Legislation is in to revisit the long-lasting debate about Highway User Revenues – the share of State motor fuel and vehicle taxes distributed to local governments for their own road and bridge maintenance. The bill is worth a real look.

Senator Andrew Serafini and Delegate Carl Anderton are lead sponsors of legislation to extend and revive the local distribution of transportation revenues. It’s been a couple of years since this debate took center stage – let’s look at the bill and the need for it.

First – if the whole debate is foreign to you, don’t worry. Conduit Street has you covered. At the start of this 4-year term, we ran an article talking about the history of HUR, and where we stand today – that primer is still very relevant:  Taking the Longer Look at Transportation Funding

Now… about this year’s bill.

HB 1394 (Anderton, et al) is the first serious look at what “the next phase” of local transportation funding might look like. The Senate cross-file, SB 982, has a bi-partisan and rural-urban sponsor line, with the same objectives. Here’s what the bill does:

Drops The Sunset From the 2018 Law

The most straightforward step – a landmark effort in 2018 brought county, municipal, and City funding to new levels, and stabilized them with a five-year statutory mandate. HB 1394 would drop the end date on that plateau, to avoid funding falling back to deep-recession levels after FY 2024. Benefits: Counties, Baltimore City, Municipalities

Local Transportation Funds – Lockboxed, Just Like The State’s

HB 1394 puts the local distributions of transportation revenues into protected status, just like the State’s own share. In 2013, when the State last adjusted its transportation revenue structure, this assurance – that transfers away from transportation purposes could only be accomplished in case of a genuine emergency. HB 1394 extends that same reasonable protection to the local road and bridge funding. Benefits: Counties, Baltimore City, Municipalities

Bumps Up Municipal and City Shares in FY25

In addition to avoiding the over-the-cliff effect slated for FY 2025, HB 1394 would bump up the share of revenues that are distributed to municipal governments (from 2.0% to 2.6%) and to Baltimore City (from 8.3% to 8.8%). The share to the 23 counties remains flat at 3.2%. Benefits: Baltimore City, Municipalities

Removes the CPI “State Fence-Off”

In the 2013 legislation adjusting State transportation revenue structure, one component was to provide an annual adjustment to the motor fuel tax rate, to account for the changing cost of related projects. These annual adjustments, pinned to the Consumer Price Index (CPI),  were not allowed to flow through the Highway User Revenue formula, but were all directed solely to state transportation needs. HB 1394 would re-apply the historic State/local split to the full, adjusted, revenue stream. (Note – the bill does not apply a local distribution to another revenue component from the same bill, applying the State sales tax to fuel purchases) Benefits: Counties, Baltimore City, Municipalities

The Senate bill’s hearing is set for March 4. the House has not yet scheduled its public hearing for the bill.