Long-Term Financial Planning The MDTA’s dynamic financial forecasting model produces strong debt service coverage and is seen as a strength by the credit rating agencies, thereby resulting in favorable credit ratings of AA and Aa2 from Fitch Ratings and Moody’s Investors Service, respectively. Traffic and revenue forecasts are produced annually by an independent consultant covering a ten-year period utilizing conservative elasticity factors and limited long-term growth on existing facilities to reflect recent experience and changing demographics.
July 1, of each year and with the submission of the MDTA’s annual update to its six-year capital program in January. For internal financial planning purposes, additional forecasts are developed for varying planning horizons and testing alternative sensitivity cases. The toll rates for the additional sensitivity cases remain unchanged as a means of accurately reflecting the effects of each stress test on the system; however, if such unexpected circumstances were to occur, the MDTA would adjust its budgets and use its independent toll rate-setting power to take mitigating action to the extent necessary. The MDTA develops an annual operating budget and is required by the Trust Agreement to approve it by July 1, of each fiscal year. Each of the MDTA’s division/office directors and managers contribute to the development of the operating budget based on the expected staffing and funding level necessary to operate the MDTA’s facilities and departments. On a quarterly basis, the budget is reviewed by division/ office and by budget category for any significant variances from targeted spending levels. The MDTA may at any time adopt an amended or supplemental budget for the remainder of the then-current fiscal year. The operating budget is provided to the legislature annually for informational purposes but does not require legislative approval. The annual capital budget is developed as part of a six-year capital program. The capital program includes both major and minor projects in varying stages of development. Projects are moved from the Development & Evaluation Program to the Construction Program as funding becomes available and as design work is significantly advanced. Inspections of the MDTA’s facilities by a nationally accredited engineering firm are required by the Trust Agreement and help to identify needed improvements and prioritize projects. The FY 2025-2030 capital program provides a $5.1 billion investment in the MDTA’s facilities, with the majority of this funding focused on system preservation and the replacement and expansion of existing facilities.
These realistic traffic and revenue forecasts are utilized in the development of the MDTA’s financial forecast. Conservatism is built into the financial forecast by assuming that the operating and capital budgets will be fully spent and the use of assumed interest rates on future borrowings at rates that are typically higher than current market trends. The financial forecast is used to determine whether the MDTA will meet all financial goals and legal requirements throughout the forecast period, helps to determine the appropriate mix of current year funding and bond proceeds to fund the capital program, and identifies the potential need for future toll rate adjustments. As required by statute, the MDTA’s six-year financial forecast is provided to the legislature twice per year for informational purposes. The timing coincides with the development of the annual operating budget by
Curtis Creek Drawbridge (I-695)
Annual Comprehensive Financial Report For Fiscal Year Ended June 30, 2024 | 17
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