Maryland to cut $1.3B from transportation budget to address growing shortfall

Hundreds of millions of dollars for planned transportation improvements across Maryland would be slashed for the second consecutive year under a proposed update to the state’s transportation budget, Gov. Wes Moore’s administration said Tuesday.

The cuts — totaling $1.3 billion from the roughly $20 billion, six-year transportation plan — would defer some maintenance projects like sidewalk repairs and traffic improvements, slow down the transition to fully electric state-run buses and pause the development stage of other initiatives.

They would not directly impact major projects like planning the Red Line light rail in Baltimore, completing the Purple Line route outside Washington, D.C., rebuilding the Francis Scott Key Bridge or improving the Chesapeake Bay Bridge .

But the changes, released in a draft Tuesday, could still shift before being finalized in early 2025.

They’re also a sign of rising pressures on the state’s outdated transportation funding system. Lawmakers are considering a variety of ways to boost revenue and remake the transportation funding system while at the same time facing multibillion-dollar deficits in other aspects of Maryland’s finances .

The latest proposed cuts come a year after Maryland Department of Transportation officials first trimmed the same six-year plan by $3.3 billion , a move that led to pausing projects where construction had not started and making 8% across-the-board cuts to transportation agencies’ operating budgets.

Some of the initial cuts were later restored when Moore tapped $150 million from the state’s “rainy day” fund and the Maryland General Assembly approved fee increases for vehicle registration and more in order to raise up to $328 million more per year.

Those actions were not enough to cover the shortfall, which has increased partly because operating costs and spending continue to outpace incoming revenue, Transportation Secretary Paul Wiedefeld told reporters ahead of the announcement Tuesday.

“That has been a historical issue, a structural issue that we’ve had in the department for decades,” Wiedefeld said. “It was obviously exacerbated with some of the growth of inflation and things of that sort, and also the construction costs and the supply-side issues.”

Each project that would be deferred as part of the new round of cuts was not outlined in the draft Tuesday.

Wiedefeld said thousands of projects in the “system preservation program” — which, at $7.4 billion, accounts for the largest portion of MDOT’s plans — were being evaluated to determine which ones are at a “logical point” to defer until more money is available.

The final version of what’s known as the Consolidated Transportation Program from last year called reduced funding for system preservation “a last resort.”

Another targeted area is the “development and evaluation program,” which includes projects for planning studies, preparation for environmental studies and preliminary design. Priority will go toward projects where any planning efforts would otherwise be lost if they’re deferred, Wiedefeld said.

The slower transition to electric buses, meanwhile, is both to save money on new bus purchases and because of an unavailability of electric bus manufacturing, the secretary said. A 2021 state law has required the Maryland Transit Administration to purchase only zero-emission buses since 2022, but the process was also delayed with the budget cuts last year.

Wiedefeld said each electric bus costs roughly $1.4 million, about twice the amount of a diesel bus, though there are plans to purchase more this fall.

Another fund that elicited significant concerns from local lawmakers earlier this year was not scheduled to be cut.

Many local lawmakers — including many in Baltimore, which benefits from a larger share of the fund — had loudly pushed back against proposed cuts to local governments’ share of highway user revenues. Mayor Brandon Scott, for one, said the resurfacing of several major city thoroughfares would be in jeopardy and lobbied in Annapolis to restore the money.

Wiedefeld said lawmakers’ decision to fully fund that program and another known as the Local Operating Transit Systems was the reason for about $400 million of the new reductions elsewhere.

Among the rest of the $1.3 billion, about $350 million is because of declining or slower-growing revenues than expected — primarily the gas tax — and about $300 million is due to growing operating costs. Another reason is overall lower-than-anticipated matching revenue for projects that qualify for assistance from the federal government, Wiedefeld said.

Meanwhile, federal funding will remain critical to the fate of major projects that are not already part of the six-year plan but are expected to be costly.

The Red Line , for example, is expected to cost up to $7.2 billion. When Moore picked light rail as the mode over the less costly rapid bus option in June, he offered few details on how the state would pick up the tab, which Wiedefeld said at the time could be about 50% from each the state and the federal government. The state is planning on applying for those funds next year.

“If those federal dollars do not come through, then we would have to assess, ‘Do we have enough state dollars to deliver them?’” Wiedefeld said, when asked about projects including the Red Line.