HB 1471: A Bill to Eliminate Funding For the Intercounty Connector

Lead Sponsor: Delegate Barbara Frush (D - Prince George’s County)

Co-Sponsors:

Barnes, Beidle, Bobo, Bromwell, Cardin, Carr, Carter, V. Clagett, Conaway, Dwyer, Gutierrez, Healey, Heller, Holmes, Hubbard, Hucker, Impallaria, Ivey, Kaiser, Kipke, Lafferty, Montgomery, Nathan-Pulliam, Niemann, Oaks, Olszewski, Pena-Melnyk, Ramirez, Robinson, Ross, Schuh, Schuler, Stein, Stukes, Tarrant, F. Turner, V. Turner, Valderrama, and Vaughn

Description and Action

This bill repeals the Intercounty Connector Financing Plan passed by the General Assembly in 2005. By repealing the ICC Financing Plan, this bill preserves more than $2 billion in state debt capacity and in state and federal funds to be redirected to other state priorities.

Specifically, this bill:

Prohibits state agencies from issuing any further debt for the construction of the ICC, and provides for retiring any debt that the Maryland Transportation Authority (MdTA) has already issued for the ICC.

Reverts state law to pre-2005 language regarding the timing of and limits on the transfer of $265 million from the General Fund to the Transportation Trust Fund, so that those funds:

1) transfer to the Transportation Trust Fund, not the MdTA;

2) are no longer earmarked for the ICC and so are available for other priorities; and

3) may transfer only when the General Fund has an unappropriated surplus of at least $10 million.

Prohibits the transfer of more than $100 million from the Transportation Trust Fund to the Maryland Transportation Authority for the ICC, and makes those funds available for other transportation priorities.

Rationale

Based upon construction cost estimates that may be obsolete and overly optimistic, the ICC would cost more than $3.1 billion to build, or roughly $165 million per mile.¹

The ICC may have a larger impact on the State’s resources than previously thought as sharp increases in highway construction costs combine with substantial rescissions of federal transportation dollars from Maryland, unpredictable toll revenues from the ICC and other state toll facilities, unpredictable fuel tax revenues as the price of oil climbs, and unpredictable sales tax revenues as our economy appears to be sliding into recession.

Three agency studies in 10 years have found that the ICC would not relieve congestion on the Capital Beltway (I-495), I-95, I-270 or most local roads in the ICC Study Area.^2,3,4

In fact, the State Highway Administration’s most recent study – the 2006 ICC Final Environmental Impact Statement – found that the ICC would sharply increase overall driving and would worsen congestion on segments of I-495, I-95, I-270 and other major commuter routes.

More Than $2.5 Billion in New Debt for the ICC

More than 80 percent of the ICC’s cost is to be financed with new state debt including:

$750 million in GARVEE bonds – plus roughly $300 million in interest – to be paid for out of future federal transportation dollars over 14 years⁵.

$1.233 billion in Maryland Transportation Authority revenue bonds – plus at least several hundred million dollars in interest – to be paid out of tolls on the ICC, significant revenues drawn from every other toll facility in Maryland, and possibly other sources.

Only $400 to $600 million of the ICC’s total cost of more than $3 billion would be paid from ICC tolls.⁴

Even so, MDOT estimated in 2006 that tolls on the ICC could cost commuters more than $7 for a full round trip in the ICC’s first year of operation which translates to close to $2000 in tolls per year.⁶

Revenue Shortfalls and Federal Rescissions

May Mean a Shrinking Fiscal Pie

Federal transportation revenues are falling so short of projections that the Federal Highway Administration has been forced to rescind billions from the states in each of the past few years. Maryland lost $63 million to federal rescissions in FY 2006 and $73 million in FY 2007. We stand to lose roughly $70 million more in early FY 2008 because the Omnibus Appropriations package passed by Congress in December 2007 includes $4.1 billion in additional highway rescissions.⁶

The rescissions that Maryland suffered in FY 2006 and FY 2007 equal nearly one-seventh of Maryland’s annual federal highways dollars; they also roughly equal an annual GARVEE repayment for the ICC. Relative to projections, federal transportation dollars have been a shrinking pie, and the ICC debt repayment could consume a larger and larger slice.

Rising Highway Construction Costs Mean the ICC

Might Take a Larger Slice of That Shrinking Pie

The Federal Highway Administration (FHWA) reports that the cost of major highway construction has risen by roughly 50 percent nationwide since January 2005.⁷ This is based on cost data from all 50 states for projects priced at $500 million and higher. Yet MDOT still states that building the ICC would cost $2.4 billion ($3.1 billion including interest on the debt) – the same figure that MDOT published in 2004 and presented to the General Assembly in early 2005, when the legislature was debating how to finance the ICC.

¹ 2006 BRAC Projects List and Map, MDOT (MDOT lists the ICC as serving Bethesda Naval Hospital)

² 1997 Draft Environmental Impact Statement; Maryland State Highway Administration and Federal Highway Administration

³2001 Transportation Policy Report; Maryland-National Capital Park and Planning

⁴ 2006 Final Environmental Impact Statement; SHA, FHWA and MdTA

⁵ Tentative GARVEE Bond Schedule - MdTA

⁶ Federal Highway Administration

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