With New Revenue, States to Play Bigger Transportation Funding Role Through 2040

Sep 29, 2014

Having approved historic measures last year that raise hundreds of millions of dollars a year in new revenue for transportation, Maryland and Virginia are poised to cover a larger share of the cost of maintaining, operating, and expanding the Washington region's transportation system over the next 26 years.

That's one of the key findings of the latest Financial Analysis of the region's Constrained Long-Range Transportation Plan (CLRP), carried out earlier this year by the Transportation Planning Board. The analysis takes place every four years in accordance with federal law to demonstrate that funding is reasonably expected to be available to pay for all of the planned improvements spelled out in the CLRP.

The 2014 CLRP identifies a total of $244 billion in planned maintenance, operations, and expansion costs through 2040. Of that, Maryland, Virginia, the District of Columbia, and the numerous counties and cities in the region are expected to contribute about $140 billion, or 57% of the total.

 

Four years ago, the last time the TPB carried out its analysis, the combined state and local share was just 51% of all planned spending through 2040. The growth since then is the result of two key factors: newly available state transportation revenue in Maryland and Virginia, and the declining availability of federal dollars for transportation.

In Maryland, upwards of $400 million a year in additional revenue is available for projects in the Washington region. In 2013, the state indexed its per-gallon tax on motor fuel to inflation so that it keeps pace with rising construction costs. It also imposed a new 3% tax on fuel wholesalers. The new revenue goes directly to the Maryland Department of Transportation (MDOT), which has the primary authority to decide how the money will be spent.

Virginia is also raising close to $400 million more a year for transportation projects in the Washington region. Virginia's new revenue-raising measure eliminated the state's motor fuel tax altogether, imposed a new 3.5% sales tax on fuel wholesalers and a new 6% tax on diesel fuel, and raised the existing state sales tax -- by 0.3 cents per dollar statewide, and by a full penny in Northern Virginia.

The sub-regional Northern Virginia Transportation Authority (NVTA) has primary responsibility for identifying and funding projects with the newly available revenue.

Both MDOT and NVTA have already begun to use the new revenue to accelerate projects that were awaiting sufficient funding to move forward.

The new revenues have also enabled area transportation agencies to commit to keeping the region's existing highways and transit systems in a full state of good repair through 2040. That means making significant capital investments to rehabilitate or completely replace aging infrastructure, including transit vehicles, as they near the end of their intended lifespan.

In all, the Financial Analysis shows that maintaining a state of good repair through 2040 will cost $79 billion -- about 32% of all planned spending.

 

An additional $123 billion will cover day-to-day maintenance and operations, including repaving roadways, clearing snow and debris, servicing transit vehicles, and paying train and bus operators. About $42 billion, or 17% of all spending, will go to planned highway or transit expansions.

The growing role of the states highlighted in this year's Financial Analysis is also attributable to the forecast decline in availability of federal dollars for transportation. The analysis assumed that federal spending would remain flat in coming decades rather than growing to keep pace with rising population and increased needs. As such, federal spending is forecast to account for 16% of all spending in the region between now and 2040, down from 18% in the last financial analysis in 2010.

Final public comment on the findings of the Financial Analysis and the 2014 CLRP is open until October 11. The TPB will consider both documents for final approval on October 15.

* * *

Stay tuned: TPB Weekly Report's coverage of the final stages of the 2014 CLRP update continues October 7 with the results of the Performance Analysis and Priorities Plan Assessment of the draft plan. On September 23, TPB Weekly Report highlighted the major highway and transit projects included in this year's update.

To follow all coverage, please visit www.mwcog.org/CLRP2014 or follow #CLRP2014 on Twitter. For more TPB Weekly Report, including access to all previous issues, please visit: www.mwcog.org/TPBweeklyreport.

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