How the state lost its way on transportation funding

Earlier this week a statewide coalition of advocates, including the Greater Baltimore Committee, the Maryland Chamber of Commerce, the Greater Washington Board of Trade and 29 other organizations and businesses, was formed to protect and strengthen Maryland’s funding for transportation infrastructure.

The new coalition, named START, for State Transportation Alliance to Restore the Trust, has simple, straightforward objectives. We seek to convince Governor Martin O’Malley and state lawmakers to:

• First, enact a constitutional amendment or equally enforceable legal protection to stop the raids on the state’s Transportation Trust Fund for non-transportation uses;
• Second, find a way to increase revenue to the transportation fund to address a more than $40 billion backlog of state highway, transit, port and airport projects that are planned but not funded for construction, and restore highway user revenue to local jurisdictions.

An online news story on the new coalition’s formation prompted one reader to comment on the story by raising a compelling question: When did raiding transportation funding for ready cash first start?

“Surely, this has been going on far longer than Mr. O’Malley has ever been alive,” the online reader commented. “But not doing so is still a good idea.”

The state’s Transportation Trust Fund is 40 years old this year, so it’s younger than Governor O’Malley. But the reader is right about one thing – the fund has been regularly raided by lawmakers for most of its existence.

The trust fund’s history is the story of how a government that is widely considered to be financially well-managed lost its fiscal discipline over the last four decades relating to a public resource – the state’s transportation infrastructure – that is critical to maintaining a superior business climate and quality of life.

Maryland’s Transportation Trust Fund was created in 1971 to establish an integrated, dedicated fund to support the Maryland Department of Transportation (MDOT). “The use of this integrated trust fund approach allows Maryland tremendous flexibility to meet varying transportation service and infrastructure needs,” MDOT’s web site states.

Current revenue sources for the trust fund include gas taxes, vehicle titling taxes, vehicle license, registration and other fees, 24 percent of corporate income taxes, 5.3 percent of sales taxes, and federal aid.

Despite the original intention that the Transportation Trust Fund be a dedicated source for transportation uses only, lawmakers have consistently “borrowed” from it though the years, mostly for budget-related transfers to the state’s general operating fund.

Between 1984 and 2004, state legislators approved ten transfers totaling $571 million from the Transportation Trust Fund to the general fund for non-transportation related purposes, of which $127 million has yet to be repaid.

Since then, state lawmakers have abandoned the concept of “borrowing” and have rationalized reasons for simply making money disappear from the revenue stream to the transportation fund. A current example of this is the estimated $250 million in revenue over five years that lawmakers voted in 2008 to temporarily divert from the transportation fund to the general fund.

Also, to help balance the budget during the last two sessions, lawmakers diverted to the general fund approximately $500 million each year from transportation fund proceeds that had previously gone to local governments. Consequently, in two years, highway user revenues distributed to counties has been cut by 96 percent – money that counties depend on to keep their roads in good shape and to fill potholes. Those cuts would continue under the governor’s proposed FY 2012 budget.

Legislative leaders have ready rationalizations for their raiding practices. When lawmakers “borrow” money from the Transportation Trust Fund for non-transportation purposes, it eventually gets paid back, they point out. Almost always, I say, except for that $127 million or so that has yet to be paid back from the “borrowing” that occurred between 1984 and 2004.

The $250 million in diversions to the general fund over five years was to compensate for anticipated revenue lost by repealing the ill-advised computer services tax, lawmakers rationalize.

And finally, the $1 billion in highway user funding that was taken away from local jurisdictions isn’t money that would have been available for non-local transportation projects anyway, so that doesn’t count as a “raid” of the Transportation Trust Fund, they contend.

Maybe these rationalizations seem legitimate to some in Annapolis.

But even so, they beg a more legitimate question: does Maryland’s transportation “dedicated” revenue really go into a trust fund?

To transportation advocates, it’s pretty clear that we must do something to restore the “trust” in the state’s Transportation Trust Fund.

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