By Adam Pagnucco.
Do you oppose the state’s I-270/Beltway widening project? Don’t worry about it. Do you oppose building Baltimore’s Red Line? Not a problem. Are you worried about more pesky bike lanes on state roads? You probably don’t have to worry about them appearing everywhere.
But if you are sick of being stuck in traffic every day, you should be unhappy. Your predicament is not going to change any time soon. The State of Maryland is experiencing a crisis in its transportation funding that might be even worse than during the dark days of the Great Recession. This crisis is so severe that if it is not addressed by the governor and the General Assembly, the state may have to stop building new transportation projects entirely.
This series explores the origins of this problem, its consequences and what options the state may consider to deal with it.
Let’s start by describing how the state finances transportation. Two entities are responsible for state-level transportation operations and construction in Maryland.
The first is the Maryland Department of Transportation (MDOT), which includes the State Highway Administration, the Maryland Port Administration, the Maryland Aviation Administration, the Maryland Transit Administration and the Motor Vehicle Administration. MDOT is an executive branch department. Its secretary is appointed by the governor and confirmed by the State Senate. The current secretary, Paul Wiedefeld is the former general manager of WMATA and is therefore familiar with dire crises.
MDOT uses the Transportation Trust Fund (TTF) to pay for its operating and capital expenses. The TTF is segregated from the state’s general fund, although it was once common to transfer out TTF money to other uses. Transfers were made more difficult by a 2014 constitutional amendment approved by voters, which requires the governor to declare a fiscal emergency and a 60% vote by both chambers of the General Assembly in order to make transfers.
The second entity is the Maryland Transportation Authority (MDTA), which builds and operates the state’s toll facilities. MDTA is not an executive department, but an independent state agency. Its board is appointed by the governor and confirmed by the State Senate. Wiedefeld is the current chair of MDTA’s board. MDTA’s finances are separate from MDOT’s and it issues its own debt, which is bound by a series of trust agreements with the Bank of New York Mellon. MDTA also issues its own annual comprehensive financial reports separately from the state government.
Why is MDTA legally separate from MDOT? The reasoning here is that the toll revenues collected by MDTA should be used to build and maintain toll facilities and not as general revenue for the state. An additional benefit is that the tolls can be used to finance bonds to pay for building toll facilities. In practice, however, MDTA is not totally separate from MDOT as it issues bonds on behalf of the latter agency which are not backed by tolls. One example is a series of MDTA bond issues for the MDOT-owned BWI Marshall Airport.
And so these are two different agencies with two different financing mechanisms. What is going wrong? We will start finding out in Part Two.