Transportation Commission Discusses Financing Options, Potential Recommendations

The Blue Ribbon Commission on Maryland Transportation Funding met in Randallstown on June 13 to receive an update on Federal Authorization, learn more about state infrastructure banks and public private partnerships, and discuss potential recommendations.

Although legislation has not yet been introduced in Congress to reauthorize federal transportation spending, the Administration, House, and Senate have very different perspectives on funding levels. The Administration has discussed a funding level of $550 billion, the Senate has discussed $339 billion, and the House has discussed a funding level no greater than expected revenue, which is 35% below the Senate amount.  There has also been discussion about collapsing programs, which could limit state flexibility, and doing a two-year funding authorization instead of the typical six-year.  It is anticipated that legislation would be introduced before the summer recess, but if these issues can not be worked out prior to the beginning of the new Federal fiscal year, authorization will not occur until after the Presidential Election in 2012.

The Commission also discussed State Infrastructure Banks (SIB) and Public Private Partnerships (P3s) as financing mechanisms for transportation projects.  A SIB is a revolving loan fund that can be used to provide low-interest loans for projects.  Whereas, 32 states have established SIBs, Maryland has not mostly due to the way transportation has been traditionally funded.  Maryland relies on funding and financing from the Transportation Trust Fund, bonding, and the Maryland Transportation Authority.  SIBs tend to be successful in states where local governments have funding requirements or a local option sales tax to be used as a payback mechanism.

A P3 is a contractual agreement between a public agency and a private sector entity under which the private entity assumes control of the operation and maintenance of an existing State facility; or the private entity constructs, reconstructs, finances, or operates a State facility or a facility for State use and will collect fees, charges, rents, or tolls for the use of the facility.  The Commission discussed some key parameters that should be in place to ensure success of P3s.

Lastly, the Commission discussed potential recommendations compiled from meeting discussions.

  • Continue to explore policies and legislation to facilitate value capture
  • Continue to explore expanding the use of P3s and developing policies and legislation to facilitate P3s
  • Facilitate smart growth by investing in infrastructure that supports transportation in growth areas and preserves rural areas
  • Explore options to improve the collection of tolls revenues including adding tolls to untolled portions of MDTA facilities and evaluating tolls on facilities that lose money
  • Reduce the percentage of transit ridership that is non-paying (non-profits, etc)
  • Reach the transit cost recovery ratio of 35%
  • Establish a methodology for regular adjustment of transit fares (indexing to be explored)
  • Any revenue options explored should include local transportation needs
  • Remove or increase limitation on MVA cost recovery

The next meeting of the Commission will be held on Wednesday, September 7 in Waldorf, Maryland from 11 a.m. to 2 p.m.  Two more meetings will follow, Tuesday, September 27 in Frederick from 11 a.m. to 2 p.m., and Tuesday October 25 with time and location to be determined.

Meeting summaries and other materials can be found on the Blue Ribbon Commission on Maryland Transportation Funding website.

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