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O’Malley, Ehrlich differ on funding for transit plans

The $2.6 billion InterCounty Connector, shown here where it will intersect with Interstate 95, was begun by then-Gov. Robert L. Ehrlich Jr. and continued by Gov. Martin O'Malley.

The $2.6 billion InterCounty Connector, shown here where it will intersect with Interstate 95, was begun by then-Gov. Robert L. Ehrlich Jr. and continued by Gov. Martin O

Transportation has shouldered its way in alongside jobs and the economy as a key issue in the governor’s race among many in Maryland’s private sector who see investments in rail, road, air and sea travel as essential to the state and its economic well-being.

The divide between Gov. Martin O’Malley and former Gov. Robert L. Ehrlich Jr. has been most visible in their positions on transit lines planned for Baltimore and the Washington suburbs. But the issue goes deeper, to the future of the third-most congested urban highway network in the country, and the airport and seaport that provide the state its global connections.

State dollars dedicated to transportation increased marginally in recent years, but have consistently fallen short of budget expectations. Also, slack tax revenues have led governors and lawmakers to patch budgetary holes with $1.2 billion plundered from transportation funds in the past decade.

Gus Bauman, a land-use attorney who heads a state panel investigating potential sources of transportation funding, called the situation “dire.”

“Transportation is the lifeblood of any economy of any political jurisdiction,” said Bauman, of Beveridge & Diamond PC in Washington. “We cannot let this deteriorate to arteriosclerosis. Without a really fully funded and modern transportation system, you cannot have a 21st-century economy.”

Donald C. Fry, president and CEO of the Greater Baltimore Committee, said every layer of government has “neglected our investment” in transportation infrastructure, a problem compounded by Maryland’s demographics.     The state is crowded, with the ninth-smallest area but 19th-largest population, and 1 million more residents expected in the next 20 years.

“All you have to look is 40 miles to the south and you see where businesses have to adjust work schedules to allow for people to do the things that you would naturally want to do because of the congestion that occurs on the beltway in Washington,” Fry said. “In Baltimore, while we don’t have it that bad now, if we don’t do something we’re going to be facing that in the next 10 years.”

The Reason Foundation, a libertarian think tank, found 69 percent of the state’s urban highways were congested in 2008, with only Minnesota’s and California’s worse.

Roads vs. transit

O’Malley and Ehrlich took markedly different approaches during their time in office to ease the strain on Maryland’s highways.

Ehrlich began construction of the $2.6 billion InterCounty Connector in Montgomery and Prince George’s counties during his term and reserved a greater share of funding for highway projects. In the final transportation funding plan drawn up during his term, Ehrlich anticipated spending 54 percent of transportation dollars on highways and 29 percent on mass transit, such as buses and trains.

O’Malley tipped the scales toward transit. In the final plan of his term, highway maintenance and projects account for 48 percent of the funding, and transit accounts for 35 percent.

That disparity is crystallized in the candidates’ disagreement over the $1.8 billion Red Line and $1.7 billion Purple Line light rail system planned for the state’s urban centers.

Ehrlich opposes the light rail option; he prefers using buses — what he calls a cheaper, more realistic alternative that could free up money for other projects.

O’Malley backs light rail, which he says will be less expensive to maintain in the long run.

Transit advocates and many in the business community prefer rail for its superior capacity and permanence of its stations, which can become hubs for development.

Ehrlich’s stand has cost him the support of a key business group. The Greater Washington Board of Trade has endorsed O’Malley, due largely to his support of the Purple Line and extending Metro service to Dulles International Airport.

The endorsement raised eyebrows — the board endorsed Ehrlich in 2006 and was chaired recently by the husband of Ehrlich’s running mate, Mary Kane — and highlighted the seriousness with which business groups approach transportation issues.

“We’re the second-most congested area in the country,” said Jim Dinegar, the board’s president. “Transportation is not about getting tourists to the cherry blossoms. It’s about getting people to work and back home in a reasonable amount of time.”

Time to raise the gas tax?

But tackling transportation needs will likely require politically risky measures to raise revenues after state spending on transportation has been slowed by the recession.

As governor, O’Malley has budgeted about $700 million less in state funds for new highway projects than Ehrlich did during his term, but O’Malley has shelled out $300 million more for maintenance on the state’s aging roads and bridges, according to state Department of Transportation documents.

O’Malley has also used $676 million in funds normally distributed to the counties for transportation projects to balance his budget, a tactic employed by the previous two administrations as well.

The region’s largest business groups, including the GBC, the Greater Washington Board of Trade and the Maryland Chamber of Commerce, support an increase to the gas tax in some form, but the gubernatorial candidates and many lawmakers have said that will not happen in 2011.

The gas tax is the single largest source of revenue for the state Transportation Trust Fund. It is expected to generate $751 million of the $3.7 billion in fund revenue this fiscal year. The tax was last raised in 1992 — the final in a series of regular increases — when it was set at 23.5 cents per gallon.

“There’s no appetite for the gas tax,” Ehrlich said in a recent interview with The Daily Record. He has sworn off all tax and fee hikes if elected and promised to slice one cent off the sales tax.

Cutting the sales tax would decrease transportation funding, but Ehrlich said he would consider diverting more corporate income tax revenue to transportation.

O’Malley has said he hopes to avoid tax increases next year but has not gone as far as Ehrlich in swearing them off completely.

But even a gas tax increase would bring only fleeting relief, transportation advocates say, because of efforts to decrease fuel consumption through the use of mass transit, tax credits for fuel-efficient vehicles, and other programs.

Searching for alternatives

The GBC is studying — as will Bauman’s Blue Ribbon Commission on Maryland Transportation Funding — other funding sources, like a tax on the amount of miles a vehicle travels or more tolls. The GBC has not endorsed any of the alternatives.

O’Malley has turned to a public-private partnership to supplement state funds in another area, approving a 50-year lease of the Seagirt Marine Terminal in January. The state expects the deal to be worth up to $1.6 billion.

“We concluded a public-private partnership last year, the only one in the country, that’s going to widen and modernize the Port of Baltimore so that when those bigger ships pass through the Panama Canal, they don’t pass by Maryland,” O’Malley said this week.

The struggle to pay for the state’s transportation needs does not end at getting the money into the Transportation Trust Fund, business leaders say, but extends to actually keeping the money there.

Michele Whelley, president and CEO of the Central Maryland Transportation Alliance, described the penchant of governors to tap the transportation fund for other purposes as myopic.

The economic situation should not have such a profound impact on “the decisions that we make that have long-term implications,” she said.

In the ’80s and ’90s, the state used the trust fund to cover $100 million in budget deficits, buy $37.5 million in medevac helicopters and transfer $100 million to the Maryland Deposit Insurance Fund.

In 2003 and 2004, $315 million was used to cover budget shortfalls, with the last $68 million due to be repaid in 2012. And from 2003 to 2005, $222.7 million was taken from the same local funding source O’Malley used.

“Maryland is fairly unique in having this trust fund for transportation,” said Bauman, whose commission will look at protecting its funding streams. “It’s one of the great attributes of state government. So we want to keep it safe.”