Governor’s Transportation Plan – What’s in it for Counties?

As previously reported on Conduit Street, the Governor has released his transportation plan, SB 971/HB 1302 the Maryland Transportation Financing and Infrastructure Investment Act of 2012.  This legislation would apply the State’s 6% sales tax to the price of motor fuel.

Although, this proposal will provide additional transportation aid to local governments, it is not in the same manner as historically advocated by MACo.  Instead of providing for a full restoration of Highway User Revenues (HUR) back the historic 70% State/30% local share, it maintains the existing split of HUR, 90% State/10% local.  It then establishes a new “Local Transportation Infrastructure Aid Account” to allocate new revenue from the sales tax on gasoline to local governments.

Below is a more detailed description of what is being proposed.  County-by-county estimates of the fiscal effects of this proposal are also available.

Highway User Revenue

  • Maryland counties and municipalities are budgeted to receive their full allocation of shared revenue per statute under the current funding formula – 90% State/10% Local share, which is effective in FY 2013 – not the 70% State/30% local share as advocated by MACo
  • Of the 10% of local share of HUR – Baltimore City will received 80%; Counties, 16%; and Municipalities 4%, the same as under the current formulas

Local Transportation Infrastructure Aid Account (LTIAA)

  • Establishes a new account for the purpose of sharing more revenue with local governments
  • New revenue generated by the application of sales tax would be shared with the local governments on an 80% State /20% local basis
  • The distribution of funds would be – Counties receive 70%; Municipalities 20%; and Baltimore City 10%
  • Funding to local governments would be phased-in  like the 6% sales tax, 2% in each year over a minimum of 3 years
  • At a 2% rate, local governments would receive 10% of the new revenue generated
  • The local share would increase to 15% at the 4% rate and 20% at the 6% rate

When combined with Highway User Revenues, the revenue generated from the application of the sales tax will restore both municipalities and Baltimore City to approximately 70% of their 2008 funding levels and will restore the counties to nearly half (42%) of their 2008 funding level.

MACo’s Legislative Committee will be discussing this proposal at its meeting on Wednesday, February 22.

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