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Legislators seek lock on dedicated funds

ANNAPOLIS — A bipartisan group of delegates wants to amend Maryland’s constitution to prohibit the transfer of dedicated funds to the General Fund, except in a state of emergency, as they look for ways to stave off potential tax increases.

The Dedicated State Funds Protection Act would prohibit the transfer from accounts such as the Transportation Trust Fund, which is funded by gas tax revenue. A similar proposal received an unfavorable report from the House Appropriations Committee in 2011.

Authored by Del. Herb McMillan, R-Anne Arundel, the bill is sponsored by 10 Republicans and 10 Democrats.

“We’ve got a really interesting group of people supporting this piece of legislation,” McMillan said. “I think this year its chances of passing are better.”

The bill has also garnered support from the Maryland Association of Counties, McMillan said.

Proponents of the act say it has become increasingly necessary for infrastructure projects, due to the state’s tendency to transfer dedicated funds to balance the budget.

“It’s part of the culture of Annapolis to take money from these funds,” McMillan said.

This is particularly true in the case of the Transportation Trust Fund, intended for highway construction and repair, which has been raided for hundreds of millions of dollars in the last two fiscal years.

Now, Gov. Martin O’Malley is proposing $2 billion in transportation projects and may push a gas tax increase in order to generate the required funds.

“The trust fund was able to take care of itself until a couple of the past few governors started digging into the pot,” Del. John Wood Jr., D-Charles, said.

Wood hopes to create a lockbox that will ensure gas tax revenues are used the way they were intended, without the tax needing to be raised.

House Republicans say to raise the gas tax at this point is to charge Marylanders twice for road repairs.

However, the proposed bill is intended to apply to dedicated funds across the board, not just the Transportation Trust Fund, so as not to make others, like the Bay Restoration Fund, bigger targets.

“All the dedicated funds should go towards the purpose they were approved for,” Delegate Kathy Szeliga, R-Baltimore, said.

Many legislators are opposed to the bill because of the extent to which it limits government options when it comes time to balance the budget, which the state is required to do.

The fact that the bill proposes a constitutional amendment exacerbates these concerns.

“In periods of deep economic decline like we’ve experienced, we need economic flexibility,” said Delegate Norman Conway, D-Wicomico.

Conway, who chairs the Appropriations Committee that will hold a hearing on the bill on Tuesday, said that dollar transfers from funds are necessary for government operations even though they don’t always make people happy.

While the bill may receive another unfavorable review, at the very least its sponsors hope to make the General Assembly take a closer look at the transfer of dedicated funds in the future.

“You can’t spend your way out of the deficit and tax your way into prosperity,” McMillan said.