Department of Transportation

Consolidated Local Street and Highway Improvement Program (CHIPS)

HISTORY

The Consolidated Local Street and Highway Improvement Program (CHIPS) was established by the NYS Legislature in 1981. The applicable rules for the Program are contained in Section 10-c of the State Highway Law.

Between State Fiscal Year (SFY) 1982-83 and 1990-91 (April 1, 1982 - March 31, 1991), all CHIPS funds were distributed on a direct grant quarterly allocation basis. In 1991, State Legislation restructured CHIPS into two separate and distinct components. One was the Operation and Maintenance (O&M) direct grant component, funded from the State's General Fund, and the other was the Capital reimbursement component, funded from the sale of New York State Thruway Authority bonds.

While no CHIPS O&M funding has been included since the SFY 2001-02 State Budget, the Legislature "converted" these funds into additional CHIPS Capital funds that have been appropriated since SFY 2002-03.

Effective April 1, 2014, CHIPS is funded in the first instance by a budget appropriation, and reimbursements are being issued by the Office of the State Comptroller (OSC) rather than by the Thruway Authority.

ADMINISTRATIVE PROCESS

Legislative Authorization

Individual apportionments to municipalities for the Consolidated Local Street and Highway Improvement Program (CHIPS) are calculated annually according to a formula specified in Section 10-c of the State Highway Law. While several other factors are considered (municipality "funding levels" and historical percentages for counties, cities, towns, and villages), the two most important data inputs for this allocation process are local highway inventory (LHI) mileage (for all municipalities) and paid motor vehicle registrations (for counties and New York City) that are reported annually to the New York State Department of Transportation (NYSDOT).

Annually, after the State Budget has been enacted, NYSDOT calculates each municipality's final CHIPS Capital apportionment for the new State fiscal year (April 1- March 31). The municipality is then notified of the amount available via the letter for the scheduled June payment and a posting to the Capital Apportionment Balances link on the CHIPS Web site.

Each apportionment consists of two separate amounts that are authorized in two different subdivisions of Section 10-c. Subdivision 3 of Section 10-c authorizes payments historically out of the Transportation Improvement Fund (TIF), while Subdivision 4 of Section 10-c authorizes payments historically out of the Local Assistance Fund (LAF). Consequently, any given CHIPS check generally reflects payments made out of both the TIF and the LAF.

Capital projects are first-instance funded by individual municipalities. The municipality then requests reimbursement from the State (on specified payment dates) for its local cash expenditures for highway-related capital projects. Municipalities must certify on their reimbursement request forms that project disbursements were made during the specified authorized reimbursement period, their projects have a minimum ten-year service life, or where the project is either: (1) microsurfacing; (2) paver placed surface treatment; (3) single course surface treatment involving chip seals or oil and stone; or (4) double course surface treatment involving chip seals or oil and stone.

Subdivision 3 (TIF) Process

The TIF is appropriated at $145 million annually, with amounts to individual municipalities distributed in accordance with the following three-step process:

1. 20.7% ($30 million) is distributed to counties and NYC based on their relative shares of motor vehicle registrations, and 20.7% ($30 million) is distributed to counties and NYC on the basis of their relative shares of centerline highway mileage, except interstate and state highways.
2. The remaining $85 million is distributed to all municipalities in a two-part process. First, the money is split into individual amounts for cities, counties, villages, and towns on the basis of relative vehicle miles of travel that are specified in this subdivision of Section 10-c for each municipality class (42.7% for cities, 18.5% for counties, 10.7% for villages, and 28.1% for towns). Amounts so allocated to each municipality class are then apportioned within that class on the basis of the relative number of lane miles, exclusive of parking lanes, under the maintenance jurisdiction of each municipality.
3. The amounts distributed to each municipality in accordance with (a) and (b) above are adjusted so that such amounts will not be less than the "funding level" for each municipality. The "funding level" or "hold harmless" provision for each municipality is defined as the average amount that it received in State Fiscal Years (SFY) 1980-81 and 1981-82 from the four programs that preceded CHIPS (note: NYC is the only city and Rye Brook is the only village that has a "funding level" because they received funding under the four programs that preceded CHIPS; all other cities and villages have a funding level of zero). TIF amounts initially calculated to be less than the funding level for any municipality are raised to the funding level, with the amounts needed for this adjustment taken uniformly from other municipalities.

Subdivision 4 (LAF) Process

LAF amounts distributed to municipalities are made in accordance with the percentages that were established in the 1979 Safer Local Roads and Streets Program (SLRSP), a 3-year program that was funded at $100 million. As stated in Subdivision 5 of Section 232 of the Transportation Law, the SLRSP-based percentages are as follows: (a) towns (38%); (b) counties (30%); (c) NYC (14%); (d) other cities (9 %); and (e) villages (9%).

Unlike the Statewide TIF, which stays constant at $145 million annually, the Statewide LAF amount often varies annually. The LAF amount each year is proportional to the amount received under SLRSP; for example, if the Statewide LAF is $218.097 million in a particular State Fiscal Year (SFY), the LAF amount to each municipality for that SFY would be derived by simply multiplying the municipality's historical SLRSP figure by 218.097 percent (a factor of 2.18097).

SPECIAL CIRCUMSTANCES AFFECTING THE FORMULA APPORTIONMENT PROCESS

1. Municipal Dissolutions/Consolidations: If a municipality is dissolved (such as a village), the road mileage reported in NYSDOT's Local Highway Inventory will revert to the successor municipality (such as an adjoining town) that is absorbing/consolidating the former municipality. This will result in both the TIF and LAF from the dissolving municipality being assigned to the absorbing municipality.
   
   If the CHIPS funding payable to the individual municipalities in a municipal consolidation or merger exceeds the CHIPS funding payable to the successor municipality, the successor municipality will receive no less in CHIPS funding than the individual municipalities would have received in total had the consolidation or merger not occurred.
2. Municipal Incorporations: For municipal incorporation (such as a new village), NYSDOT will coordinate with the affected municipalities in determining the road segments in the Local Highway Inventory that should be deleted from the "giving up mileage" municipality and transferred to the new municipality; this will form the basis for the new municipality's TIF portion. The LAF portion will be calculated based on relative centerline mileage that the new municipality owns compared to the total from the "giving up mileage" municipality.