Transportation fund borrowing stalls Md. plans

Transfer: Gov. Ehrlich promises to repay - somehow - hundreds of millions of dollars taken for other expenses, but major projects will be set back for years.

February 02, 2003|By Stephen Kiehl | Stephen Kiehl,SUN STAFF

For a cash-strapped governor who wants to stand by his promises - not to lay people off, not to raise taxes, not to cut money for education - the pile of cash set aside for state transportation projects must be awfully tempting.

The money rolls in daily - gas taxes, vehicle registration fees, transit fares, airport fees, federal aid - and adds up to about $3 billion a year. It all goes into the transportation trust fund and it's supposed to be used for highways, mass transit, airports and the like.

But it doesn't always work that way.

Gov. Robert L. Ehrlich Jr. is proposing to take $300 million out of the trust fund over the next 18 months and move it into the state's general fund, which is so far into the red it's purple. It would be the largest transfer out of the fund since it was created 32 years ago, and it means money that was supposed to be spent on transportation will go to teachers' salaries and crime fighting and a myriad of other state responsibilities.

Ehrlich says not to worry, that clever accounting will make up for the loss and that major transportation projects under way will not be stopped. But his critics call it shortsighted "voodoo budgeting" and paint a scary scenario that will hobble state transportation projects for years to come.

The General Assembly has to approve the transfer for it to take effect; considerable pressure already is building against the move.

"You can forget about projects that aren't in the pipeline, like the Intercounty Connector, like the Purple Line" Metro extension, said Montgomery County Executive Douglas M. Duncan, who also decries the loss of $100 million for local transportation agencies in Ehrlich's budget. "He has raided the fund and devastated the fund. You can't just take $400 million from that fund and say everything is going to be fine."

To an extent, Duncan's right: By taking that money out of the trust fund, Ehrlich had to cut $315 million out of the transportation department's long-range plans. But the bulk of the cuts were made to the projected budgets for 2006, 2007 and 2008. Ehrlich promises that by then, he'll return the money he's taking now. The big question is: Will he be able to do that?

But first, here's why cutting money down the road can solve this year's and next year's state deficit, projected at $1.8 billion: The transportation department had planned on selling bonds on Wall Street in those later years to pay for projects. Instead, officials are selling the bonds now ($150 million worth were sold Wednesday and another $150 million worth will be sold after July 1), so they must cut what they plan to spend down the road.

Most of those cuts came in the department's highway maintenance and neighborhood improvement plans. Instead of increasing the money spent on keeping up state highways - often ranked as among the best in the country - starting in 2005, that funding will level off. That will save $108 million.

The department is also eliminating the neighborhood conservation program, which rebuilt roads and improved lighting and sidewalks in older urban areas such as Glen Burnie and Middle River. That will save $76 million. A lot of other, lesser cuts will make up the balance.

$205 million promise

Meanwhile, the trust fund is taking another hit from the legislature. When times were flush, lawmakers promised that $205 million for the new Woodrow Wilson Bridge across the Potomac River near Washington, and an extension of the Washington Metro in Prince George's County would be paid for from the state's general fund budget. Now that times are bad, the state has left it out of the budget.

So, that $205 million would have to come from the trust fund, in addition to the $300 million Ehrlich is shifting to cover the deficit.

That all means the state doesn't have money this year or for the next five years to add projects to its transportation plan. Indeed, it can barely afford what's in the plan. And that worries the Montgomery County executive, among others.

Even Comptroller William Donald Schaefer, who supports Ehrlich's transfer, agrees that transportation projects cannot be put off. He said it will be harder to bring businesses into the state if they see congestion on the roads and no efforts being made to fix it.

"We'll be so choked if we don't do something and move on these roads," said Schaefer, who transferred small amounts of money out of the fund when he was governor. "But this will not hurt the fund. Ehrlich promises he'll put the money back, and I believe him."

Vague repayment plan

To put back the $300 million he's taking now, Ehrlich plans on revenue increases that have not been spelled out. He's hoping the state will get more federal aid for transportation. He's hoping the economy will rebound so the fees that go into the fund will increase. He expects the transportation department to tighten its belt. And he's looking for more money from the gasoline tax and increases in bus and subway fares.

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