Donald Fry: State funding for new roads approaching zero

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By Donald C. Fry

Last Tuesday when Warren Deschenaux, Maryland’s top government policy and budget analyst, told lawmakers that the state was running out of money for new transportation projects, it might have seemed like an overly dire warning to some.

But to anyone who has been paying close attention to our state’s escalating transportation funding crisis, it was hardly a surprise.

Deschenaux’s warning to members of the Maryland General Assembly’s Spending Affordability Committee quantified the looming inevitability to be derived from decades of stagnating state transportation revenue by forecasting a hard number to swallow – zero.

That’s how much money the State Highway Administration will have available as early as fiscal 2018 for planning or building major new road projects, said Deschenaux. If current funding trends continue, that’s the year the SHA will be able to fund only system preservation, according to the Department of Legislative Services’ Office of Policy Analysis.

As if such a number is not dire enough, legislative analysts also point out that their projections of dramatically dwindling state capital budgets for transportation do not include the costs of the state’s three top-priority transit projects – the Red Line and the Purple Line in Baltimore and the D.C. suburbs respectively, and the planned 15-mile rapid-bus Corridor Cities Transitway in Montgomery County

The state’s Consolidated Transportation Program “does not show any funding for the construction of the transit lines because the state has not yet identified sufficient revenue to pay for its share of the costs,” legislative analysts report.

The combination of growing transit operating costs and increasing construction costs for road and transit infrastructure, combined with comparatively flat revenue to the state’s Transportation Trust Fund, is leaving little and ultimately no revenue for new projects.

Revenue stagnation is largely attributable to the fact that Maryland’s per-gallon gas tax – which is not inflation-sensitive and is the largest single source of the state’s transportation revenue – has not been increased in 20 years. Other transportation fees have been increased, so transportation funding is rising slightly, but the pace of increase is not coming close to keeping up with the need and the costs.

State analysts forecast annual transportation operating costs over the next five years to increase 32 percent and for overall annual state spending on capital projects to decrease by 54 percent, with virtually all remaining capital spending dedicated to system maintenance.

Overall, the state’s Transportation Trust Fund revenue will inch up by only 10 percent during the next five years, according to legislative forecasters. Incidentally, in the same report, the Department of Legislative Services projects revenues to the state’s general operating fund to increase 17 percent and for the state’s general operating spending to increase 21 percent during the same time period.

That’s a compelling disparity that sums up the prevailing legislative perspective when it comes to the issue of funding transportation infrastructure.

In last week’s briefing, Deschenaux suggested that, instead of relying on traditional transportation funding sources, lawmakers consider alternative financing options, such as public-private partnerships, a low-interest federal loan program for transportation projects, special taxing districts or other measures designed to draw on added land value created by transportation projects, authorizing local taxes for transportation, and use of state general fund revenue or general obligation bonds for transportation projects.

These suggestions give state lawmakers some constructive options to consider during the next General Assembly session. But for them, the transportation funding crisis is not a surprise.

As an aide to House Speaker Michael Busch told Examiner reporter Rachel Baye this week, Busch “recognizes that there’s a need for investment in the state’s Transportation Trust Fund,” but he hasn’t decided the best way to fill that need.

Although state lawmakers imply that the issue is about process, transportation funding ultimately boils down to a matter of priorities. And state lawmakers have failed to make transportation infrastructure a priority.

The frustration among transportation advocates is that in the eyes of too many elected officials transportation infrastructure never seems to rise to a top priority until there is a crisis.

In light of Warren Deschenaux’s projections, this might be an appropriate time to consider whether a crisis is staring us in the face.

Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland.

Recent Center Maryland columns by Donald C. Fry:

A significant step forward looms for Red Line

Minority and women business achievers show entrepreneurial spirit

Sailabration showcased Baltimore’s ‘fun’ potential

Are Maryland’s regulatory rankings about substance or process?

Transportation budget process: a tale of backlog and irony

CSX intermodal facility: Mayor, Governor to the rescue

Cyber threat warnings offer scary scenarios
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Donald C. Fry has been the president and CEO of the Greater Baltimore Committee (GBC), the central Maryland region's most prominent organization of business and civic leaders, since November 2002.

Under Don’s leadership, the GBC is recognized as a knowledgeable and highly credible business voice in the Baltimore region, Annapolis and Washington, D.C. on policy issues and competitive challenges facing Maryland. Its mission is to apply private-sector leadership to strengthening the business climate and quality of life in the region and state.

Fry served as GBC executive vice president from 1999 to 2002. From 1980 to 1999 Fry was engaged in a private law practice in Harford County. During this time he also served in the Maryland General Assembly. He is one of only a handful of legislators to have served on each of the major budget committees of the General Assembly.

Serving in the Senate of Maryland from 1997 to 1998, Fry was a member of the Budget and Taxation Committee. As a member of the House of Delegates from 1991 to 1997 Fry served on the Ways and Means Committee and on the Appropriations Committee.

Fry is a 1979 graduate of the University of Baltimore School of Law. He earned a B.S. in political science from Frostburg State College.