Transportation in a Crunch

By Marc Korman.

A recent Gazette comic, reproduced below, sums up the recent action by the General Assembly when it comes to transportation. A big loser in this year’s session, and a potential loser in future years, is the state’s transportation funding.


Coverage of the General Assembly’s repeal of the 6% computer services sales tax mostly ignored the negative effect on transportation and instead focused on the new millionaire’s surcharge, really just a new tax bracket, that taxes earnings over $1 million at 6.25%. Far less attention was paid to the $50 million cut from the state’s Transportation Trust Fund for each of the next five years. Just a few months ago, the General Assembly and the Governor received much earned praise for adding $420 million in new annual revenue for transportation.

The opponents of the computer services tax repeal proposed even deeper cuts to transportation, with Senator Madaleno proposing a $150 million annual cut to the Transportation Trust Fund. In a posting to Free State Politics and republished here at MPW, Senator Madaleno justified his proposal by noting that it would still leave in place a $300 million increase from prior to the Special Session. Senator Madaleno also stated that the projects slated to be funded were not good uses of the state’s money. Given the state’s transportation needs, I find the argument a bit curious because the idea that the local transportation projects have no validity because they will only improve “traffic flow in the immediate vicinity of these intersections” begs the question of why they are being funded at all. If Senator Madaleno’s claims are true, and these projects are of such low priority and value, then perhaps our legislators need to convince the Department of Transportation to pick better projects instead of deciding to cut funds.

But the real point for all of those proposing transportation funding cuts of any size is that the needs are real and we need more funds, not less. Even if individual legislators do not support all of the projects on the list of needs, surely each individual Senator supports a majority of these and numerous others. Some of the needs are:

1. The Inter County Connector-$2.4 billion
2. The Purple Line-$105 million to $1.685 billion (depending on the method selected)
3. Corridor Cities Transitway-$850 million estimate
4. BRAC Enhancements in Bethesda-$70 million estimate
5. Georgia Avenue and Forest Glen Road Crossing - Cost unknown, but I put it in to avoid the wrath of MPW’s writers.

Instead of searching for ways to meet these needs, everyone is proposing cuts. If we are not going to raise the gas tax, the least we can do is stop raiding the Transportation Trust Fund. As I said, it was only a few months ago that we were praising the $420 million increase. It was just a year before that we were criticizing Bob Ehrlich for raiding the Transportation Trust Fund. In 2010, I do not want the Democrats to be accused of the same transportation policy failures.

A Note of Concurrence from Adam Pagnucco

Marc Korman's argument is even more powerful than he originally stated. The fact is that Maryland's Transportation Trust Fund (TTF) is already under assault.

First, the revenues devoted to the fund are endangered by the poor economy. The major sources for the TTF are gas taxes, motor vehicle titling taxes and fees (like registrations and licenses), operating revenues (like tolls) and a portion of corporate income tax receipts. All of these revenues will probably record shortfalls in the coming year.

Second, construction material prices are soaring. According to the Bureau of Labor Statistics, national wholesale prices have skyrocketed by 31% for ready-mixed concrete, 73% for gasoline and 78% for asphalt between 2004 and 2007. The situation is exacerbated by an ever-weakening U.S. dollar and rising commodity demand from India, China and other developing countries. These price increases threaten the financial solvency of some construction contractors and will stretch already scarce dollars at MDOT.

Of the $400+ million transportation increase approved by the General Assembly’s special session, $150 million was planned for new projects such as the ones listed above by Marc. The loss of $50 million from the computer tax repeal, the slowdown of TTF revenue sources and rising commodity prices will greatly reduce the amount of money left for new projects. As a matter of fact, if the state protects tens of millions of dollars in planning money for mass transit projects (like Baltimore’s Red Line and MoCo’s Purple Line and CCT), it is entirely possible that all other new work aside from the ICC will be deferred. That means that if the legislature attempts to raid the TTF – as Governor Ehrlich did repeatedly – there may be little left to plunder.

There is another possibility. The legislature could choose to defer system maintenance, which was supposed to receive an extra $250 million per year. The state prioritized system maintenance in the wake of the I-35 bridge collapse in Minnesota. If the state does cut maintenance and a major infrastructure failure occurs, the political consequences will be cataclysmic.