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Budget passed, but no bond

The 126th Maine Legislature closes its first session without passing the bond the budget was built upon

By John Melrose
 
With the attention of Governor LePage, Maine legislators and the media focused on the General Fund budget and other matters, the Highway Fund budget passed this year with little notice in a moment of policy consensus. The budget provides Highway Fund appropriations to MaineDOT in FY 14 of $244.2 million and in FY 15 of $243.5 million. That is an $8 million per year decline in appropriations from FY 13.
 
A major victory for MBTA in this budget is a shift in the Highway Fund share of the Maine State Police funding from 49 percent to 35 percent. That will generate $13.2 million in savings over the next two years.
 
The history of MBTA and the constitutional dedication of the Highway Fund are deeply intertwined, going back three-quarters of a century. That is when the MBTA began a long fight to protect Highway Fund revenues from being diverted to non-transportation-related uses. For many years now, the organization has maintained that the state relied too heavily on Highway Funds to support non-transportation-related State Police activities, and in 2011 MBTA completed a legal review of the issue going back to a 1948 amendment to the Maine Constitution. Before this session, the organization had shared that research with the governor’s office and legislative leaders.
 
Governor LePage presented the change in the cost sharing arrangement between the Highway and General funds during the most recent budget process, and at session's end, the legislature largely agreed with the governor's proposal. MBTA is very grateful to the governor for pursuing and presenting this change in the budgets.
 
Go GARVEE
 
A second victory for MBTA came with the inclusion of a $50 million federally financed GARVEE (grant anticipation revenue vehicle) bond in the budget authorization. The seeds for a GARVEE were planted early in the session with a bill calling for an $80 million GARVEE sponsored by Senate Transportation Committee Chair Edward Mazurek (MBTA had worked with Senator Mazurek on the bill). When the governor’s support for an $80 million GARVEE appeared uncertain, that legislation was set aside in lieu of placing a smaller GARVEE authorization into the budget with the administration's support. Up to $40 million from the GARVEE bond may be needed to complete Maine’s share of funding for the Sarah Mildred Long Bridge replacement (New Hampshire is providing half of the funding for the bridge that spans the Piscataqua River between Kittery, Maine and Portsmouth, New Hampshire.) The balance will be made available for “other highway and bridge capital needs statewide.” 
 
Fewer miles paved
 
The $8 million decline in Highway Fund revenues noted at the beginning of this article has required MaineDOT to reduce its commitment of 600 miles of maintenance paving per year. Even after a $17.3 million transfer of TransCap capital funds to the light capital account where maintenance paving is funded, there will be a 100- to 200-mile reduction in miles paved during the next two years.
 
Capital projects at risk
 
An additional $20 million was transferred out of the TransCap account to a capital line in the budget. Over the strong objections of MBTA, the budget redefined capital projects using TransCap funds as having a useful life of five years or more, instead of 10 years. This enabled MaineDOT to use these funds for maintenance paving and other shorter-lived projects. MBTA has opposed similar proposals in the past, but the especially tight budget outlook this year made legislators more sympathetic to MaineDOT’s request. Fortunately, the revised definition of capital is only for years 2014 and 2105 and is not ongoing.
 
Because of the transfer of TransCap funds, there is no capital funding appropriated in this budget, and the governor and legislature approved a budget with no direct appropriation from the Highway Fund to the capital line in Highway and Bridge Capital. The budget, as it was enacted, assumed passage of Governor LePage's proposed $100 million transportation bond, and MaineDOT has expressed concern the legislature adjourned on July 9 without taking action on any one of the 32 bonds under consideration.
 
MaineDOT has released a list of “at risk” capital projects, projects that could be cut from the work plan if the legislature does not send a transportation bond to the voters. [Download a copy of MaineDOT’s at risk projects in the Hot Topics section at www.MBTAonline.org.]
 
For its part, MBTA continues to urge passage of L.D. 942: An Act to Authorize a General Fund Bond Issue to Invest in Deficient State Highways, Bridges and Aviation, Marine, Rail and Transit Facilities. Of the various transportation bond proposals filed this year, L.D. 942 is the most balanced, comprehensive and responsive means for meeting the substantial transportation capital needs facing Maine. It specifies funding for all modes and reflects broad feedback from persons and organizations. It leverages possible matching funds from federal, local and private sources to the maximum extent. 
 
L.D. 942 will enable MaineDOT to continue its efforts to address the backlog of deficient bridges initiated in 2008. On average, every sixth bridge in Maine is rated structurally deficient by the Federal Highway Administration. L.D. 942 also targets highway reconstruction and rehabilitation on the priority road network that carries 70 percent of all travel and specifically targets roads rated in poor or unacceptable condition by MaineDOT. Roughly 1,500 miles of arterials and major collector highways in Maine have that rating.
 
Governor LePage’s transportation bond proposal, L.D. 1095, bears many similarities to L.D. 942 but notably contains $17 million less for road reconstruction and rehabilitation. It also provides less detail on allocations for other modes.
 
While MBTA prefers L.D. 942, the association is pleased to see so much commonality between these two proposals.
 
A final note regarding the budget involves changes to the Local Road Assistance Program (LRAP). The governor’s original budget sought to transfer motor vehicle excise tax receipts for heavy trucks from municipalities to the state.
 
This idea was a non-starter with the Transportation Committee. The administration proposed and the committee accepted the following provisions: the repeal of an archaic LRAP “hold harmless” provision that dated back to the 1990s; a switch from quarterly to annual LRAP payments; repeal of the Transit Bonus Program in FY2015; and a reduction in overall funding to 9 percent of the MaineDOT budget from Highway Fund starting in the second year of the biennium. According to MaineDOT, the latter provision represents roughly a 10 percent cut in annual payments to municipalities. 
 
Beyond budget, bonds
 
MBTA followed the progress of many other bills filed this year. There were numerous bills in front of the Transportation Committee dealing with the Maine Turnpike Authority, public-private partnerships and the East-West highway proposal. In the end, none of the worrisome aspects of these bills passed.
 
Only one bill under consideration this year attempted to substantively address declining Highway Fund revenues: L.D. 614, filed by Representative Ann Peoples of Westbrook. That bill proposed to shift a portion of the per gallon motor fuel excise tax to a retail sales tax. The Taxation Committee unanimously defeated this proposal. In a nod to the severity of the Highway Fund’s declining fortunes, the Appropriations Committee sent a letter to the Transportation Committee acknowledging the problem, but offering no remedy.
 
The Taxation Committee voted unanimously to support L.D. 996, a bill that would have cut motor fuel taxes by $623,000 for the biennium. Fortunately, this bill was sent back for further work to the Taxation Committee upon the recommendation of the Transportation Committee.
 
For those waiting for better times, drink up. The new state liquor contract passed by the legislature provides 35 percent of net liquor sales revenues to go to transportation capital investment once the revenue bonds issued to pay off the hospitals are retired. This is expected to occur within seven to 10 years.

 

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