Since the Maryland General Assembly convened for a ninety-day session last month the state budget has been the focus of intense attention, an intense focus that generally occurs later in the session.
Projected state budget deficits have driven early debates on spending cuts, tax increases, personal income and business tax adjustments, fee increases, and “rainy day” fund transfers.
Given the challenges in reaching consensus on the Governor’s proposed $67.3 billion budget, and majorities in the House of Delegates and the Senate, these debates have been and will continue to encounter unexpected twists and turns.
Last week, Maryland Senate President Bill Ferguson speaking about a new challenge said lawmakers will likely have to look for “several hundred million more dollars” in additional cuts or taxes to cover anticipated decreases in federal funds coming to Maryland.
Despite these challenges, a balanced budget as mandated by the state constitution will most likely be approved by the General Assembly and sent to the Governor for his approval just before or at midnight when the General Assembly adjourns on April 7.
If that does not happen, the Governor will need to call for a special session for a budget approval for the first time since 2012.
Another state budget issue that will be challenging but which has not yet received much attention is long term funding for the state’s $21.2 billion six-year transportation trust fund.
This fund provides capital investment funding for the Maryland Aviation Administration, Maryland Port Administration, Maryland Transit Administration, Motor Vehicle Administration, State Highway Administration and The Secretary’s Office, as well as Maryland’s investment in the Washington Metropolitan Area Transit Authority.
Currently, almost a third (31%) of the transportation trust fund’s annual revenue comes from a 46.1 cent per gallon gas tax, a tax that is automatically adjusted based on the rate of inflation.
There are increasing concerns that even with future annual automatic gas tax rate increases, it is not a long-term reliable funding source for the transportation trust fund.
There are three driving trends leading to the gas tax reliability concerns: less gas consumption due to improved fuel efficiency of new gas-powered vehicles, increasing use of electric and hybrid vehicles, and less driving by those working from home who seldom or never drive to or from work.
The Eastern Transportation Coalition (ETC), a partnership of nineteen states and the District of Columbia focused on connecting public agencies across modes of travel to increase safety and efficiency. is proposing mileage-based user fee (MBUF).
ETC has already done a four-month MBUF demonstration pilot in Maryland with voluntary
participation of over 170 drivers.
In their analysis of the Maryland pilot results, the ETC concludes, “in general”, drivers would have paid the same amount with an MBUF as they would have with the gas tax.
They do not elaborate on how they define “in general”.
The response to the ETC proposal from the Maryland Department of Transportation (MDOT) is “MDOT continues to partner with the Eastern Transportation Coalition on the work that the Coalition is doing to learn more about the feasibility of MBUF as a sustainable transportation funding option for the future, but has no next steps planned at this time.
I suggest MDOT’s non-committal for next steps at this time is very appropriate.
There is a wide range of unanswered questions on the ETC demonstration pilot results specifically, and the MBUF concept in general, that need to be addressed before MBUF is given serious consideration as an alternative to a gas tax.
How reliable are ETC conclusions that MBUF and gas tax driving costs are close to equal?
Are those conclusions applicable statewide in Maryland, especially on the Eastern Shore where long commutes to Annapolis, Washington and Baltimore are common?
If the goal is increasing revenue for the transportation trust fund, why replace one revenue source for another with no net gain on revenue?
Will 170 drivers reporting positive pilot demonstrations with an MBUF experience from voluntary driver surveys generate enough political support for legislative approval of a statewide WBUF when there are over four million licensed drivers in Maryland?
What are the projected long-term trends on sales of gas efficient vehicles?
What are the projected long-term trends on sales of all electric vehicles?
What are the projected long-term trends on sales of hybrid vehicles?
What are the projected long-term trends on work from home workers?
Complicating matters on this issue is another gas tax-related proposal reducing the mass transit operating expense subsidies paid from the state transportation trust fund.
Under current law, 50% of the transportation trust fund goes to pay those subsidies since fares cover less than 10% of the total operating costs of mass transit systems.
The question is: will the General Assembly and Governor approve a new mandate that at least 35% of the operating costs of a mass transit system must be covered by fare revenues, and just as with the gas tax, fare must be adjusted regularly based on the rate of inflation.
Until all of the above questions are answered, going slow on any replacement of the current gas tax system with an MBUF system is necessary, prudent, and realistic.
David Reel is a public affairs and public relations consultant in Easton.