Why The Fuss Over Highway User Revenues?

Why The Fuss Over Highway User Revenues?

  • Recession-driven state budget cuts have starved funding for local roads and bridges
  • Replenished state funds didn’t help resolve the local funding problem
  • County and municipal leaders urge state policymakers to help get this back in play

This background was written with the Annapolis newcomers in mind – the scores of new legislators, the dozens of new county officials, and the countless others who may not really speak the language yet of local road and bridge funding. We hope the analysis here is useful to them, and anyone, who follows state and local finances – as this is an enormous issue lingering since “the great recession” upended everyone’s budgets.

So What Are Highway User Revenues Anyway?

For decades, Maryland used one workhorse system to fund its roads and bridges. The revenues from motorists – gas taxes, car titling, and some fees – went into one account split 70/30 between the state and local governments. This split served everyone’s purposes for generations, even though locals maintain many more road miles than the State does. No local governments have their own transportation revenue systems – they’ve counted on the state Highway User Revenues (that 30% share) as their engine to maintain local roadways.

Why Are Local Governments So Worked Up?

During the depths of the great recession, the State needed funds to resolve its general fund shortfall, and redirected more than 90% of most counties’ and cities’ Highway User Revenues to help balance the state budget. The deepest cut came in the summer of 2009 by the Board of Public Works, but when the recession lingered the big changes were made permanent, and are still built into the current year’s budget.

How Much Money Are We Talking About?

It’s staggering. Across the local governments, the annual shortfall is about $350 million each year. Even with special funding targeted to municipalities, they are still far short of their historic funding levels.

That’s about $2.1 billion that would have been used to support local roadways.

No major segment of the state budget has seen cuts as drastic as local roads.

Wait – How Does Baltimore City Fit In?

Baltimore City has always been a special case. The state doesn’t maintain roads in the City – even the many numbered highways. So, they have always received a larger share than other jurisdictions, to reflect those huge responsibilities.

What’s left of Highway User Revenue can look pretty unfair – and many people conclude that the share for Baltimore City (larger than what’s left for the other counties and cities) proves they were spared the deep cuts of 2009 and afterward. Not true. Baltimore City’s share was cut by some $90 million per year – far, far more than any other jurisdiction, even scaled per capita.

Was All This Part of the Transportation “Lockbox” Debate?

Absolutely. The voters overwhelmingly approved a constitutional amendment last fall to fence off transportation funding, and make it harder to divert it to other purposes. Every analysis reveals that when the state has diverted its own share of transportation funds during emergency budget times, it has repaid those funds. The multi-year diversion of Highway User Revenues away from local governments and to the state (either to its general fund or to its own transportation program) has never been repaid. That adds up to more than $2 billion in funds (and counting) paid by motorists but used for purposes other than they had a right to expect.

However, while the constitutional amendment did make it harder to move transportation funds away from transportation projects- it didn’t resolve the six-year pattern of short changing local roads and bridges in the priorities that get funded through state revenues.

But Didn’t The Locals Get Helped By The 2013 Transportation Bill?

Not a dime.

It’s an understandable question. In 2013 Maryland passed a bill to change the state gas tax (in several parts), which brought new funding for transportation and infrastructure across the state. However, an under-appreciated part of this package was that every dollar of this new revenue was directed to state projects – overriding the formulas that otherwise would have split that revenue with local governments.

Do Highway User Funds All Go To Transportation?

Yes. When the state does send funds to local roads and bridges, either before or since the devastating cutbacks, the locals are obliged to use it for transportation. That has always been in state law. Last year, an additional report was required to account for these funds – but the need for local transportation is so great (especially with pent-up demand after years of deep cuts) there’s no challenge to show the funding targets. Every jurisdiction has pothole problems, decaying roads, bridges with structural issues, and the always-uncertain threat of major snow removal.

Is This Just A One-Party or One-Region Issue?

Not at all. The two counties listed first alphabetically on any impact sheet make this case plainly. Rural Allegany County saw its combined county and municipal funding drop from BIG to SMALL during the 2009 cutbacks. Anne Arundel County, with its half million people, dropped from BIG to SMALL in the same time. These are massive cutbacks to those counties and to their municipal areas as well.

On the gubernatorial campaign trail, candidates from both parties made restoring these funds a priority and a pledge. The Hogan Administration has announced its support for a full restoration plan, and backed it up by introducing legislation to do it.

And who’s taking the lead in the legislature? A Senate bill this year is sponsored by a metro-area Democrat. House bills are in from all parts of the state, and both parties. Last year’s bipartisan Senate bill was co-sponsored by two other Senators from Western Maryland and Montgomery County.

This issue isn’t urban or rural, it isn’t D or R. It’s about the importance of long-neglected roads and bridges, and delivering to motorists the full transportation system they believe they are already paying for.

How Can I Help?

If you’re a legislator – we need your support for legislation to get Highway User Revenues back on track. Get off the starvation diet for local roads, and get back to fair funding. Contact the House Environment and Transportation Committee, the House Appropriations Committee, and the Senate Budget and Taxation Committee, and let them know this is a priority. Support – or co-sponsor – bills to restore the funding. And keep talking about this issue, and what it means to the citizens and communities back in your district.

If you’re a county leader or other stakeholder and want to help – keep delivering the message. Talk to your Senators and Delegates, write to your local paper, and raise the issue. We can’t let these deep budget cuts just continue because too many people forgot, or don’t understand, what has happened.

Michael Sanderson

Executive Director Maryland Association of Counties