State Transportation Funding Updates: Maryland Picks Up the Pieces; Georgia, Pennsylvania and Ohio Look Ahead

Policymakers in Maryland are pondering how to move forward after the legislature wrapped up its session this week without finding new revenues for transportation. Meanwhile, Georgia continues to look ahead to this summer’s increasingly important referendum votes on regional transportation projects and the sales tax increases to fund them. Pennsylvania’s Auditor General tries to jumpstart transportation investment in his state. And Ohio looks to innovative revenue sources to tackle long-neglected projects.

Maryland: As I blogged about earlier this week, Maryland’s legislative session ended Monday without consideration of Gov. Martin O’Malley’s proposal to place a 6 percent sales tax on the retail price of motor fuel to fund transportation. O’Malley Thursday blamed a debate over whether Maryland should build a sixth casino for crowding out not only a debate about the transportation measure but also an income tax increase that was needed to avert $500 million in cuts to education and other programs. According to The Washington Post, O’Malley said he’ll wait until legislative leaders reach consensus over the tax package before calling lawmakers back to Annapolis for any special session. Asked if transportation funding could be a part of such a special session, O’Malley said “I don’t know. … Whether we have the ability to do that now is hard to say.”

At least one Maryland lawmaker isn’t holding his breath that the legislature will tackle the state’s transportation funding issues in a special session. In an op-ed for The Baltimore Sun this week, State Sen. Jim Rosapepe blames the failure of efforts to raise taxes to fund transportation on two factors: “oil prices have risen and public trust in government priorities has fallen.” “Most legislators were convinced—rightly—that most voters won’t support a gas tax increase to pay for transportation investments they are only vaguely aware of,” he wrote.

Rosapepe believes a more transparent strategy for transportation investment is needed. “Unlike Maryland, many states fund major transportation projects from bonds authorized in voter referendums,” he writes. “The state’s leadership draws up a plan and asks the voters to approve it. The revenue sources may be the gas tax—or sales tax, property tax or other revenue. The key is that the revenue is tied to specific projects, and the voters—not the politicians and bureaucrats—get to decide if the benefits are worth the costs. In just the last three years, in the midst of the Great Recession and rising gas prices, voters in 18 states have passed 74 transportation investment programs. Maryland can learn something from them.”

In Maryland, the legislature would have to propose a constitutional amendment to allow for a voter referendum on such a transportation investment program. That amendment would have to go before the voters.     

“If it is approved, the governor and legislative leaders should convene a group, including private-sector representatives, to draw up a plan to put to the voters,” Rosapepe wrote. “It should be both bold enough to inspire confidence that it will a game-changer, reducing traffic congestion and driving smart growth, and practical enough that voters can understand why the benefits are worth the costs.”

Rosapepe’s plan would likely face a lot of hurdles but he believes it would all ultimately be worth it.

“Our current transportation funding model has clearly failed to keep pace with our economic needs," he wrote. "It's time for a new approach: Asking our people to make the big choices.”

One place to start to define such a plan to present to voters might be a new report just out from TRIP, a national transportation research group. The report lists “TRIP’s Top 40 Transportation Projects to Support Economic Growth and Quality of Life in Maryland.” The organization also has reports on other states available on its website.

Georgia: As I’ve reported previously (including in the most recent issue of Capitol Ideas), Georgia is one state going the referendum route this year. Voters are being asked this July to decide whether to enact a 1 cent sales tax to fund different transportation projects in each of 12 regions around the state. Well, WSB-TV in Atlanta reported this week that voting to reject the tax increase could actually end up costing taxpayers even more. Kennesaw Mayor Mark Matthews told the station that should the referendum fail, the local match for road work would triple for every community, meaning that on a $400,000 project on which the city is expecting to pay 10 percent or $40,000, they would end up having to pay $120,000. Taxpayers would likely end up paying the additional costs in some way.

Pennsylvania: Auditor General Jack Wagner, who I interviewed a few months back for CSG’s Capitol Ideas, is once again calling on Gov. Tom Corbett and state lawmakers to come together around a transportation funding plan for the state, The Patriot News reports. Wagner said this week that officials should look to savings in areas where past audits have shown the state can save money, such as public welfare programs and charter school subsidies. Savings in those areas could be used to help fund the Pennsylvania State Police, which in recent years has been funded using state gas tax dollars that would otherwise go to highway and bridge repairs. A Transportation Funding Advisory Commission last year recommended capping or moving state police costs to the general fund. Wagner also endorsed uncapping the Oil Company Franchise Tax, as the commission also recommended. As I blogged earlier this week, Corbett, the state’s Republican governor, has yet to either endorse the commission’s recommendations or come up with his own plan to fund transportation. Wagner, a Democrat and once and possibly future candidate for governor, said he doesn’t buy the governor’s excuses about getting the state’s budget in order first and avoiding tax increases in poor economic times. “There is never a good political time, so to speak, but life safety issues must prevail,” Wagner said. “This is very frustrating to me because I know the costs (of deferring maintenance) will increase dramatically by kicking the can down the road.”  

Ohio: The (Cleveland) Plain Dealer reported this week on the challenges Ohio faces with regards to funding transportation. Ohio Department of Transportation (ODOT) officials say efforts to keep up with repairs to aging highways are taking money away from and causing significant delays to major transportation projects (defined as those that cost more than $12 million a year and add lanes or capacity to roads and bridges) in the Cleveland area including the second Inner Belt Bridge and the conversion of the West Shoreway into a boulevard.

ODOT said in January that the bridge had been delayed for nine years while the shoreway conversion has suffered a 13-year delay. The department also said revenues for 34 projects promised by previous administrations would fall short by $1.6 billion through 2017. Funding for major new projects, which regularly totaled more than $400 million in recent years, will be down to just $48 million by 2017. Meanwhile, the cost of maintenance is expected to increase from $1.58 billion this year to $1.82 billion by 2017.

The department recently launched a new Division of Innovative Delivery to pursue new sources of revenue for transportation. Among them, according to this diagram from the division, are short term revenue generators like encouraging corporate sponsorship of transportation facilities and the development of travel plazas at non-interstate rest areas and more long-term revenue generators such as leasing the Ohio Turnpike, developing more public-private partnerships to fund projects and seeking additional transportation funds from federal government programs. The department is also looking to cut costs by $100 million over two years with operational improvements and organizational downsizing.     

James Riley, the Deputy Director of Innovative Delivery at ODOT, will be among the speakers this summer at the annual InfraAmericas U.S. P3 Infrastructure Forum. It takes place June 19-20 at the Metropolitan Club in New York City. As I’ve mentioned before, CSG is a supporting organization for the event again this year. State government officials will want to be on hand to hear from their colleagues from around the country and from representatives of the private sector about the latest developments in the field of public-private partnerships. You can read my coverage from last year’s conference here and here. And you can learn more about this year’s event here.