If lawmakers don’t act to solve the state’s ongoing transportation funding woes during the upcoming session, they may not get a better chance, observers say.
State budget analysts painted a bleak picture of Maryland’s transportation finance situation last week, warning lawmakers in Annapolis that alternate revenue sources should be considered to fund major transit projects such as the Red and Purple lines.
But the news wasn’t all bad. Preliminary fiscal 2014 projections suggest the state could end up with a general fund deficit of just $27 million, according to the Department of Legislative Services.
“That’s essentially dead even,” said Neil C. Bergsman, director of the nonprofit Budget & Tax Policy Institute.
A recovering economy could make it easier for the governor and legislature to pass a transportation funding plan such as an increase in the state’s gas tax, Bergsman said.
A gas tax hike, likely to be the most effective revenue generator, probably will get harder to pass in the future as the number of hybrid and electric cars increases, Bergsman said.
Those cars, which use less gasoline, won’t generate as much tax revenue, and lawmakers might need to explore ways to track the number of miles a vehicle has traveled in order to fairly raise revenue, he said.
Maryland has not raised its 23.5 cents-per-gallon gas tax since 1992, and although Gov. Martin O’Malley proposed adding the state’s 6 percent sales tax to gasoline earlier this year, the proposal stalled in the legislature.
The governor has not yet decided whether he will reintroduce the proposal in the 2013 General Assembly session and needs to discuss the matter with legislative leaders, according to his staff.
Gus Bauman, who chaired the state’s Blue Ribbon Commission on Transportation Funding, hopes lawmakers will revisit funding proposals made in the commission’s November 2011 final report, which he said was largely ignored.
Increased revenue to the state as a result of expanded gambling as well as a recovering economy should prompt policymakers to take a hard look, Bauman said.
The report suggests increasing the gas tax by 15 cents per gallon over three years, as well as raising transit fares and motor vehicle fees, to generate as much as $870 million in annual transportation revenue.
But for such measures to fly with taxpayers, the state must guarantee that the money won’t be raided from the Transportation Trust Fund, Bauman said.
Since 1984, hundreds of millions of dollars have been taken from the transportation fund to balance the state’s budget.
More than $500 million of those funds have been repaid, but $947.5 million in Highway User revenues — intended to pay for local road repairs — have not, according to the commission.
“Without such a guarantee, I don’t see it happening,” Bauman said.
Restoring the Highway User revenues is a legislative priority in the coming year for both the Maryland Municipal League and the Maryland Association of Counties.
Del. Sheila E. Hixson (D-Dist. 20) of Silver Spring, chairwoman of the House Ways & Means Committee, said Nov. 13 that with the election over, there might be more of an appetite for a gas tax hike in the upcoming session.
Hixson said she’d be meeting with the governor’s staff next month to discuss the matter. “Something has to be done,” she said.
Senate Minority Leader E.J. Pipkin (R-Dist. 36) of Elkton said that the state needs to reconsider its transportation priorities before there is any discussion about raising the gas tax. Maryland taxpayers would be funding initiatives like the Red and Purple lines, which have a combined price tag of about $4 billion, but they really are regional projects, he said.
Instead, the state should consider regional transportation and taxing authorities so the localities impacted by the projects are footing the bill, Pipkin said, adding that he’d proposed such legislation in the past and would do so again in 2013.
“Just raising the gas tax will not get it done,” he said.
Analysts from the Department of Legislative Services told members of the joint Spending Affordability Committee on Nov. 13 that some funding projections for fiscal 2013-2018 from the state Department of Transportation may be off-target.
The $5.7 billion in funding that MDOT is projecting for capital projects through 2018 is optimistic and could be overstated by more than $2 billion, said Jonathan Martin, a DLS analyst, adding that MDOT was anticipating more titling tax revenues and less overall spending than was likely.
Furthermore, by 2018, the State Highway Administration’s special fund capital budget will be able to pay only for system preservation rather than new, major construction projects, Martin said.
The draft five-year plan developed by MDOT does not include construction funding for the planned Purple Line light-rail system in the Washington, D.C., suburbs, which is projected to cost $1.9 billion, or the Baltimore Red Line light-rail project, which is estimated to cost $2.1 billion, Martin said.
The state should consider alternate ways of funding those projects, such as public-private partnerships or local revenue options, such as regional sales or motor fuel taxes, Martin said.
Sen. David R. Brinkley (R-Dist. 4) of New Market said local options, such as a regional sales tax, should be considered, as should tolling on roads such as Interstate 270.
Another option expected to resurface in the upcoming session is a constitutional amendment — proposed by Sen. James C. Rosapepe (D-Dist. 21) of College Park and Del. Brian J. Feldman (D-Dist. 15) of Potomac — that would allow the governor and lawmakers to piece together specific plans to fund transportation projects and put them to referendum for voter approval.
Such an amendment would need to be approved by voters, which couldn’t happen until 2014.
The amendment also would restrict transfers from the Transportation Trust Fund except in emergencies, which has earned the approval of other blue-ribbon commission members such as former state Sen. Donald C. Fry, now president and CEO of the Greater Baltimore Committee.