Fiscal Year 2009 Budget 124
Appendix - Annual Toll Revenue Certificate
Michael Colsch October 23, 2008 Page 3 of 6 In the labor market, private sector payrolls slowed markedly in late 2007 and early 2008. Private sector employment declined in the first half of 2008 at an average monthly rate of 94,000 jobs nationally, and the national unemployment rate rose to 5.5 percent. The sluggish pace of hiring, higher energy prices, lower equity prices and softening home prices have impacted consumer confidence and consumer spending. The Federal Reserve took several steps to stabilize the financial markets, extending credit to financial institutions and cutting the Federal Funds Rate beginning with a 50 basis point cut in September 2007. The Federal Reserve’s Open Market Committee has cut the Federal Funds Rate six more times since September 2007, bringing the Federal Funds Rate to its current 2.0 percent level. Motor Fuel Prices A critical factor affecting the national and regional economy has been the sharp rise in energy prices, with crude oil trading at about $83 per barrel higher in early July 2008 compared to June 2007. According to the September 2008 Energy Information Administration’s (EIA) Short Term Energy Outlook, the price of West Texas Intermediate crude oil increased sharply from approximately $58 per barrel in the first quarter of 2007 to approximately $145 per barrel in July 2008, falling back to approximately $117 per barrel in August 2008. National retail gasoline prices have moderated similarly, from a peak of $4.11 per gallon for regular gasoline for the week of July 14, 2008 to $3.81 per gallon for the week of August 11, 2008. Retail diesel prices have changed similarly, up from a national average of $2.55 per gallon in the first quarter of 2007 to approximately $4.76 per gallon on July 14th, to $4.35 per gallon on August 11, 2008. The EIA’s September 2008 Short-Term Energy Outlook report forecasts crude oil prices to average $116 per barrel in 2008, and $126 per barrel in 2009. Regular-grade gasoline is projected to average $3.61 per gallon nationally in 2008. Prices are forecast to remain high in 2009, with the average price of $3.88 per gallon in 2009. Diesel prices are forecast to average $4.09 per gallon nationally in 2008, and $4.26 per gallon in 2009. The domestic economic slowdown has dampened demand for gasoline and diesel, contributing to lower forecast prices later this year. Impact of Economy and Motor Fuel Prices on Travel The effect of the slowing economy and rising motor fuel prices on travel has been felt both nationally and regionally. The July 2008 issue of Traffic Volume Trends, published by the Federal Highway Administration (FHWA), based on approximately 4,000 continuous traffic counting locations nationwide, indicated that the estimated vehicle-miles of travel on all roads and streets nationwide declined by 3.6 percent compared to July 2007. The cumulative vehicle-miles of travel for the first seven months of 2008 was estimated to be 3.0 percent lower than the same period in 2007. The FHWA estimated that travel on urban arterial roads in Illinois declined by 0.8 percent in July 2008 compared to July 2007. This follows a decline of 4.5 percent in vehicle-miles traveled in June 2008 compared to the same month a year ago. It is anticipated that the effects of the economic slowdown and high gasoline prices will continue to be felt through the rest of 2008 and 2009. Traffic and Revenue Forecasts It was observed that revenues for the first eight months of 2008 were 3.6 percent lower than our prior forecast. We believe the decline in travel caused by the economic situation and motor fuel price increases will continue through 2009. The toll revenue forecasts provided herein reflect negative adjustments for the economy and high motor fuel prices for the rest of 2008 and all of 2009.
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