In the State Highway Administration budget analysis for the 2013 session, the Department of Legislative Services (DLS) analyzed the impact of Highway User Revenue (HUR) reductions on local transportation spending.  To do so, DLS compared a three-year funding average for local transportation expenditures for fiscal 2007 through 2009, those years prior to the fiscal 2010 reduction, and the two years data were available following the reduction, fiscal 2010 and 2011.  Whereas, aggregate funding increased by 11.6%, this increase is misleading once the data is examined on a jurisdiction by jurisdiction basis.

The DLS analysis summarizes the following findings, in addition to two others:

• Data for counties and municipalities shows no strong correlation between average local HURs funding as a percentage of transportation expenditures in peak years and the change in average transportation expenditures since HURs were significantly reduced. Additionally, an entity’s population size and tax actions since HURs were reduced appear not to have influenced the overall change in average transportation expenditures.
• 15 counties decreased their average transportation expenditures since local HUR were significantly reduced after fiscal 2009. Six counties (Calvert, Caroline, Queen Anne’s, Somerset, Wicomico, and Worcester) each decreased their average annual transportation expenditures by at least 20.0%.

• Anne Arundel County, Baltimore City, and Montgomery County showed average transportation expenditure increases of at least 20.0% over the same period. Expenditures for these three jurisdictions total $151.2 million, which is greater than the overall increase in local transportation spending.

Considering the large reduction in HUR, one would have expected more than half of Maryland’s counties to reduce local transportation funding, probably significantly.  For smaller jurisdictions, HUR was the primary source of revenue for local roads maintenance budget, including snow removal, patching and chip sealing, signage and pavement stripping, and drainage work.  For some, the state share of transportation revenues was the complete budget.  It also should be expected that some larger jurisdictions had no choice but to step up increase local funding into their own heavily traveled roadways.

The 95% reduction in HUR forced counties to make difficult funding decisions to continue maintaining their roadways while not decimating the rest of county government.  This is evidenced by the series of county budget actions taken in fiscal 2010 and 2011, the depths of the fiscal downturn.  Counties across the state eliminated employee COLAs and increments, instituted furloughs, laid off employees, enacted across the board cuts, and dipped into rainy day and reserve funds — all required to offset the state funding reductions as well as their own revenue declines related to the economy.  Although this data may show local transportation funding increasing in the aggregate — this simply reinforces the essential nature of local transportation programs.  State cuts could not simply be absorbed by deferring projects – counties were frequently compelled to make up a share of those lost funds with county general revenues, essentially diverting property tax funds away from education and public safety to do so.

Roadway users usually support the notion that their taxes — on motor fuel and vehicle purchase — are the primary means to support the transportation system they enjoy.  However, Maryland’s decision to retain all these funds for state projects and to deny nearly all the shared HUR funding has betrayed this principle.  Drivers pay transportation taxes, but are then called on to also pay county property taxes to support the locally-maintained roads in their community and neighborhood.

As the state gradually rebounds from the worst economic cycle in generations, what remains relevant is the State’s policy for funding transportation at the State and local level. Until fiscal 2010, Maryland had a long-standing and wise policy to share transportation revenues with local governments.  With local governments being responsible for more than 80% of Maryland’s road miles, this ensured that the revenues collected by the users of Maryland’s roadways were used for that purpose.  Significant reductions to HUR at the State level have drastically changed this policy and have forced local governments to rely more heavily on the property tax to fund transportation projects and maintenance.

MACo and the county community hope this recent trend will be reassessed, and hopefully reversed, with the appointment of a new transportation task force to study local and regional transportation funding. Highway User Revenue and other local funding options will be discussed as a part of the task force’s charge.

Follow Conduit Street for updates on the task force’s discussions.