Maryland is Facing a Transportation Funding Crisis: While our population and travel demand have grown steadily over the past three decades, investment in new transportation capacity in our state has actually declined. Maryland has dropped from 11th to 48th in per capita investment in transportation capital projects, and that was BEFORE the current recession reduced dedicated transportation revenues even further.
Maryland has a unique, unified Transportation Trust Fund (or TTF): The TTF was designed to support state operating and capital expenditures in these key areas: (1) State roads, highways & bridges, (2) two major mass-transit systems — Maryland’s share of the Washington area’s Metro system and all of Baltimore’s MTA system, (3) the Port of Baltimore, (4) BWI and other regional airports. The TTF is supposed to be funded with dedicated revenue streams that are collected specifically to support transportation. These include: The State gas tax, vehicle titling fees, federal transportation funds, and a small percentage of both the State sales tax and the corporate income tax. Many of these fees are fixed in statute and are not indexed to inflation, which has caused them to dramatically lose value over time. The gas tax, for example, which is one of the main sources for transportation funding in Maryland, was last adjusted in 1992 to 23.5 cents per gallon, where it remains today. It is now worth less than half of that in real terms and is among the lowest in the mid-Atlantic region. In the meantime, both gas prices and construction costs have skyrocketed, leaving Maryland chronically short of the funding we need to maintain our current system, let alone meet the future increases in demand that we know are coming.
Nearly $1 billion has been raided from the Transportation Trust Fund in recent years to help address deficits in the State’s General Fund. This was not the stated purpose given to the public when these fees were established. However, another $100 million raid was in the budget sent to the General Assembly just last year, and while some has been restored, there remains roughly $900 million in local highway user revenues that were diverted to non-transportation purposes and have NEVER BEEN REPAID. This money needs to be restored, and new revenue sources need to be found, to help fund our urgent transportation needs.
The Result: Maryland has No Funds for Major New Capital Projects to Address Congestion. You would think, with polls showing traffic congestion to be the leading concern among Washington area voters in Maryland, that the State would make congestion reduction a priority. With a few rare exceptions, however, this is not the case. Today, nearly all of the funds remaining in our capital construction budget are being consumed by repairs and maintenance. As important as these things are, they do NOTHING to address our growing congestion problems or support new job creation in our region.
Without an Infusion of New Revenue, Key Priorities like the Purple Line, Corridor Cities Transitway, I-270 and I-495 Improvements, Simply Will Not Happen. There is no funding available to move any of these projects past preliminary engineering and design and into construction. Clearly, this situation is unacceptable.
New Funding Options Currently Proposed Include:
- Raising the gas tax by 10 cents and adjusting it for inflation to recover the value it has lost over the past two decades
- Applying the existing 6% sales tax to motor fuel sales at the wholesale level
- Increasing vehicle titling fees
- Converting the current gas tax to a percentage sales tax
- Expanding Maryland’s network of toll highways
- Allowing greater use of public-private partnerships to finance new projects
- Increase the sales tax (statewide or by region) and dedicate the difference to transportation
- Restore trust in the Trust Fund by enacting a “lock-box” provision to prevent future raids
Doing Nothing Will Cost you MORE than Any of these Options. The Road Information Project, a national transportation think-tank, has quantified the economic costs that Maryland residents are paying NOW as a result of severe congestion and deteriorating roads and transit service. The total comes to about $2,300 per person per year. This is extra money you are paying now, and includes all the wasted gas from sitting in traffic delays, the extra wear and tear on your car from stop-and-go-conditions and the increased number of potholes we are now seeing. The cost per person of raising the gas tax by 10 cents is a small fraction of this amount, between $41 and $55 per year, and that assumes the entire amount will be passed on to consumers (which is not at all clear, given how the oil industry sets its prices). Would you pay an extra $55 a year to save a significant share of the 70 hours we currently waste, or the extra $2,300 each of us currently spends, due to severe congestion and poor road conditions?
There is no Correlation between the level of State Gas Taxes and the Prices Consumers Pay at the Pump. Many of our surrounding states have already raised their state gas taxes (Pennsylvania, West Virginia and North Carolina are all above 32 cents per gallon), yet even with our much lower 23.5 cent gas tax, in Maryland we generally pay higher prices for gas than they do. So what gives? Oil companies use zone pricing to set their prices at the pump, based on what local residents can afford to pay, among other factors. So when you look at retail gas prices by state and region, those prices have little or nothing to do with the level of state taxation. Oil companies just make higher profits in states with lower gas taxes.
There is No Time to Waste. According to the most recent data, 44% of Maryland’s bridges are now in mediocre or poor condition. 55% of our urban highway segments are experiencing severe congestion, and our region is projected to add another 1 million people by 2030. Surrounding states like Virginia are already acting, and major employers in our region are paying attention to which of our competitor regions are making these kinds of investments. Maryland is falling dangerously behind, and this looming crisis in transportation funding will cost us dearly if not addressed this year.
The Choice We Face is Clear: Invest in Transportation Now,
or Bring our Local Economy to a Grinding Halt
Find out what YOU can do. Visit our Action page.