Cash Crunch at DOT

June 03, 1991

State legislators are playing a dangerous game of "chicken" with the Schaefer administration that could harm the state enormously if they turn out to be wrong. And so far, it appears that they are.

Lawmakers, particularly House Speaker R. Clayton Mitchell, adamantly refuse to yield to pleas from the administration to hike motor vehicle fees and consider a higher gasoline tax to finance the state's unmet transportation needs. Without a new infusion of funds, the state Department of Transportation will be dead broke by the end of the year. In fact, DOT had only a $20 million cash balance at the end of May -- not enough to pay for a week's worth of project work.

DOT's cash situation is deteriorating. Latest projections foresee a cash deficit in September, rising to $95 million by next January. The only way to pay for new projects -- or qualify for federally supported ones -- would be to issue more debt. That would violate a long-standing state policy on debt coverage and jeopardize DOT's bond ratings.

The most recent DOT revenue receipts are even more discouraging. The recession has staggered the transportation trust fund. Auto titling fees plunged once more in the first three weeks of May by $3.8 million. April's gas-tax revenues took an extraordinary dive of $5.5 million. The corporate income tax, meanwhile, plummeted $19 million in a 10-month period. Even the legislature's own, jerry-built forecast shows DOT can't survive for long without a new infusion of revenue.

While Maryland may be able to qualify for $100 million in federal interstate funds this summer, there is not enough cash to start making payments on these projects when the bills come due this winter. And there is no way the state can come up with enough matching money to qualify for another $300 million in federal projects October 1.

Schaefer administration officials called a halt to all new transportation projects last December. The crisis still has not abated. If anything, it is deepening. Just when the state's sagging economy needs a boost from public works projects, DOT has been forced to sharply curtail its activity.

Pushing DOT into penury is not the answer. The department doesn't even have enough cash to pay for projects now under way. Forcing DOT deeper into debt isn't the solution, either. That would be irresponsible fiscal policy. Nor can the state wait out the recession without shuttering DOT's offices.

When legislators meet June 26 in special session, they cannot afford to ignore Maryland's transportation crisis. It is real. It is getting worse. It won't disappear on its own. Sooner or later, Mr. Mitchell and other lawmakers must address this problem. Playing deficit games with DOT is risky business that could damage the state's fiscal and economic well-being for years to come.

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