Declines in revenue, federal aid drive cuts in proposed transportation projects – Maryland Matters

Transportation projects around the state will be put on hold as officials grapple with ongoing budget constraints and a growing list of expensive projects.

A combination of budget pressures has created a $1.3 billion funding gap over a six year period, which Transportation Secretary Paul Wiedefeld said forced his department to defer projects across the state.

“We just don’t have enough dollars to do what we have to do within our means. So that’s what we’ve had to do,” he said.

The agency Tuesday released a draft of its latest Consolidated Transportation Program, a six-year budget that contains $19 billion in projects around the state. Wiedefeld said the draft required tough choices to address the budget gap, a “historical issue” that continues.

Wiedefeld said the state’s transportation funding shortfall is driven, in part, by an end to federal COVID-19 aid. Other factors include inflation, increased construction costs, less than expected revenue from the state’s gas tax, and reduced federal funding.

“The biggest one we do is we take a look at our financial forecast and all the ups and downs that may occur in the financial forecast,” Wiedefeld told reporters during a briefing Friday. “And so, in doing that, what we learned was that some of the projections that we had in terms of the growth of some of our sources were not growing at that rate, particularly our largest source of revenue, the motor fuel tax. There were some others that were either not growing or remaining flat again, not growing to the level that we’d hoped for.”

Wiedefeld said that resulted in roughly a $350 million decline in projected revenues over the six-year period of fiscal 2025-2030.

“At the same time, our operating costs continue to grow at a rate a little bit more significant that we have projected,” said Wiedefeld, adding $300 million in projected costs over the six-year period.

Additionally, lawmakers earlier this year restored proposed cuts in state aid to local governments as part of Highway User Revenues as well as proposed cuts to transit systems run by 23 counties and Baltimore City. Restoration of those proposed cuts added another $400 million over six years, Wiedefeld said.

“So those three things basically are our realities that put pressure on the financial forecast,” he said.

Finally, Wiedefeld said the amount of federal aid is falling short of expectations.

“We were pushing all the modes to really buckle down and see where else we could get federal dollars for delivering projects,” he said. “We were shooting for roughly 80% federal, 20% local match, overall for the program. Basically, we were not able to achieve that, and we’re probably not going to be able to achieve that into the future.”

Instead, Wiedefeld said the state now expects a 75-25 split. “That 5%, although it sounds small, is significant, obviously, when you think of the amount of federal dollars that would bring down,” he said.

The resulting lack of revenue means counties will see priority projects not already underway slowed down or paused

“In effect, projects that are into the future — larger projects that we want to construct — we have to slow those down in terms of the process to get them to construction, until we have available dollars to pick that back up,” Wiedefeld said.

One large project that could suffer is the proposed widening of the American Legion Bridge.

“So, on the American Legion bridge, obviously, we have the record of decision for this, you know, larger improvement there,” said Wiedefeld. “But given the stress that we’re under, we’re going to have the state highway particularly focus on the pure state of good repair issues around the American Legion bridge.”

The state applied for a federal grant to help pay for the costs of repairing “structural issues with the bridge,” he said. “So that’s where we’ll be focusing,” Wiedefeld said.

News of the delays was delivered to county leaders by Wiedefeld and transportation officials during the Maryland Association of Counties summer conference last month.

The transportation secretary said he will also seek to slow down the purchase of zero-emissions buses in the coming years, as some major bus manufacturers are having issues with the performance of electric buses, as well as availability.

Moore warns of difficult fiscal decisions ahead

A new clean diesel bus costs the state $750,000. A hybrid bus costs about $1 million each. A new electric bus costs $1.4 million each.

“So, as you play that over the program period, if you defer that, it actually saves a lot of dollars,” Wiedefeld said. “It allows us not to dig deeper into operating cuts, that we would have to do, or system preservation cuts.”

Wiedefeld said he will not request cuts to his department’s operating budget as he did last year when he cut 8% across the board. He will also not request cuts to county aid or local transit networks.

“What we’ve done is we’ve gone through all those projects, and we’re going to defer those projects at a logical deferred point,” Wiedefeld said. “So basically, some of those projects were in different levels of study. We want to make sure that they stop at a point where we don’t lose any of the effort that we had done, but we don’t have the available funds right now to continue those projects. What you’ll see in the capital program is basically those projects that will be deferred.”

A year ago, Wiedefeld proposed cuts to county shares of highway user revenues and to local transportation networks.

Highway user revenues — decimated in cuts more than a decade ago — had yet to be restored to previous levels. Proposed cuts, nixed this spring by the General Assembly, would have eliminated planned increases in future years.

“Even so, the fiscal 2025 funding for HUR (highway user revenues) falls significantly short of Maryland’s appropriate and historic funding levels, even without adjusting for inflation,” the association of county governments said in a post on its website. “This gap becomes even more pronounced when accounting for rising road maintenance and materials costs.”

The association said it would continue to seek restoration of state highway aid.

“MACo and county leaders will continue urging Maryland policymakers to advance a sustainable plan to address critical infrastructure needs across the state,” the group said in its statement. “Proper restoration of the HUR formula should be a priority in advancing solutions that create sensible and reliable support for all locally maintained roadways.”