New Local Roads Funding: $19M to Towns, But Only $4M Across 23 Counties

Two weeks after his Governor’s initial budget proposal, Governor Hogan has offered new budgeted funds for local roads and bridges. The new funding, however, is heavily slanted toward cities and towns, who receive $19 million in new funds while county governments receive only $6 million ($4 million for counties and $2 million for Baltimore City) despite having substantially more road miles and bridges to maintain. The Governor also called for a full restoration of Highway User Revenues, indicating an eight-year phase-in period to return to longstanding prior local funding levels.

In his “State of the State” address today, Governor Hogan spoke about the importance of local roads and bridges:

Over the last several years, monies for local road improvements have been slashed by up to 96 percent.

Our administration is committed to restoring the money that was taken from the transportation trust fund, and to making sure that it never happens again.

Today I am pleased to announce a supplemental to our FY2016 budget that will increase Highway User Revenues by $25 million and give counties and municipalities the most money for road improvements that they have received since FY 2009.

Further, we are committed to increasing the local share of Highway User Revenues from 10% today to its original high point of 30% over the next 8 years.

(See the full comments released by the Governor’s office online)

An accompanying Supplemental Budget, as the Governor referenced, has been released but with few funding details. Legislation would be required to effect a formal restoration of Highway User Revenues, but also has not yet been introduced.

Local Road Funding In Context

Across Maryland, counties maintain more than 4 times as many road miles as municipalities – a ratio that has historically been reflected through the Highway User Revenue formula. In FY 2014, at the urging of municipal leaders, then-Governor O’Malley used a one-time settlement of the local income tax reserve account to provide a one-time grant to municipal road projects. That grant was continued (and expanded slightly to $16m) in FY 2016. In this supplemental budget, Governor Hogan has apparently elected to maintain the funding for another year – and then to add modest additional new funds for municipal (roughly $3 million), county ($4 million), and Baltimore City ($2 million) roads.

This distribution will not be even across counties — but will have only a modest impact on county road projects. The expected distributions to smaller counties will be below $100,000 in new funding. Two large jurisdictions, Baltimore and Howard Counties, will not even receive benefit from a share of the more generous municipal distributions, since their population centers are unincorporated – the roads of Towson and Columbia will be drastically underfunded compared to other downtown areas.HUR comparisons

The resulting distribution appears to have targeted “even funding” between municipal and county roads, providing a total of $26 million for each in the coming year. This lies in stark contrast to the historic distributions, which were based on two factors – the location of road miles and vehicle registrations. For FY 2009, the last year of full distributions, the split of highway user revenues (setting aside Baltimore City) was $46 million municipal and $278 million county (a 6-to-1 ratio), recognizing the far broader roadway responsibilities for county governments statewide.

The Top County Priority

MACo has adopted restoring these local roadway funds as a top initiative for the 2015 session:

Local Transportation Funding Restoration – With the recent expansion of transportation revenues, it is time for local governments to again play a more significant role in the State’s transportation funding plan. Many new State projects, including transit, have been added into the Consolidated Transportation Plan, while local governments have continued to struggle to maintain and preserve their roadways. MACo believes all avenues should be explored to restore local funding – the use of federal resources, the reallocation of funds should projects be delayed, and the reallocation of state highway user revenues back to local governments over time. MACo urges State policymakers to take the necessary steps to restore HUR and local roadway infrastructure.

In FY 2009, the last year of the longstanding Highway User Revenues distribution, a full 30% of state revenues from motor fuels and vehicles was distributed locally. That totaled $278 million to the 23 county governments, reflecting their share of vehicle registrations and road miles maintained. For FY 2015, the share to those counties was only $26.5 million — more than a 90% reduction. Counties, in order to maintain local roads and bridges, had to make up these deficiencies to the best of their own capacity, by diverting other revenues and reducing other local programs.

Over the span of these recession-driven cuts, roughly $2.1 billion has been diverted from local roads and bridges, initially to directly support the state general fund and later to support state transportation projects (after some sales tax money was reassigned away from transportation and to the state general fund). State budgets have been balanced on this massive cost shift on local governments.

MACo and county leaders will continue to press state officials – both in the Administration and the General Assembly – to stop the “starvation diet” for local roads and bridges.

Michael Sanderson

Executive Director Maryland Association of Counties