Budget analysts ask cut in transportation funds

Diverted sales tax revenue would go to state's general fund

February 04, 2010|By Michael Dresser | michael.dresser@baltsun.com

Budget analysts for the General Assembly are urging legislators to divert almost $60 million a year that had been intended for the state's Transportation Trust Fund to general use starting in 2013 - a move opposed by the state Department of Transportation.

The Department of Legislative Services said the move would "relieve funding pressure on the general fund."

The recommendation came at a budget briefing held Wednesday before the Senate Budget and Taxation Committee, where lawmakers questioned state Transportation Secretary Beverley K. Swaim-Staley on her department's plans and priorities at a time of slumping transportation revenue.

The change urged by analysts would extend indefinitely the Assembly's decision in 2008 to reduce the share of the state's sales tax earmarked for transportation from 6.5 percent to 5.3 percent until the budget year that starts July 1, 2013. In 2007, lawmakers had raised the sales tax by a penny - to 6 cents on the dollar - and set aside 6.5 percent of the revenue for transportation. They later decreased that amount temporarily in order to close the budget gap left by repeal of an unpopular tax on computer services.

If the current law remains in effect, the Transportation Trust Fund would gain a projected $57 million in 2013 and $59 million in the budget year that begins July 1, 2014. If it is changed, that money would be switched to the general fund in those and future years.

Analysts said changing the law now would give transportation officials sufficient time to revise the state's capital program. Maryland's proposed capital budget for transportation next year comes to $1.5 billion, while the operating budget is roughly $1.6 billion.

Redirecting tax money to the general fund would help alleviate the budget crunch lawmakers have struggled with in recent years as the recession has cut into revenues and pushed up some spending. Under Maryland's Constitution, the general fund budget must be balanced each year. There is no constitutional provision protecting transportation revenue from being used for other purposes. Attempts to add such a provision to the state Constitution have been repeatedly rebuffed.

Swaim-Staley told senators her department does not agree with the proposed cut to its revenue. But she said the department will work with the governor's office and the legislature as they sort out budget priorities.

The secretary said the department is focused on getting through the current recession "a year at a time." Swaim-Staley said she believed the sales tax diversion was "just one of many options" budget analysts are considering as they look forward. But she also noted that the increased sales tax revenue is already built into its projections for paying back state bonds.

The change would take effect at a time when the Transportation Department hopes to be in a modest recovery after several years of a recession that has depressed revenue and forced the postponement of more than $2 billion in capital projects.

It would also come at a time when Maryland may be seeking $2 billion to help build three transit projects on its wish list - Baltimore's Red Line, the Purple Line in Prince George's and Montgomery counties and the Corridor Cities Transitway along Interstate 270 in Montgomery.


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