Last year, I wrote a series called “Crisis in Transportation” contrasting Maryland’s inability to finance its transportation infrastructure with Oregon’s plan to boost spending by a half-billion dollars per year. Months later, those two states have continued to diverge.
Maryland has happily accepted transportation money from the federal government (most of which is going to the Baltimore area) but has done little else. Delegate Bill Bronrott’s (D-16) bill to index the gas tax has attracted zero co-sponsors and is in limbo. Senator Rich Madaleno’s (D-18) bill to raise the gas tax by five cents has also attracted zero co-sponsors and has joined Bronrott’s bill in the abyss. Oregon jumpstarted its transportation plan by convening a large stakeholder taskforce (including many representatives from the business community) which issued a report outlining the state’s needs. Maryland has done no such thing. Instead, the state cut its transportation budget by $1.1 billion last fall (including double-digit cuts to the Purple Line and CCT), is cutting MARC service and is projecting another $2.5 billion in cuts. The state has no plan for financing its BRAC needs or finding money for its share of one of its three proposed transit lines. Montgomery County is now spending county money on state projects and other counties could well follow suit.
In Oregon, Governor Ted Kulongoski sent his Jobs and Transportation Act of 2009 to the state legislature. The act, based on the earlier stakeholder report, would raise a half-billion dollars every year for transportation, create a dedicated fund for transit and implement a pilot congestion fee project and other measures. It is projected to create 2,100 construction jobs annually. The Governor is also asking the legislature to consider a “mileage tax” as an eventual replacement for the gas tax. Under this tax, a GPS device installed in cars would calculate in-state miles traveled and charge a fee based on those miles at the gas pump. Representative Terry Beyer (D-12), Chair of the House Transportation Committee, predicted the legislature would pass an even larger gas tax increase than the Governor’s proposal of two cents.
Oregon’s efforts could yet fail. The legislature could disagree on both the financing composition and the amounts. But even Republicans acknowledge the need; House Republican Leader Bruce Hanna said, “I’m not absolutely saying no.” In Oregon, the Democrats have an 18-12 advantage in the Senate and a 36-24 advantage in the House. These are tighter margins than in Maryland (33-14 in the Senate and 104-36 in the House).
The point is that Oregon’s leadership recognizes their transportation problems and is trying hard to come up with a solution. Can anyone say the same of the state leadership in Maryland?
Wednesday, March 18, 2009
Oregon Schools Maryland on Transportation
Wednesday, November 26, 2008
Crisis in Transportation, Part Three
In Part Two, we described Oregon Governor Ted Kulongoski’s aggressive infrastructure bill to create jobs, stimulate the state’s economy and generate long-run returns for Oregon. So what about Maryland?
No one argues that Maryland’s transportation needs are immense. And according to MDOT Secretary John Porcari, the $400 million increase approved in the 2007 special session is only now yielding $265 million, just barely enough to keep up with system preservation needs. Put aside the obvious need for specific projects like the state’s three proposed transit lines and the BRAC projects in Bethesda, Aberdeen and Fort Meade. There are four reasons why Maryland’s political leaders must heed the example of Oregon and start putting more money into transportation now.
1. The need for matching funds
Many large projects that rely on federal financing require matching funds from state government. That is especially true of Baltimore’s Red Line and the Washington suburbs’ Purple Line and Corridor Cities Transitway. Unless Maryland demonstrates an ability to raise sufficient funds to pay its share of these projects, federal money will flow elsewhere.
2. Costs will go up in the future
At present, we are deferring $1.1 billion in new transportation projects and face the possibility of delaying $2.5 billion more. It is inevitable that delayed projects will see higher construction costs if they are started years in the future. That will be especially true if petroleum costs rise again and ripple through into construction materials. And recessions are good times to build construction projects because contractors are hungry for work and will restrain their margins just to keep their key personnel employed.
3. Economic competitiveness
The Tax Foundation’s determination that Maryland’s business tax climate has deteriorated from 24th to 45th among U.S. states in one year is a threat to the state’s reputation. If in addition the state is perceived as unable to finance its transportation infrastructure, it will risk being perceived as a radioactive place for locating jobs.
4. Job creation and the next elections
Governor O’Malley has done his best to deal with a difficult budget situation. But if the economy is still in rough shape in 2010, that may be insufficient to mollify voters. What voters want in tough times is to create jobs – especially high-paying jobs. The construction industry creates and supports many high-wage jobs such as estimators, engineers, architects, planners and superintendents. And on state transportation projects, the building trades workforce is protected by Maryland’s prevailing wage law, ensuring adequate pay and benefits. The short-term ripple effects of job creation will combine with long-run returns on improved infrastructure to benefit the state’s economy immensely. And the Governor will enjoy support from both business and labor if he proposes such a plan.
But what about the tax increase necessary to support it? Voters recently demonstrated their unhappiness with tax hikes by voting for slots and the Ficker amendment while opposing a telephone tax in Prince George’s County. But transportation taxes differ in two ways:
1. If they are truly dedicated to transportation, voters may support them. If they are used to finance “general spending,” voters will be skeptical.
2. Recent declines in gas prices mean that voters will not be hit in their pocketbooks by a gas tax hike. According to Gasbuddy, the average gas price in Maryland has fallen from over $4.00 last summer to less than $2.00 now.
Oregon Governor Kulongoski’s two-cent gas hike would amount to less than one-percent of the recent reduction in gas prices if implemented in the Free State. If the gas tax cannot be raised and/or indexed now, when can it ever be increased?
Maryland has a transportation crisis. So does Oregon. Oregon’s leadership has a plan to deal with it. We need one too.
Update: The Baltimore Sun details the total lack of leadership in Howard County on this issue.
Tuesday, November 25, 2008
Crisis in Transportation, Part Two
A flatlining economy. Intolerable and worsening traffic congestion. Falling transportation revenues. Maryland has all of these problems. So does Oregon. The difference is that Oregon’s political leadership is doing something about it.
In December 2007, Oregon Governor Ted Kulongoski (D) saw all of these problems coming. He convened an advisory panel of business leaders, labor leaders, transportation advocates and state and county politicians to recommend the best way to deal with the state’s economic, budgetary and transportation officials. Their report, delivered just this month, contains these findings:
1. The Challenge
The report defines Oregon’s challenge this way:Oregon’s transportation system is not currently equipped to respond to the needs of a global economy, increases in population, rising energy costs and the obligation to reduce greenhouse gas emissions, which contribute to climate change. As Oregonians begin to drive fewer miles in more fuel-efficient vehicles, the revenues from the gas tax and related fees will continue to be less than necessary to meet needs. In fact, ODOT predicts that, within the next few years, revenues will decline in real as well as relative terms. This reduction, combined with the rapid increase in the cost of construction, severely limit Oregon’s capability to maintain and preserve existing infrastructure. Further, the economic slowdown the country is facing reduces reso-urces even more. Oregon’s challenge is to find a sustainable way to fund a transportation system that supports a vibrant economy, creates jobs and offers safe, efficient options for travel.
Every word of that statement applies equally well to Maryland.
2. Recommendations
Among many other things, the committee recommended:
A. A dedicated fund for non-highway investments.
B. Studying per-mile road user fees like vehicle mile taxes (VMTs).
C. Implementing a pilot congestion fee project.
D. Creating regional transportation utility commissions to collect and distribute revenues to projects in those regions.
E. Implementing variable first-time title fees to give buyers of fuel-efficient vehicles lower rates than buyers of gas guzzlers.
F. Providing tax incentives to promote alternative vehicle technologies (like plug-in hybrids).
G. Providing incentives for clean diesel technologies.
H. Supporting “pay-as-you-drive” insurance policies, which would tie premiums to actual auto use.
I. A finance package combining increases in registration fees, title fees and a two-cent gas tax hike resulting in $499 million per year in new funding for transportation.
The report estimated the revenue increases would cost motorists $85-265 per year. It also estimated that poor road conditions cost motorists more than $400 per year in additional vehicle maintenance.
After receiving the report, Governor Kulongoski incorporated many of its recommendations – including the $499 million annual financing package – into his Jobs and Transportation Act of 2009. In proposing the act, the Governor said: One of the most important investments we can make during a slow economy is in public works projects, such as transportation... We have a long bipartisan tradition of investing in transportation in good times and in bad times. Building roads, bridges and public transit is good for the economy and our citizens by putting people back to work.
The Governor estimated that the transportation program would create 2,100 construction jobs every year and called it “the most robust, sustainable, strategic and green transportation package in Oregon history.”
Will Oregon’s Governor get his way? Democrats control 18 seats in the 30-seat Senate and 36 seats in the 60-seat House. The legislation should also receive significant business support since the advisory committee included 25 business representatives among its 69 members. So while the package will perhaps be tweaked in the legislature, some version of it may very well become law. And Governor Kulongoski will be hailed by business and labor alike for creating jobs during a recession.
So what of Maryland? We will conclude in Part Three.
Monday, November 24, 2008
Crisis in Transportation, Part One
Last week was a tough one for Maryland transportation advocates. Let us count the ways.
1. The message from MDOT Secretary John Porcari’s Road Show presentation in Rockville was a gloomy one. After revealing that the state only had three road projects in the entire county under construction, the Secretary told legislators upset over lack of progress on BRAC work, “We know we have to live within our means.” Translation: we have no more money to spend.
2. Even though the state just cut $1.1 billion from its $10.5 billion six-year transportation plan, the Post reported that revenue shortfalls could force more cuts totaling $2.5 billion. According to the Post:Collections of the vehicle titling tax in Maryland -- the equivalent of a sales tax on cars -- were down 17.8 percent from July to October compared with the same period a year ago, according to transportation officials. Revenue from the gas tax was down 6.6 percent from July to September compared with that period...
Secretary Porcari was skeptical that more cuts of that magnitude were necessary. But Delegate Murray Levy (D-28), Vice-Chair of the Transportation and Environment Subcommittee, said, “ I think we're going to get to the point where, if it hasn't been started, it may not get built... It's like one dollar out of three has gone out the door. That's not a trim around the edges. You have to whack projects.”
“Cars sales are poor, and people aren't driving,” said Warren Descheneaux, chief fiscal analyst for the Maryland legislature. “This is going on everywhere.”
The forecast Descheneaux presented to legislators yesterday assumes that Maryland will collect about $1 billion less than expected in titling taxes in the next six years. Gas taxes and other revenue sources that benefit transportation are also expected to be more sluggish than predicted. Maryland's ability to sell bonds for transportation projects is likely to be reduced by $1.2 billion, according to the forecast.
3. Two of our county’s leading state legislators poured cold water on the notion that additional revenues will be raised for transportation. When the Post asked House Majority Leader Kumar Barve (D-17) about prospects for a gas tax increase, he replied, “I don't think people want us to be doing that right now.”
New Montgomery Senate Delegation Chairman Rich Madaleno (D-18) went further. In his statement on the Purple Line, read by an aide at last week’s hearing in Chevy Chase, Senator Madaleno said:It is no secret that our state, like every other, is facing a severe economic downturn from the global financial crisis. With the end of this crisis nowhere in sight, our state will have to make some very serious decisions on our transportation priorities. Our transportation infrastructure across the state requires serious attention and dwindling gas tax and titling tax revenues, combined with this economic downturn, will severely restrict our spending on many worthwhile projects.
House Majority Leader Barve and Senator Madaleno are two of Montgomery County’s highest-ranking representatives in Annapolis. If they believe that no new revenues are available for transportation, that is a serious problem.
Quite frankly, the state does not have the resources to pay for any of the Bus Rapid Transit (BRT) or Light Rail Transit (LRT) options. Over the past decade, the only major new construction projects the state has moved forward with have been funded primarily with toll-backed revenue bonds. There are no alternative funding mechanisms available for this project. As a member of the Senate Budget and Taxation Committee, I feel confident in reporting that no new revenue options appear politically feasible in the foreseeable future.
But Maryland is not the only state with economic, budget and transportation headaches. In Part Two, we will reveal how another state is dealing with those same issues.
