Chapter 90 Road Funding explained

Mr. Lynam of the Finance Committee has sent me his primer on Chapter 90 road repair funding. Here it is:

On Tuesday, March 6th, 2007 the Fin Com meet with DPW officials. During this meeting the Chapter 90 Highway funding was explained.

As I understand it :
Chapter 90 qualified roads are any public roads greater than 500 ft in length.

Chapter 90 funding comes from “State funds derived from periodic transportation bond authorizations and apportioned to communities for highway projects based on a formula under the provisions of MGL Ch. 90 §34. “

In Dartmouth’s case, this amounts to about $700K annually in the form of a Revolving Grant “ that is cumulative from year to year. Whatever funding is not used this year can be carried over to the next. This allows for larger projects to be done.

How does a project become reimbursable under Chapter 90 ?
The project, or collections of smaller projects, are identified and the engineering done at Town expense. The application is then made to the State and the project(s) approved for Chapter 90 funding. The Town then completes the project at it’s own expense, either in-house or by outside contractor(s). The final bills are then presented to the State and reimbursed, debiting the Chapter 90 “Capital Projects Funds” account : [ shown under “Capital Projects Funds” at the following URL :] http://www.mass.gov/Ador/docs/dls/mdmstuf/MunicipalActualExpenditures/srfrevolvingfunds06.xls

In some instances, the town will be required to ‘invest’ it’s own resources in a project whereby the State will pick up a large percentage of the project ...

...and the town a smaller percentage. The funding portion attributable to the Town is budgeted in the “Highway -Chapter 90 “ line item of our Town Budget.

How is the money accounted for ?
The monies paid back to the Town through this sort of “Revolving Grant” are accounted for in the “Town of Dartmouth 2005 Annual Report” [ the latest available at this time ] under “Revenue Received ~ Special Revenue ~ Revenue from State “ [ Note: For FY05, it totaled $ 611,701 Page #25 ]

The Questions is ?
When the DPW is budgeted, the amounts shown as expended for road repair, et. el. are not true insofar as those monies are actually returned to the General Fund by the State. Therefore an overall budget showing as ‘balanced’ ( or in deficit ) may actually be positive by some portion of the value of the Chapter 90 funds reimbursable. Since these are considerable in size [ $ 1,064,188.00 in FY06 ] and for the most part known ahead of time, it might behoove us to keep a closer eye on these funds in order to ascertain exactly what our ‘cash’ position is at any one time ; especially as it pertains to potential ‘free cash’ at the fiscal years end and leading into the fall.

As far as I can tell, these monies are not shown to us on the '‘Revenue Re-cap” that we are given. I suspect that they are simply booked as received [as are fees and other misc income ] , used as a slush fund of sorts to balance out shortfalls in other expected revenues, the balance then certified as free cash at the start of the next FY. This might account for why the sale of the Smith Neck school not materializing is not being heralded as such a big deal. [ Just speculation on my part ]

The Problem :
Because the numbers are so large, it leaves an unusually cloudy picture of the actual cost of operating the DPW.

Greg




Massachusetts Department of Revenue Chapter 90 Highway Funds page
Chapter 90 Funds :

State funds derived from periodic transportation bond authorizations and apportioned to communities for highway projects based on a formula under the provisions of MGL MGL Ch. 90 §34. The Chapter 90 formula comprises three variables: local road mileage (58.33 percent) as certified by the Massachusetts Highway Department (MHD), local employment level (20.83 percent) derived the Department of Employment and Training (DET)(now called Department of Labor and Workforce Development, BillT), and population estimates (20.83 percent) from the US Census Bureau. Local highway projects are approved in advance, then later on the submission of certified expenditure reports to MHD, communities receive cost reimbursements to the limit of the grant. Under the formula, communities with a larger number of road miles receive proportionately more aid than those with fewer road miles.

That's it in a nutshell. Thank you, Mr. Lynam