Donald Fry: Protecting transportation fund: not a magic bullet, but still needed

By Donald C. Fry

Gas tax opponents are increasingly hanging their hats on the issue of “raiding,” contending that state lawmakers shouldn’t increase revenue to Maryland’s Transportation Trust Fund because they frequently raid it for non-transportation purposes.

It’s an effective contention that gets significant media play as radio and television commentators and talk show hosts immediately bring up the raiding issue when the topic of raising the gas tax comes up on the airwaves – which is a lot lately, since Governor Martin O’Malley filed his proposed gas tax legislation earlier this week.

But gas tax opponents are wrong when they argue that, if lawmakers only stopped raiding the transportation fund, Maryland would have enough money to fully address the state’s massive backlog of unfunded-but-needed road, transit, port and airport projects.

Putting an end to habitually raiding the fund is an important part of the debate about increasing revenue to pay for our state’s transportation infrastructure, but not because it would alleviate the need for a transportation funding increase. It wouldn’t – not by a long shot.

Here are the facts.

Since 1984, the Maryland General Assembly has made 11 transfers totaling $571.1 million to the state’s general fund from the portion of the Transportation Trust Fund that is allocated to the Maryland Department of Transportation, according to state data. Of that amount, $472.2 million had been paid back by the end of FY 2011, with $68 million more scheduled to be paid back in FY 2012 and 2013.

This would leave a balance, by the end of the next fiscal year, of no more than a $26 million shortage of transportation funds earmarked for MDOT operational and capital projects that had been borrowed over a 27-year period. You could also argue that other legislative actions – such as reducing the transportation fund’s share of sales tax collections to make up for revenue lost by repealing the ill-fated tax on computer services – resulted in depriving the fund of several hundred million dollars in additional lost revenue over the years.

Nevertheless, however you calculate it, even if we completely stop raiding the transportation fund – which we should – it still would not leave the fund in a fiscal position to adequately address the state’s crisis in funding transportation infrastructure that has left us with a multi-billion backlog of unfunded projects.

The combined cost of just the single top transportation priorities in each of the state’s 24 jurisdictions would exceed $12 billion, according to Maryland Department of Transportation Secretary Beverley Swaim-Staley.

This backlog exists primarily because the transportation fund’s single biggest source of revenue – the gas tax – hasn’t been increased in 20 years.

Only an influx of at least $500 million in annual new revenue will enable MDOT to begin work on dozens of priority projects across the state that have been dormant for at least two years and will remain so until revenue for transportation infrastructure is increased.

However, despite the fact that it won’t come close to resolving the overwhelming fiscal shortfall that has developed, protecting the Transportation Trust Fund remains an essential element in efforts to increase funding for transportation.

That’s because the bigger issue relating to raiding remains one of public trust. The raiding only serves to reinforce rampant public skepticism over how gas tax revenue and other transportation funds are ultimately being used. Any kind of raiding or borrowing dilutes support for transportation funding measures that might otherwise gain acceptance from a public that is enduring increasingly clogged highways, limited transit options and eroding mobility in our state.

Recognizing that, Governor O’Malley’s legislative proposal to apply the state’s 6 percent sales tax in 2 percent annual increments to the price of gas also contains a provision to protect the transportation fund from routine raiding by lawmakers.

The governor’s proposal would require three-fifths favorable committee votes in the House and Senate for any future legislation to transfer transportation funds, or would require the governor to proclaim a state of emergency resulting from a major catastrophe.

Whether the governor’s idea or other proposals to protect transportation funding are ultimately considered and enacted remains to be seen.

Protecting transportation funds from being easily raided is not, in itself, a magic fiscal bullet. But that’s not the issue. The raiding of the Transportation Trust Fund has become a significant public policy issue in and of itself.

Transportation funding is needed now and will be needed in the future. Now is the time to nip this issue in the bud. Providing protection for dedicated funds for transportation is needed to help alleviate the angst and mistrust that has developed in the public’s eyes by past legislative actions.

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