Summary and background on Senate Bill 75

2/11/05

Senate Bill 75 would raise the percentage of Federal highway funds that can be used for any one Maryland highway project. Current law allows a maximum of 13% of Federal highway funds to be used for any single project, and SB75 would raise this maximum to 20%. Prince George’s ACT opposes this change because it would allow the State of Maryland to issue bonds (called GARVEE bonds) that would promise, in advance, 20% of Maryland’s future Federal highway funds, once a highway project and its funding plan is approved.

It is clear that Senate Bill 75, proposed by the Maryland Department of Transportation, is intended to enable the Intercounty Connector to be built and thus lock up, in advance, 20% of Maryland’s future Federal funds. Prince George’s ACT opposes funding the ICC in a manner that leaves scant funds for other projects across the state of Maryland.

The ICC itself would be paid for disproportionately by GARVEE bonds. The current ICC funding plan calls for about 40% (about $1 billion) of the ICC’s cost to be paid for by GARVEE bonds, which will promise the above-described portion of Maryland’s Federal funds for the next 15 years. At the same time, the funding plan envisions only about 20% of the ICC’s cost to come from ICC tolls. Because the ICC will benefit a small section of the state and will not significantly benefit Prince George’s County (extending only 1 or 2 miles into the county, ending either on Interstate 95 or on US Route 1), it has been suggested that a smaller portion of the ICC be paid by GARVEE bonds (within the current 13% maximum) and a larger portion by tolls.

By comparison, Metrorail commuters pay a much higher percentage of Metro’s operating costs: over 50%! In fact, Maryland law requires this! Thus one could suggest that ICC tolls pay a higher percentage of the ICC’s costs than 20%. Although Prince George’s ACT does not advocate for any particular percentage, it does support a more balanced approach to funding the ICC. And by increasing the maximum percentage of Federal funds from 13% to 20%, Senate Bill 75 would circumvent consideration of a more balanced approach.

The Budget and Taxation Committee is scheduled to hold a hearing on SB75 on Wednesday, February 16. Prince George's ACT will be submitting testimony opposing SB75, either in person or in abstentia. If you can attend, we encourage you to share your thoughts in person. If you cannot attend, please let you legislators, especially your senators, know your thoughts!