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.

Paying for Roads One Way or Another

Yes, I know everyone is talking about MoCo’s budget crisis, and don’t worry – we will too. But this Post article on a report by the Metropolitan Washington Council of Governments (COG) calling for a comprehensive toll network caught my eye.

According to the article:

The [COG] study, which will be presented to the council of governments' Transportation Planning Board, includes three scenarios. The first would add a series of new toll lanes to every freeway in the region, with tolls applying only to drivers on those lanes, a proposal that is seen as unworkable. The new roads and overpasses would be so costly and eat up so much land that it is essentially a non-starter.

"We can't build a duplicate highway network; it ain't gonna happen," [COG transportation director Ronald] Kirby said.

The report lays out two other scenarios that would add tolls to existing highways:

One would add tolls to all District river crossings and existing freeway lanes in the city, where there is no room for new or expanded lanes. The plan would, in effect, connect the 1960s-era highway network that was discontinued in favor of Metrorail. For example, the stretch of New York Avenue from the District line to the Third Street tunnel, which connects U.S. 50 and Interstate 395, would be tolled. Similarly, the stretch of Independence and Maine avenues that joins the Arlington Memorial Bridge and Southeast/Southwest Freeway would be tolled.

The most comprehensive scenario, which has captured the imagination of planners and government leaders, would toll every regional highway, plus all the regional parkways, including the Baltimore-Washington, George Washington, Rock Creek and Potomac, Clara Barton and Suitland parkways.

According to the report, the most comprehensive tolling network would raise $2.75 billion a year, increase transit use by 6 percent, boost carpool rates by 4 percent and result in a relatively small -- 1.2 percent -- increase in vehicle miles traveled, which is how traffic planners measure the amount of driving.

Why are we talking about tolls? Because there just aren't very many alternatives to pay for massively expensive but necessary transportation projects. Neither Maryland nor Virginia have done very well at this. In last year’s special session, the Maryland legislature voted to allow the gas tax to increase along with construction costs, thereby generating an extra $400 million annually for transportation. But $250 million will go to maintenance, leaving just $150 million – roughly equal to the cost of one average interchange project – for new projects statewide each year. In Virginia, a plan to allow an unelected board to levy taxes for transportation unraveled when the state’s Supreme Court declared it unconstitutional. Politicians in neither state have shown much willingness to further increase gas taxes, so COG is proposing tolls as an alternative.

I have never actually met a person who loves tolls. I mean, not just one who tolerates tolls, but one who has formed a pro-toll fan club, collects toll-related memorabilia, has opened a toll museum and worships toll collectors like rock stars. That said, EZ-Pass has made paying tolls less painful than it used to be.

But think about it like this: one way or another, we will pay for our road network. We can pay for it through a gas tax. We can pay for it through tolls. We can pay for it by privatizing roads (as Indiana has done) and then watching the private operators jack up the tolls over time. Or we can pay for it by sitting in congestion, burning needless gas as our cars idle and further pollute the atmosphere. The first two options present costs that are obvious and up-front whereas the last two have costs that are hidden or deferred. Nevertheless, I find the first two options preferable to the last two because at least they do not increase greenhouse gas emissions or enrich plutocratic investors.

That's Nice, But Where Are You Getting the Money?

Lt. Governor Anthony Brown is promising billions to pay for BRAC projects. But not so fast.

At an event marking the release of Maryland’s Base Realignment and Closure (BRAC) report, Brown announced an ambitious plan to pay billions for education and transportation needs. The money is needed to adjust the state’s infrastructure to accommodate thousands of new jobs created by the military’s shifting of more capacity into Maryland. Brown’s proposal includes $1.6 billion for 26 transportation projects, with half the money due for projects to commence next year.

But wait – where is the money coming from? In the recent special session, the General Assembly turned down a proposal from the Governor to raise the gas tax. Instead, they chose to devote a portion of the sales tax increase to transportation. Of the estimated $400 million in annual funds generated by the legislature, roughly $250 million would go to maintenance of existing capacity. That leaves $150 million for new projects, or about the cost of one interchange project per year. That’s right – one interchange. In the entire state. Per year. That prompted some Montgomery County politicians to float the idea of a local gas tax for transportation.

No one denies Maryland’s transportation needs. The BRAC projects are another addition to a long list including Baltimore’s Red Line, Montgomery County’s Purple Line and Corridor Cities Transitway, and countless much-beloved little projects. But in the aftermath of the special session, the General Assembly may have little appetite for more tax hikes. So where are they getting the money for BRAC?

Transportation funding is a huge budgetary issue that is not going away. Stay tuned.