By Adam Pagnucco.
Part One described how the state’s two transportation agencies – the Maryland Department of Transportation (MDOT) and the Maryland Transportation Authority (MDTA) – finance transportation projects. Part Two discussed their revenue problems. Part Three discussed their cost increases. Today we will look at the impacts of stagnant and declining revenues along with rising costs.
MDOT is not mincing words. In its overview of its final Consolidated Transportation Program (CTP), which is its capital budget, the department said:
Over the life of the CTP, MDOT’s revenues are expected to grow by one percent annually while operating costs are increasing seven percent per year. This has a two-fold impact on the capital program.
1. Operating expenses are funded before capital projects. As a result, any increase in the operating budget reduces available state funding for capital projects on a dollar-for-dollar basis.
2. As operating expenses consume a larger portion of available resources, it reduces MDOT’s ability to issue additional bonds to help fund the capital program.
There is a good reason why operating expenses come first: they are related to maintenance of existing facilities. It would be beyond foolish for the department to continue building new projects while allowing existing ones to deteriorate. That’s why the disproportionate impact of cuts is going to fall on new work.
Even before the full impacts of MDOT’s revenues were completely understood, the department’s draft CTP was full of projects that were “on hold.” In Montgomery County, they included the Georgia Avenue/Norbeck Road intersection and Clopper Road/Diamond Avenue intersection improvements. Other projects were wrapping up or had small amounts of planning money. MDOT is not discriminating against MoCo – the phrase “on hold” is used 21 times in the draft CTP all across the state.
In its recently released overview, MDOT goes into more specifics. The headline cuts include:
- Eliminate MTA [Maryland Transit Administration] commuter bus service, where ridership is at 17% of capacity and less than 35% of pre-COVID levels.
- Reduce two of three MARC Brunswick daily trips to West Virginia and forgo option to expand service at additional periods of the day.
- Reduce roadway sweeping, mowing, litter pick-up, drainage maintenance, curb and gutter repair, and guardrail replacement.
- Reduce funding for various contracts, including repair and maintenance of facilities, information technology subscriptions and support, and janitorial services throughout MDOT.
- Delay or cancel funding for MTA bus upgrades, including the downtown Baltimore hub and the transit priority initiative.
- Delay a number of MTA light rail, MTA Metro and Maryland Area Rail Commuter (MARC) state of good repair (SGR) projects.
- Lower MTA’s SGR funding level below the level required by the Maryland Transit Safety and Investment Act.
- Reduce funding for [state highway] state of good repair initiatives.
- Reduce funds for the Electric Vehicle (EV) Readiness Program.
- Remove construction funding for all major expansion projects that will not be advertised by the end of the calendar year.
That last one is huge. MDOT is essentially exiting the construction business. The department specifically mentions $6.5 million in cuts for Georgia Avenue in Montgomery Hills and $68.5 million for I-495/I-270 Phase I South. Again, these occur in the context of similar cuts in other parts of the state.
Two cuts target local governments. First, the state is cutting aid to local transit services, including a $17 million cut for Montgomery County’s Ride On. Second, the state is cutting highway user revenues – transportation money sent to the counties and municipalities – by $53 million in FY25. That includes a $1.8 million cut for Montgomery County and a $1 million cut for MoCo’s municipal governments. Local leaders have never forgotten how this money was cut during the Great Recession and have been working to get it restored ever since.
Local governments are affected in another way. All of them regularly send wish lists of state projects to MDOT. There is never enough money to build all of them and so construction proceeds at a snail’s pace. But if nothing is done to fix MDOT’s problems, construction will not proceed at all.
Among the few brights spots are that the state is not laying off MDOT employees and it plans to increase subsidies for WMATA, which is experiencing a financial crisis of its own.
MDTA, which builds and operates toll roads, has not been so explicit about its plans. However, its FY22 annual comprehensive financial report shows that its income from operations (the difference between operating revenues and operating expenses) has plummeted in recent years as shown in the chart below. The drop started three years before the pandemic. That’s not going to be helpful to its ability to finance future debt needed for construction projects.
What can be done to save Maryland from transportation Armageddon? We will explore a few ideas in the conclusion.