February 7, 2012

Increased transportation revenues may not be enough to fund projects, analysts say

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By Megan Poinski
Megan@MarylandReporter.com

gas pump

Photo by Brian Herzog.

Legislative analysts said Friday that $870 million more in revenues for transportation – the amount recommended by the Blue Ribbon Commission on Maryland Transportation Funding – is not enough for the state to meet all of its needs.

Gov. Martin O’Malley has proposed applying the sales tax to gasoline, which would generate over $600 million, but he has yet to submit legislation to implement the tax.

Comptroller Peter Franchot, whose agency collects the gas tax, is hosting a roundtable at noon on the gas tax hike that includes industry opponents of any increase.

In a hearing on the state’s transportation budget Frdiay, legislative analyst Jonathan Martin told members of the House Appropriations Committee that Maryland’s aging infrastructure is demanding more and more dollars.

“Because of all the funding pressure for transit lines and system preservation, the amount raised is insufficient to meet those needs,” Martin said. “With a shortfall, as policymakers, you have difficult choices to make.”

The shortfall is exacerbated by two major factors. The state is planning to build two major commuter transit projects – the Red Line to connect Baltimore suburbs and the Purple Line to connect Washington, D.C. suburbs – without a funding source. The federal government is paying half of the planning costs, but estimates for construction costs are as much as $724 million in a single year. Congress has not come to a consensus on how to fund transportation in the future, causing uncertainty about continued funding.

According to the analysis done by the Department of Legislative Services, between fiscal 2013 and 2017, it would cost about $6.5 billion to do all of the work that the state has proposed. Even if $870 million more in transportation funds are raised, the state will under $5 billion to work with in that five-year period.

Martin said that policymakers have many questions to answer in order to shore up transportation funds. One of the things that the Blue Ribbon Commission wanted to do is restore Highway User Revenues – funds given to city, county and municipal governments to maintain local roads. The funds were cut as state budgets got tighter.

Local governments used to count on these funds. Del. John Bohanan, D-St. Mary’s, said that he spoke to county officials who used the state funds for 100% of their road repairs. The Blue Ribbon Commission wanted to raise $350 million just to distribute to local governments through these funds.

However, Martin said that the amount may need to be lowered in order for the state to meet its other obligations. Working on mass transit projects is extremely expensive, and building two transit lines at once will be costly.  Martin said that the state could do it through methods like drastically increasing fuel taxes, entering into a public-private partnership to build the transit lines, or delaying construction of one of them.

The state is depending on federal funds to pay for half of the new transit line costs. Martin said that may not happen. The federal government has been debating a reauthorization of transportation funds and looking at places to cut. It is possible that the federal government would not give such a large subsidy to these future transportation projects, meaning that the state would have to pay a larger share.

Del. Susan Aumann, R-Baltimore County, said that recent figures have showed that only a small percentage of people utilize transit systems.

“I’m concerned we are putting so much money on mass transit when ridership may be decreasing,” she said.

Martin, Transportation Secretary Beverley Swaim-Staley and several other delegates said that transit ridership is actually increasing – but so are transit construction costs.

  • Tom Henry

    This bunch in Annapolis is brain-dead. They steal the money over the last 10 years, to the tune of close to $1 billion dollars, yet, they want US to pay it again because they can’t hold back the spending on the pet projects! ENOUGH! We need fiscally responsible people in the Legislature. Stop using the people as chattel and ATMs. We elected YOU, you did not elect us.

  • Dee Hodges

    Del. Aumann is correct to note that few use the mass transit lines we already have.  The MARC train perhaps being the exception.  The Baltimore LIght Rail seldom rides full unless there is a Ravens or Orioles game.  Even so, few riders pay.  Also, it seems that few actually want a Red Line or a Purple Line to be built.  Cars allow flexibility that public transit does not.  Cancel both of these until or if such time there is actual public demand.  Further, the Transportation Trust Fund is supposed to be used for roads and highways, not mass transit.  Dee Hodges, President, Maryland Taxpayers Association

    • Anonymous

      Where have you been, we’ve been subsidizing mass transit projects in MD for years?  Unfortunately making mass transit riders pay the full freight for using the service (they roughly cover 25-30% of the cost) causes cries of outrage from special protected areas of the state. As one who lives in an area that completely lost any mass transit service due to low ridership many years ago, I do not think that my gas tax should be used to subsidize those who can use available mass transit at a discount.

      • Unfortunately, drivers have never paid the full cost of their travel either. 95% of car trips in the US begin and end in a “free” parking space. These spaces cost from $10,000 to $30,000 or more per space to construct, then there is the economic value of what could be done with the land if it weren’t used for parking. As a business owner, do you provide free parking for your employees and/or customers? Were you required to by a zoning code? That’s a cost that I as a bicycle commuter and transit rider subsidize for car drivers every time I buy a product or service and in lower salary because my employer pays the landlord thousands of dollars a month for “free” employee and guest parking.

        Then of course, there are the externalities… lost work time due to traffic, air and water pollution, the public health costs of sedentary lifestyles, destruction of natural and scenic areas, the loss of tax base cities experience when up to 35% or so of their land is taken up by highways which generate no revenue, cost of conducting wars in the Middle East to maintain the artificially low gas prices American drivers enjoy… the list goes on and on.

        Unfortunately, with all the government interference in our economy, there is no such thing as a transportation or land use decision that is truly driven by market forces.

        • Anonymous

          As a non-auto user, you have the freedom not to support those businesses that you think support a policy you do not agree with. As for linking all of societies ills to the automobile, we could go back to the invention of the wheel. But that totally misses the point. We entrust our leaders to prudently use the tax funds collected, especially those designated for a specific purpose, like the Transportation Trust Fund. When those funds are consistently diverted & we are expected to make up the shortfall repeatedly, one cannot continue to comply without protest. As for government interference in our economy, unfortunately when one looks closer, the smell of cronyism emanates from many of the deals. Historically, both political parties are guilty of the practise.

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  • Anonymous

    Fixing roads & bridges has very little to do with raising the gas tax. The main issue has been building the Red & Purple lines no matter the cost. Annapolis depends on taxpayers to keep paying without questioning how our taxes are being spent. We are asking but not liking the answers that we are getting.

    • Rich, Mdtransportation.org

      Actually, raising the gas tax has everything to do with fixing roads and bridges, and without an increase we will soon reach the point where the entire Transportation Trust Fund goes to repairs and maintenance with nothing left for new roads, or new transit, and there still won’t even be enough to do the maintenace at some point. 

      And, it’s not like the state is only funding transit with this money.  About half goes to transit and half goes to roads, across the whole state too.  The problem is, we have a gas tax that hasn’t been adjusted for 20 years and isn’t pegged to inflation.  So we are trying to meet the needs of a 2012 population with a 1992 budget.  That will NEVER work.  And every one of us will pay more — in wasted fuel from sitting in congestion and added maintenance from hitting all the potholes in our future — if this isn’t done.  A 10-cent increase in the gas tax costs the average driver about $50 a year.  What each of us is currently throwing away from sitting on congested, crumbling roads comes to almost $2,300 per person in this state.  I would take that trade-off in a minute.  

      There is a very strong case for doing this now, because we are at the point where lack of investment is costing us tens of thousands of jobs and it will get much worse if this continues.  Just ask any of the 50% of MD construction workers who have been laid off already.

      • Anonymous

        Actually, given the actions by past legislatures & governors, if gas tax revenues were prudently used since 1992, there would be enough to fix the roads & bridges. Instead, the Transportation Trust Fund has been continually raided to fund NON-transportation projects (aka Robbing Peter to pay Paul).

        In a recent report by the MD Public Policy Institute on this proposed hike, it states that given the past history of diversions of the trust fund, we would need to raise the gas tax 10cents per year for at least TWO years just to offset the diversion of funds, not counting any new projects. Given our leaders past history for dipping into the trust fund, we will never see an end to higher taxes wasted on dubious projects. The hike is also most regressive as it hits hard on those who can least afford it.

        Keep in mind that the MTA uses revenues from this & other taxes to pay for road maintenance & construction, bridges, MASS TRANSIT SUBSIDIES to both MD & DC Metro lines, plus gives $ to the counties for projects. O’Malley also wants to build the RED & PURPLE subway lines in PG County & Balto city. The Feds are on board but the $$ aren’t there yet. Just those two projects will cost MILLIONS!

        We should be looking at a 10 year audit of the MTA, especially given the dubious contracts record at the SHA & the lack of oversight by the legislature. How can you support a highly regressive tax that MAYBE spent to fill a $1B+ deficit? The sales tax was raised in 2007 & we were told that all our money issues would be fixed with this higher rate. IT DIDN’T HAPPEN. Alcohol tax was supposed to be used for under served developmentally disabled, even though the dept that handled these funds RETURNED $25M to the state general fund. Plus several counties are slated to receive a % of this fund for schools. Higher tolls for maintenance & to repay bondholders for the ICC. Higher vehicle titling fees. The list just keeps growing. Yet my private industry paycheck hasn’t had a raise in over two years!

        People will respond to a real need. We’ve done it time & again. But we cannot continue to support Annapolis politicians who cry wolf & waste the people’s hard earned $$ over & over & over again!

  • Dear Dee & Abby,

    The homeless use the Baltimore Light Rail as a “home”, getting “free ride” passes…

    Good use of gas taxes is it not ?
     

    • Herx

       I never saw that while I commuted every work day on the light rail.  What, do you make this stuff up?

  • It’s time for all of us who oppose such things to flood the Governor and Legislature with e-mails, snail mail, phone calls and visits to their local offices and to their Annapolis offices… Let’s “occupy” them !

  • You won’t see a report like this on TV or in the Baltimore Sun…

  • Frank Van

    FEAR MONGERING????
    Now even AN ADDITIONAL, YES ADDITIONAL $800 million a year is not enough.  The state is trying to scare people to PLEASE raise this much.  It could be worse!!!!!

    What public use is accomplished by planning and building public transportation that does not even recover 25 cents on the costs.  The Purple and the Blue line are such projects.  The only possible justification for the Purple Line would be a connection between Bethesda and Silver Spring to complete the U loup of the Red Line that now goes all the way down through the District and then back up to Silver Spring.  The rigths of way are there and the transfer in Silver Spring at the Transportation hub seems perfect. Any extension beyond Siver Spring seems premature at best.
    IN ADDITION This 25% recovery of the fair is not a one time affair, but an ongoing deficit, YEAR AFTER YEAR, even increasing over the years.

  • If anyone does care about congestion, or poor road conditions, or transit, or the money you are currently wasting from sitting in traffic (each of us is literally throwing away $2,300 a year in wasted gas and extra car repairs caused by congestion), raising the gas tax is probably the best possible option.  I know no one wants any taxes raised ever, but if it is protected from being raided for other uses, which is what the legislature is looking at now, there isn’t a better option. 

    As I noted in a previous post, It hasn’t been adjusted since 1992 and has lost 60% of its value to inflation.  Every County in the state has a long list of transportation projects that are important to our economy and to your ability to get around.  None of it can be built now without this increase.  Just because we don’t fix any intersections, or build any new lanes or don’t add any more transit lines, that doesn’t mean our population will stop growing for one minute.  It just means we will all be miserable as we sit in gridlock the rest of our lives and watch our economy crash and burn.   As a small business owner who drives all over this state, I would much rather pay an extra 10-cents at the pump, which costs the average driver about $50 a year, than live in this traffic nightmare we call suburban Maryland.  This needs to happen now.   Go ahead and raise it IF — and I mean ONLY IF — there is some kind of lockbox to keep transportation dollars from paying for anything but transportation. 

    • Anonymous

      A question, as a small business owner, who pays for your increased business costs? You’re in business to make money, so who ultimately foots the bill? Those who use your product or service. It’s a deductible business expense to you but a commuting expense for a large portion of workers. This legislature will NEVER thoroughly lock up the Transportation Trust Fund nor any other Trust Fund in MD unless the taxpayers put their feet to the fire.  It’s just too tempting to keep passing out the goodies to get more votes then demanding more taxes. It’s very sad but true. Give consumers a break on higher taxes & fees then we just may have the extra $$ to spend on your services.

  • As a professional transportation planner, I can assure you that according to every study I’ve seen, Del. Aumann is misinformed about the direction mass transit ridership is going in. Ridership stopped falling several years ago and either continues to increase or has leveled out at new, higher rates depending on the specific mode and market area. This is despite an economic and political atmosphere that has led to service cuts and fare increases across the country. Imagine what might happen to transit ridership if we actually invested in it.

    Furthermore, government policy and failures play a significant role in what mode people choose to travel by and where they choose to live (which then influences travel distance and mode). Massive disinvestment in transit, stupid use of what funds were put into it, massive roadway expansion, and complete failure to build facilities that are safe and attractive for walking and bicycling have created an unsustainable system. We can’t continue to fight highway congestion by building more highways. You build a new highway, more people change their travel patterns or move out to the urban fringe and live in areas where they don’t have transportation choices, and within 2-10 years, the new highway is as congested as the old. Only a balanced system that gives travelers reasonable choices can break that cycle. However you feel about social responsibility, it’s not a matter of a handout to the poor (new commuter rail is built largely to attract middle class choice commuters and relieve congestion on highways), it’s a matter of correcting years of failed and expensive policy that have left us with a transportation system we can’t afford to maintain, nevermind what it does to our air quality and our waistlines.

    My generation gets it. People in their 20s and early 30s today drive significantly less than our counterparts 10, 20, or 30 years ago and the real estate market is finally coming to the realization that we’re more interested in walkable, livable neighborhoods (whether they be urban or in a small town center) than McMansions on cul de sacs. The baby boomers are finally starting to get it as they reach retirement age. Elderly people eventually lose the ability to drive safely and nobody wants to be dependent on their children for rides everyhwere, much less on van services or the other meager options available to seniors who can’t drive but live in places where they can’t get to the grocery store any other way. Transit cand and does work in rural areas when planned appropriately, and in fact the fastest current growth rates are in smaller metro and rural areas. Unfortunately, public policy decisions are all too often made by reactionary middle aged folks who don’t yet have the wisdom of old age but no longer have the imagination and optimism of youth, even as the experts in the field are screaming at them that the course they’re taking is shortsighted and dangerous.

    Gas prices will never go back to what they were when driving was at its peak and transit ridership was at its all-time low. Construction costs will never return to a level where we can maintain our current highway stock, much less continue to expand it at historic rates. We cannot continue down the road that has taken our country’s transportation system from state of the art to probably the most inefficient of any developed country. Writing off transit just because the generation making the rules doesn’t currently use it much and can’t read the writing on the wall is incredibly shortsighted.

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