approximate average annual amount that cities and counties are expected to receive in STBG funding for the next five years. Although this program will not increase with federal funds and inflation, it represents a significantly better and more sustainable program than ODOT’s previous 50% reduction plans.

Until an agreement is reached, ODOT has released the FY 2023 STBG allocation to counties as federal funds, without a fund exchange option. Details on the Fund Exchange Program will be shared as updates become available. Current program details are available on the Oregon Department of Transportation : Local Government Funding Overview : Local Government : State of Oregon website.

Please see the attached County Road Revenue Forecasts for Fiscal Year July 1, 2023 – June 30, 2024 (County FY 2024) for a detailed breakdown of how the status quo, ODOT’s proposal, and HB 2101 – 4 would impact revenue for each county.

  • FY 2024 STBG estimate stayed the same at $19.2 million.

Forecasting Uncertainty and FY 2023-24 Outlook: This FY 2023-24 forecast represents a conservative baseline county funding model estimate approach for dedicated funding budget planning purposes.

Please reach out to Jordan Cole for more information with any questions or concerns.