Tuesday, January 19, 2010

The Great Choir of Happy Talk

Today, we are going to let you in on a little secret. Transportation projects are built with happy talk. Tax revenues are not necessary. What, didn’t you know? All of Annapolis knows this, and now so do you.

Why do we say this? Because this is what we hear from our leaders. We trust them, right? Our Governor announced that he wants to build a light-rail Purple Line at a cost of $1.517 billion. On the same day, the Governor announced that he wants to build a light-rail Red Line at a cost of $1.63 billion.

And of course, let’s not forget the Corridor Cities Transitway (CCT). The state has made no commitments regarding its mode and alignment, but the CCT’s Draft Environmental Impact Statement (DEIS) estimates a capital cost ranging from $450 million for bus-rapid transit to $778 million for light rail. No one is ruling out the CCT. In fact, our leaders are encouraging us to believe that we can have all three projects!

So how are we going to pay for them? Well, we are going to apply for federal money. But the three projects will have to compete with other transit lines from across the country. And the Federal Transit Administration’s approval process is arduous. But let’s assume that all this Happy Talk is correct and our three projects will beat everybody else from all over the U.S. What about the money?

The Governor said this about the Purple Line in the Gazette: “...We are assuming at least half the projected $1.5 billion cost would come from discretionary federal funds that will otherwise go to another state.” Separately, the Gazette reported that the state would have to pony up $900 million each for its share of the Red Line and the Purple Line. So for the two projects, the state’s share would range from $1.6-$1.8 billion. Half the cost of the CCT would add $225-389 million. What does that mean for taxpayers?

Last year, the General Assembly’s Department of Legislative Services calculated that a one-cent increase in the gas tax would raise about $30 million per year in revenue. Now none of the three transit lines will be built overnight. Let’s be generous and assume that the cost of any of them would be spread over the entire six-year horizon of the state’s Consolidated Transportation Program. That means the Red Line would cost $136-150 million per year in state money, the Purple Line would cost $126-150 million per year in state money and the CCT would cost $38-65 million per year in state money. Those amounts are not laying around in the state’s already-depleted Transportation Trust Fund (TTF), so they would have to be raised through new revenues. Divide all of the above amounts by $30 million – the state’s estimate of the yield of one-cent of gas tax – and the gas tax would have to go up by 4.5-5 cents for the Red Line, 4.2-5 cents for the Purple Line and 1.3-2.2 cents for the CCT.

But there’s more. The rest of the state will not simply pay more gas taxes for the sole benefit of the four jurisdictions served by these three transit projects (Baltimore City and Baltimore, Montgomery and Prince George’s Counties). If there is any revenue hike, the other jurisdictions will demand money for their priorities. It’s only fair and that is how Annapolis works. The four jurisdictions above account for about half of the state’s population. So if the rest of the state is to benefit equally from a revenue hike, the above figures would have to be doubled. If the money is raised from a gas tax hike, the tax would have to go up by 20-24.3 cents. The present gas tax, which has not changed since 1992, is 23.5 cents. In other words, to pay for the state’s share of all three transit projects plus an equal amount for the rest of the state’s transportation needs, the gas tax would have to DOUBLE.

How likely is that to happen?

During the 2007 special session, the General Assembly turned down the Governor’s proposal to index the gas tax. Instead, the legislature raised a projected $400 million per year by boosting the titling tax and devoting a portion of sales and corporate income taxes to the TTF. These changes were supposed to generate $150 million for new projects and $250 million for system preservation every year. But by November 2008, the changes were only collecting an extra $265 million per year, almost all of which was going to maintenance. In other words, the last great effort to raise more money for transportation has almost completely failed to generate ANY money for new projects.

How many legislators are serious about raising more money for transportation? Very few. Here are the only ones to sponsor or co-sponsor revenue-raising bills since the special session:

Delegate Charles Barkley (D-39) – lead and only sponsor of a 2009 bill to raise the gas tax by 10 cents. Also the lead and only sponsor of a 2009 bill to raise the gas tax by a half-cent and index it.

Delegate Bill Bronrott (D-16) – lead and only sponsor of a 2009 bill to index the gas tax.

Delegates Sheila Hixson (D-20), Jon Cardin (D-11) and Bill Frick (D-16) – co-sponsored a 2009 bill to raise the gas tax by 5 cents.

Senator Rich Madaleno (D-18) – lead and only sponsor of a 2009 bill to raise the gas tax by 5 cents and redistribute its proceeds.

That’s right, people – exactly SIX of the 188 state legislators have put their names on bills to raise more money for transportation since the special session. None of them came from Baltimore City (which would get most of the Red Line) or Prince George’s County (which would get part of the Purple Line). And none of these bills would have raised enough money to fund the state’s share of its multiple transit proposals, much less all the other worthy projects in Maryland. Meanwhile, fifteen legislators – including thirteen Republicans – co-sponsored a 2009 bill that would have cut transportation funding. Two of these legislators - Delegates Joseph Boteler (R-8) and William Frank (R-42) - represent Baltimore County, which would get four stations on the Red Line. They swim in the murkiest alligator pit of hypocrisy.

None of this matters, we are told. We can have it all – the Red Line, the Purple Line, the CCT and lots of other nice things too. Maybe there will be a little bit of a revenue hike after the election. But what happens if gas sells for $4+ per gallon in 2011? What happens if Democrats lose state seats over the issue of taxes and the economy? What happens if President Obama’s numbers are down further and Democrats suffer massive losses in Congress? What then? The Lords of Annapolis don’t want us to ask these questions. It’s not real nice of us to do so.

And so in the Great Choir of Happy Talk, nearly all of the state politicians of both parties and all regions are singing along. Happy talk buys what revenue increases will not. Everyone inside Annapolis wins.

Everyone outside Annapolis loses.