Donald Fry: Proposed transportation fund raid — a bad habit continues

Last week the Department of Legislative Services (DLS) recommended that the General Assembly permanently reduce the amount of sales tax revenue that goes to Maryland’s Transportation Trust Fund by approximately $60 million per year.

In order to provide additional revenue to the state’s general operating fund, the DLS recommends that lawmakers permanently reduce to 5.3 percent the share of state sales tax revenue that, by law, is supposed to go to the Transportation Trust Fund. This would be an 18 percent reduction in sales tax revenue that had been dedicated to the fund.

In the 2007 special session, lawmakers passed a measure that earmarks 6.5 percent of sales tax revenue for the Transportation Trust Fund. Ironically, the fund has yet to benefit from that full allocation because in 2008, only months after the 2007 special session, the General Assembly reduced the amount to 5.3 percent until FY 2014, when it is scheduled to revert to the 6.5 percent. That action was to make up for revenue lost by repealing the computer services tax.

Now, the DLS suggests that lawmakers make the reduction permanent, continuing the long-standing penchant in Annapolis for “raiding” the already beleaguered resource that funds our state’s highway, transit, port, and airport facilities.

This sequence of events serves to illustrate precisely why, for several years, the Greater Baltimore Committee has repeatedly called for some kind of a firewall to protect transportation funding from such raids.

While it’s understandable that state policy makers are seeking ways to bolster the recession-depleted General Fund, taking money from the transportation fund only further depletes a crucial financial resource that has suffered from greater revenue challenges far longer than the General Fund.

All state revenue has suffered from the recession during the last two years. But between 2000 and 2008, core revenues to the transportation fund grew by less than half the 59 percent increase that the General Fund enjoyed over the same period of time. The Transportation Trust Fund is already under so much duress that state transportation projects that have been planned but not funded greatly exceed the $40 billion shortfall that existed as far back as 2005, well before the recession. The GBC estimates that the shortfall now could total $80 billion.

Furthermore, persistent attempts to reach into the dedicated funding source for transportation projects only serve to undermine the public’s confidence in the Transportation Trust Fund. Marylanders and state elected officials have long taken pride in separating general government operating funds from revenue dedicated for transportation investment. Our elected leaders, however, have been averse to demonstrating the political will to sufficiently increase revenues for transportation for more than a decade.

Meanwhile, the state has borrowed from the Transportation Trust Fund to serve non-transportation related purposes, much to the chagrin of the voters. The growing disregard for maintaining the integrity of the Transportation Trust Fund only serves to threaten public acceptance of needed transportation funding increases in the future. It’s time that we demand that our elected officials restore “trust” in the Transportation Trust Fund.

Superior transportation resources have always been among Maryland’s core competitive strengths. Mobility – for both people and freight – is a prerequisite linchpin of our state’s economic future. But frankly, funding our transportation resources has now become one of our state’s most serious economic development challenges.

Clearly the recession is hurting everyone in our state — government, businesses and citizens. But continuing to shortchange our Transportation Trust Fund is ill-advised, especially now.

We’re playing a very dangerous game with the very transportation infrastructure that we will need to keep Maryland competitive after the recession.

Donald C. Fry is president and CEO of the Greater Baltimore Committee. He is a regular contributor to Center Maryland. He issued these comments to GBC members in the organization’s State House Update this weeek.