Md. fund for road projects goes flat Gasoline-tax revenue will not meet costs unless rate changes

June 28, 1998|By Marina Sarris | Marina Sarris,SUN STAFF

Although Maryland is awash in cash for other new programs, its special fund for transportation projects is running out of money.

Over the next several years, the funding available to build or expand state roads and transit systems is expected to drop sharply while traffic congestion continues to increase.

Unless something is done, the state will not be able to start more than 100 planned highway projects, such as widening the Baltimore Beltway in two locations and widening Route 32 in western Howard County.

The amount of money for construction projects, which reached $1.2 billion this year, is expected to drop below its average annual level (about $860 million) in two years, according to transportation officials. By 2003, the construction budget is forecast to dip to $521 million.

Some business groups complain that congestion will increase beyond tolerable levels and that the economy will suffer unless more money is found. In the Washington area, the second most congested in the nation, fears of gridlock are particularly severe.

"We have a transportation crisis looming," said Robert Latham, executive director of the Maryland Highway Contractors Association, echoing the comments of some business leaders and legislators.

The problem is that the state relies primarily on its 23.5 cents-a-gallon gasoline tax to fuel its Transportation Trust Fund, which pays for highway, mass transit, airport and port operations and construction projects.

Because it is a flat tax, the gas tax does not keep up with inflation and the rising cost of running the state's various transportation systems. The result is periodic shortfalls in the money available for road construction, mass transit and other projects.

In the past, the legislature and governor have solved such shortages by raising the gasoline tax every five years or so. Lawmakers last raised the tax in 1992 to its current level, the twelfth highest in the nation.

The trust fund is separate from the state's general fund budget, which is flush with surplus revenues from income, sales and other taxes during these rosy economic times. In addition to the gas tax, other revenues for the transportation fund include titling taxes, federal aid, transit fares and vehicle fees.

The next governor of Maryland likely will have to decide what to do about the dwindling transportation fund. So far, the issue has not provoked much discussion on the campaign trail. Asked by a reporter, three gubernatorial candidates ruled out a gas tax increase while three others said they would consider one only if necessary.

Republicans Ellen R. Sauerbrey and Charles I. Ecker and Democrat Terry McGuire oppose increasing the tax, offering alternatives ranging from new toll lanes to cuts in mass transit or other, unspecified areas.

Three Democrats -- Gov. Parris N. Glendening, Eileen M. Rehrmann and Raymond F. Schoenke Jr. -- say they would search for other solutions before considering a tax increase.

"There obviously is a shortage, and we've started to run low on our ability to start new projects," said Glendening, who refused to raise the gasoline tax during his current term.

Glendening boasts that his administration has added $1.3 billion for transportation spending by cutting costs, selling bonds and repaying money the state borrowed from the trust fund in previous years. The booming economy also meant the state collected more in the taxes and fees that support the trust fund.

The governor said he is still looking for alternatives, but he acknowledged that they may be hard to find. "At some point we may have to bite the bullet and do this [raise the gas tax], but before we do it we must examine all alternatives. And $1.3 billion is proof that we can be creative."

Glendening said he does not support a plan being advanced by highway contractors to move the cost of mass transit operations out of the trust fund, although several other candidates do. Currently, the state spends about $370 million a year on mass transit, with fare box revenues making up about a third of that cost.

Although such a plan would free up more money for highways, it could leave transit in trouble, Glendening said. "The first time the economy slows and there's a tightening of the [general state] budget, I'm afraid mass transit would be one of the first things to be cut. That would be a disaster for our existing roads" because of added car traffic.

His opponent in the 1994 gubernatorial election, Sauerbrey, disagrees. She said she would move mass transit costs out of the trust fund.

The move would have to be phased in and would require transit to compete for funding with other state programs, she said. "I would also attempt to deal with the problem by aggressively trying to reduce administrative costs."

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