At a recent meeting of Montgomery and Prince George’s County state legislators, the state’s Department of Legislative Services (DLS) made a detailed presentation on the state’s transportation prospects. We have already covered the state’s problems with the Transportation Trust Fund (TTF). But the condition of the Maryland Transportation Authority (MdTA), which controls the state’s toll roads, is a major revelation that points to a disturbing fact: Marylanders will soon pay higher tolls just to pay for the services they already have. And that’s just the beginning.
On October 9, a team of Montgomery and Prince George’s state legislators met to consider their significant regional transportation needs. DLS updated the group on the state’s challenges in financing transportation, a regular topic on this blog. Their analysis agreed with our reporting on the TTF: namely, that the state was having increasing problems keeping up with transportation needs. But it was their focus on MdTA that really caught our attention.
MdTA is a semi-independent agency that controls the state’s toll facilities, including I-95 northeast of Baltimore, the Bay Bridge and the Intercounty Connector (ICC). It does not depend on tax revenues, but instead pays for its operating, maintenance and new construction budgets out of tolls. The agency directly controls toll levels and E-ZPass charges, all of which are set to support its budget. The state’s problems in financing its transportation needs almost guarantee that any major new road projects, including the proposed widening of I-270, will require tolls to pay for construction.
MdTA told the legislators that it is under increasing financial pressure. First, its toll revenues – the lifeblood of the agency – have dropped in year-over-year terms for 12 of the last 14 months.
This is despite the fact that the agency has tried hard to raise new revenues.
The ICC, which is being financed primarily by toll-backed bonds, is drawing on the majority of MdTA’s funding at the moment.
MdTA’s current statutory debt limit is $3.0 billion. Primarily because of the bond issues used to build the ICC, the agency will come close to its limit by 2015. Any increase will require a vote by the state legislature.
MdTA is already projecting toll increases to support its operations.
MdTA says it has “significant capital needs in the future with no clear indication of how it will pay for them.”
Those needs primarily concern bridge replacements and Express Toll Lane construction on I-95 northeast of Baltimore. The agency’s analysis does not address any widening of I-270 or any other toll-based road projects.
This data reveals an awful truth: it is not merely the Transportation Trust Fund that is in trouble. It is also the case that the state’s toll road network is on the verge of being unable to pay for its own system preservation needs – even with toll increases in recent and coming years – much less for any new road construction.
Do the Lords of Annapolis need any more evidence of the impending transportation crisis that could soon cripple the state’s economy?
Tuesday, November 10, 2009
Maryland Transportation Authority in Trouble
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2 comments:
This problem is the direct and foreseeable result of policy decisions made by the Ehrlich administration. The decision was made to pay for the ICC and I-95 widening by borrowing money that would have to be paid back from tolls collected on the state's other toll facilities.
The Ehrlich administration's policy objective was to move from the current system where all suffer equally from the same overcrowded roads and inadequate transit connections to a system where an affluent minority enjoys a subsidized network of uncongested roads. The decision to charge tolls on the new I-95 lanes, in particular, was not justifiable on a financial basis. As I pointed out three years ago, the toll revenues on the I-95 toll lanes won't even be enough to pay for the incremental costs of collecting the tolls.
I love how Ben finds a way to blame every problem known to mankind on the ICC. Predictable? Sure. Creative? Perhaps, but wrong nonetheless. The ICC is one of the most significant investments MTA has made in recent years because it also produces the biggest return to MTA and to us taxpayers. It is those future toll revenues from the ICC, and the added bonding capacity they provide MTA, that will help pay for all those future unmet capital needs Adam correctly cites in his original post.
In the first 15 years, all of the ICC's construction costs will be paid off and, from that point on, toll revenues collected on the ICC will produce a growing stream of net revenues that the State can use to finance other needs, year after year, decade after decade, throughout the lifetime of the highway.
This is in addition to the estimated $7 billion in economic benefits to the State that have been identified in just the ICC's first 20 years of operation. Not bad for a $2.5 billion investment. This includes things like the new jobs created, new taxes paid from those new jobs and the new spending they stimulate in the broader economy, plus the dramatic time savings, reduced fuel consumption and vehicle wear and tear for hundreds of thousands of daily commuters who will see their daily travel times cut in half in some cases. All of these hundreds of thousands of residents who will benefit, including those on surrounding arterial highways that will experience some of the most dramatic traffic relief and time savings, will then have more time and money to spend on other things and productivity is higher.
All of this goes back into our economy and creates many millions annually in new net tax revenues that would otherwise not be there to help meet the shortfalls in both the general fund and the TTF over the long run. The ICC's benefits help support a stronger tax base than would be possible without it. The main beneficiary is Prince George's County, where 40% of these economic benefits would be concentrated (despite the fact that only 10-15% of the ICC right-of-way is there).
In the private sector, we call this an "investment" and investments have a return, as will the ICC. The MTA's financial picture is serious, as is the Transportation Trust Fund. But rather than blaming either the ICC (which is part of the solution, undisputably, not the problem) or blaming either the Ehrlich, O'Malley, Glendening (part 1), or Schaefer Administrations -- all of whom deserve at least some of the credit for making the right decision and supporting the ICC at various points in its history -- we should all be focused on building the political support for the new revenue sources that we need to move forward on the next round of major projects for our region, which include major investments in transit (Purple Line, CCT, and express bus service on the new toll lanes that our entire County Council now supports on 270, just to name a few).
The State needs to be looking at least at indexing and re-designing the gas tax as one part of that solution, as soon after next year's elections as possible and there are other fixes as well.
I keep hoping transit advocates like Ben will realize that instead of fighting a fruitless and unproductive ideological battle against all new roads, we should focus more realistically on what works and what doesn't work in our most congested corridors (which is often BOTH road improvements AND transit), and then line up the funding to make it happen. There is a large area of common ground here in this debate, but first we need to stop beating all the dead horses out there and start looking to our future.
Adam has identified correctly that transportation funding is the major problem we should all be tackling together. So why not?
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