Lackluster revenues force Maryland to trim transportation services

Maryland transportation officials are finally getting the chance to move forward with several infrastructure projects that have been stalled for decades—new rail tunnels, highway bridges and mass transit lines. But now they have to keep those projects on track, even as they prepare to make $3 billion in service cuts over the next six years because of flagging revenues.

“The simplest way to think about it is that costs in the transportation sector were rising faster than the revenues. The COVID relief funds that Congress thankfully provided masked that those trends were continuing, but as the funds run out … the gap is wider,” said Brian O’Malley, the president and CEO of the Baltimore-based Central Maryland Transportation Alliance.

The pressures squeezing the Maryland Department of Transportation are familiar, but they are having an outsized impact in Maryland because of the way the agency is structured.

One major factor is that the Maryland DOT runs Baltimore’s transit agency and pays the state’s share of funding for the transit agency in Washington, D.C., but it has no dedicated revenues to pay for either.

Transit agencies around the country are facing a “fiscal cliff” because federal pandemic relief is running out, but fare revenues have not returned to pre-COVID levels because of changing ridership patterns. Maryland’s six-year plan includes money to maintain “core” services in Baltimore and to address part of the fiscal cliff for Washington, D.C.’s Metro service.

Meanwhile, other revenues that Maryland depends on for transportation aren’t keeping pace with the state’s expectations. The motor fuel tax, which is indexed to inflation, has been losing ground because of increased vehicle fuel efficiency. That problem will likely only get worse as more drivers switch to electric vehicles. Even car title fee revenues are slumping because residents are replacing their vehicles less frequently.

Paul Wiedefeld, the Maryland secretary of transportation, said the department took several steps to rein in spending to match the new financial picture. First, it delayed any new highway projects that hadn’t been started by the beginning of 2024. It also pushed back planned maintenance and upkeep. Then, Wiedefeld asked the heads of all the different divisions within the department to cut 8% of their funding.

The Baltimore transit system plans to eliminate its commuter bus service, which currently serves just 35% of the passengers it did before the pandemic. The commuter rail service will stop two of the three trains it runs every day to West Virginia. The highway department is cutting back mowing, litter pick up and other maintenance. Driver’s license offices will be closed on Saturdays. Airport parking fees will be increased. And money for local governments is getting scaled back.

“We’re hoping this is a temporary issue, but the thinking is that now is not the time to generate a lot of new revenue, given where the economy is and what people have been through the last few years,” Wiedefeld said.

That said, some major projects are still moving forward. The state secured federal money and still plans to provide matching funds to replace a 150-year-old tunnel in Baltimore that slows Amtrak trains on the Northeast Corridor to a crawl. Gov. Wes Moore, a Democrat, campaigned on reviving the Red Line mass transit project in Baltimore that his predecessor blocked, and that is going forward. The plan also provides money for a new light rail line in the Washington suburbs and a new bridge that carries the Beltway over the Potomac River. And funding for pedestrian improvements along state roads will continue.

Michael Sakata, the president and CEO of the Maryland Transportation Builders & Materials Association, said the cuts would not have an immediate effect on construction projects because most of the reductions would be at least three or four years in the future.

“But does it hamstring the agency? Absolutely,” he said, especially because larger projects require long-term planning with contractors and other stakeholders. “If you can't pay for these things, or have no mechanism that is possibly in place to pay them, it makes Maryland a tough place to play, much less compete.”

Sakata said the current funding crisis was years in the making, with lawmakers unable to  figure out how to pay for transit and the improvements in the highway system that they wanted to see. He noted that Larry Hogan, Moore’s predecessor, had pushed to use public-private partnerships to finance projects like the Potomac River bridge, but was blocked from doing so.

But O’Malley, the transit advocate, said Hogan had been too focused on expanding highways rather than finding other ways to reduce congestion.

O’Malley is particularly concerned about the cuts to Baltimore’s transit service, which he said could weaken Maryland’s case when applying for federal grants to help build the Red Line. It’s hard to convince federal officials that you can afford to build and maintain a new transit line if you’re cutting your capital budget beforehand, he said. Plus, transit cuts will likely result in lower ridership, which is another metric federal officials consider when deciding which cities should get construction grants, he added.

But O’Malley is also worried that the cuts Moore proposed don’t change the state’s underlying transportation priorities.

Wiedefeld’s plan to cut all agencies by 8% “sounds fair,” O’Malley said, “but it assumes things were fair to begin with, and they weren’t. There’s been a bias for decades towards widening roads and highways.”

“Gov. Moore and MDOT seem to be taking as a given that MDOT will continue to spend like it has before,” O’Malley said. But with the climate crisis and Moore’s campaign promises to use transportation to promote equity, he said, “MDOT must change its priorities and spend differently.”

“The Maryland climate goal is to achieve 60% climate pollution reductions by 2031 and be on track to net zero emissions by 2045. But 2031 is not that far away. The climate crisis is here, and it’s high time that MDOT starts acting like it,” he said.