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| Maryland now straining under a $2.8 billion debt that will limit the State's ability to maintain aging infrastructure |
According to this Washington Post article, the $2.56 billion Intercounty Connector (ICC) has maxed out Maryland's debt and depleted its transportation funds for the future.
The total debt from the ICC and other transportation projects around the State will increase to $2.8 billion by 2017, which is just under the State's conservative debt limit of $3 billion.
Consequently, the State has little flexibility to borrow money without again raising the tolls, which already increased recently to become one of the highest in the nation. In fact, the $2.8 billion debt will limit the Maryland Transportation Authority's ability to upgrade its aging infrastructure, let alone build any new roads, tunnels, and bridges.
The Authority expects that its next major project, a fortification or replacement of the aging 71-year-old Harry W. Nice Memorial Bridge in Southern Maryland won't happen for a decade or more until toll revenue has rebounded enough to cover more debt
Interestingly, the State will have to commit $87 million of its federal highway funds to ICC bond payments every year through 2019. Beyond that, the final bond payment for the ICC will be made in the years between 2041 and 2046, which is 30-35 years off. In addition, the authority’s annual debt service payments will jump from $25 million in fiscal 2007 to about $190 million in fiscal 2021.
Despite all these dire calculations, the Maryland Transportation Authority's financial health is relatively stable and its bonds still attract the highest rating due to the Authority's willingness to raise tolls when necessary. It also helps that the Washington D.C. metropolitan area ranks as one of the most affluent and suffers from the worst traffic congestion in the nation, recently beating out Los Angeles for this dubious distinction.
As a result, there should be plenty of drivers who will pay to zip along the ICC in record time despite its high tolls. That will come in handy for those rushing to the BWI Airport to catch flights. A trip on the ICC from Gaithersburg to BWI should take 37 minutes as opposed to 71 minutes on local roads. It remains to be seen if the ICC will absorb traffic from local roads.
Check out the new ICC highway while it's open to the public for free from Tuesday, November 22, 2011, through Sunday, December 04, 2011. Too bad that the ICC did not include bike lanes as many high-speed bicyclists would have enjoyed riding it, especially with traffic so light on the new highway.
Hopefully, the Maryland Transportation Authority will direct more attention and funding to the State's pedestrian and bicycle facilities, which are severely neglected, yet increasing in popularity due to high gas prices, environmental concerns, and a desire to stay fit and connected to personal telecommunications devices.
Check out the full article and insightful reader comments after the jump:
http://www.washingtonpost.com/local/icc-puts-strain-on-marylands-transportation-funds/2011/11/15/gIQAb2k7iN_story.html?hpid=z3
ICC puts strain on Maryland’s transportation funds
By Katherine Shaver,
The 18.8-mile Intercounty Connector, which opened in full Tuesday, could be the last publicly funded highway built in Maryland for a generation, as the state’s tolling agency, which financed its $2.56 billion construction, reaches its debt limit, local transportation experts said.
Financing for the six-lane toll road linking Interstate 270 in Montgomery County with Interstate 95 in Prince George’s County leveraged the Maryland Transportation Authority’s statewide toll collections.
But the transportation authority’s debt capacity is tapped out from borrowing to build the ICC and $1 billion in express toll lanes on I-95 northeast of Baltimore, state budget analysts said. Mounting debt recently prompted the authority to raise tolls statewide as the authority also struggles to maintain its aging bridges, tunnels and roads.
“You’re probably looking at another 20 years before we see another major road like this be built,” said Lon Anderson, a spokesman for AAA Mid-Atlantic.
Supporters say the ICC provides a vital east-west link long missing from Maryland’s highway network, but some critics worry about the toll road’s long-term financial effects. They say the ICC’s hefty price — it’s the most expensive road Maryland has ever built — has hamstrung the state’s transportation finances for years.
“The state has mortgaged its transportation future in many ways to the ICC,” said Montgomery County Council member Phil Andrews (D-Gaithersburg-Rockville), a longtime critic of the highway. “The opportunity cost of building the ICC has been huge, because it’s foreclosed improving many other roads.”
Whether the highway proves worth the investment — and at what cost — will play out over the next 10 to 30 years in several key measures: how many vehicles the ICC absorbs from local roads, time saved by motorists who use it, job growth from companies that rely on it to attract workers, and the impact it has on local streams and air pollution.
“The road, from an economic standpoint, will pay for itself many times over,” said Maryland Comptroller Peter Franchot (D), who helped put together the ICC’s financing plan in 2005 when he represented Montgomery in the General Assembly.
‘Wouldn’t be built’
Borrowing heavily to build a mega-project is par for the course in transportation. What’s different about the ICC debt is how the state plans to pay it back.
Like other states, Maryland has found that gas tax revenue traditionally used to finance road-building hasn’t kept pace because more fuel-efficient vehicles have eaten into gasoline consumption and politicians have been loath to raise the tax. With the ICC, Maryland began shifting transportation construction costs to toll payers, as Virginia has done to help finance a Metrorail extension and to widen the Capital Beltway.
The ICC “wouldn’t be built without tolls — that was the reality of the cost of building that road,” said former Maryland transportation secretary Robert L. Flanagan, who oversaw the ICC financing plan for then-Gov. Robert L. Ehrlich Jr. (R).
“It cost $2.5 billion,” Flanagan said. “There was no way that kind of money could be raised in any other way besides using toll revenues.”
The effects of that shift are just being felt in Maryland, where tolls had remained among the lowest on the East Coast for decades because the state relied on them primarily to maintain and operate seven bridges, tunnels and highways — not to build new ones.
Borrowing to build the ICC and I-95 express toll lanes while funding rehabilitation work on other toll facilities will cause the authority’s total debt to reach nearly $2.8 billion in fiscal 2017 — just below the state tolling agency’s debt limit of $3 billion, according to the authority. That leaves the agency with little flexibility to borrow more without again raising tolls, whether to add capacity or do major “system preservation,” such as replacing or expanding the 71-year-old Harry W. Nice Memorial Bridge in Southern Maryland, according to state budget analysts.
The authority’s annual debt service payments will jump from $25 million in fiscal 2007 to about $190 million in fiscal 2021, an authority spokeswoman said. In fiscal 2017, about a quarter of the authority’s total revenue is expected to be spent on debt service, and a third of those payments will go toward the ICC borrowing, the spokeswoman said. The final bond payments for construction of the ICC and the I-95 express toll lanes will be made between 2041 and 2046.
‘At a standstill’
The ICC is also the first transportation project to tie up a chunk of Maryland’s future federal highway funding. In addition to paying off the toll-backed bonds, the state must commit about $87 million of its federal highway funds to other ICC bond payments every year through fiscal 2019.
An additional $51 million in federal highway funds must be paid in fiscal 2020. Those ICC bond payments now consume about 15 percent of the state’s annual federal aid, but that percentage could grow if federal allotments to states shrink, as some members of Congress have suggested could occur because of budget pressures.
“In terms of increasing capacity, we’re at a standstill for roads, transit, anything,” said Warren Deschenaux, director of the Office of Policy Analysis, the professional staff for the General Assembly. “If [money] is all tied up in debt service, you can’t do much else. It’s like being house-poor. We’re road-poor.”
Deschenaux said more statewide toll increases will be “inevitable” to cover the growing debt payments, particularly if commercial trucking, along with other traffic dependent on the economy, doesn’t rebound quickly from the recession.
Maryland Transportation Secretary Beverley K. Swaim-Staley, who chairs the transportation authority board, said the most recent toll increases will cover the authority’s expenses “for at least a few years.” Those increases included passenger tolls on the Chesapeake Bay Bridge rising from $2.50 to $4, with a jump to $6 in July 2013. She said she’s not concerned about the authority’s financial health, noting that Maryland transportation bonds attract the highest rating.
Fitch Ratings recently gave the authority a “stable” outlook, noting the state’s willingness to raise tolls when necessary and the relative affluence of Washington area motorists. It also noted that drivers in the traffic-clogged area have limited options.
Construction on the authority’s next likely major project — fortifying or replacing the Nice Bridge — is at least a decade off, when toll revenue, it’s hoped, will have rebounded enough to cover more debt, Swaim-Staley said. The state’s self-imposed debt limit for the authority is conservative, she said, and separate from the Transportation Department’s and state’s borrowing capacities. The General Assembly could lift the authority’s debt limit if needed, she said, although she said it is a “high bar” for the legislature to do so.
“I’m not concerned,” Swaim-Staley said. “I think once the ICC is in operation awhile and people are used to it being there, it will absolutely prove to be a financial success.”
ICC supporters say traffic is so bad through central Montgomery that plenty of motorists will pay up to $4 each way, or up to $24 for tractor-trailers with an E-ZPass, to travel the entire route. That would relieve traffic on narrow local roads, such as Route 28 and Muncaster Mill Road, that weren’t designed to be commuter thoroughfares or truck routes.
The ICC directly connects Montgomery’s job-rich I-270 corridor with more affordable places to live, such as Howard and northern Prince George’s counties, while opening up jobs around Baltimore-Washington International Marshall Airport, Fort Meade and Laurel to more Montgomery residents.
Most important, supporters say, the ICC will attract and keep companies in Montgomery that can use the road to reach BWI. State officials say the drive between Gaithersburg and the airport will drop from 71 minutes on local roads to 37 minutes on the ICC.
The General Assembly approved the ICC financing plan, Flanagan said, because “I think people understood the ICC was needed and that it will play a very positive role in Maryland’s economy going forward.”
‘It will be much easier’
Although motorists have remarked on the often empty feel of the ICC’s first 7.2-mile segment, which opened in February, state officials say those weekday vehicle counts are tracking 1 percent above projections. They say they expect it will take several years for traffic volume to ramp up, but they’ll keep tolls high enough to ensure the ICC remains free-flowing.
Keith Ballenger, vice president for Adventist Home Care Services, said he’s eager to use the ICC three to five times a week to travel between offices in Colesville and Rockville. He estimates he’ll cut his drive time in half by avoiding the Capital Beltway — which also will help the company’s nurses and therapists reach more patients across Montgomery.
“It will be much easier knowing we won’t hit the gridlock that we hit every day on the Beltway,” Ballenger said.
But the toll rates are giving some pause. Jim Franceschini, fleet manager for United Shellfish on Maryland’s Eastern Shore, said he’s not sure whether he’ll direct truck drivers to use the ICC when delivering seafood to Montgomery restaurants and stores. Franceschini said his drivers avoid the morning and evening rush and get around fine on back roads.
“The tolls are pretty high on it,” Franceschini said of the ICC, “so we may avoid it just for that reason.”
Still, he said, he’ll weigh the toll against the cost of keeping refrigerated trucks idling in traffic. “If the Beltway is swamped, I won’t tell them to sit in traffic if they can jump on [the ICC] and get back home, because the fuel prices are what kill us,” Franceschini said.
Local transportation observers say that if Maryland motorists want new or wider highways, the state’s next alternative would be allowing private companies to build and operate roads for a profit. That, of course, would lead to motorists paying more tolls.
“I think 25 years from now, we’ll look at the Intercounty Connector and say, ‘My God, how did we live without it?’ ” said Anderson, of AAA. “I think we’ll look at the ICC as a game-changer for many, many lives in our region.”
http://www.washingtonpost.com/local/icc-puts-strain-on-marylands-transportation-funds/2011/11/15/gIQAb2k7iN_story.html?hpid=z3
READER COMMENTS:
no wonder it was a republican governor who breathed life into this moribund project after it had languished for so long. republicans are all about class privilege and believe that you can have anything if you can pay for it. the ICC will be a godsend for those who can afford to use it regularly; a source of bitterness for others. and the growing pains, which won't stop b/c the highway itself has been completed, will just continue.
Geez if a Republican found a cure for cancer you would fault them because someone would be making money from the vaccine. Anyone can ride on it AZHW you might have to reduce your unlimited data plan on your I Phone and not be able to Face Book 24/7 to afford it. The time savings alone will be worth it to many because they work and thier time is worth money. Something you may be unfamiliar with.
BamBam,
Thanks for posting that list of ICC funding sources.
One main error. You left out the massive interest on the GARVEE debt and the MDTA revenue debt.
That's not your fault, The Ehrlich and O'Malley administrations have self-servingly chosen not to publicize that additional cost, and main stream media typically have bought that line.
The interest on the GARVEE dent equals about $250 million.
The interest on the $1.2 billion or so in MDTA could equal about $1.2 billion, depending on the terms.
So you do the math. The cost of the ICC in nominal dollars is closer to $3.5 billion to $4 billion.
That's the nut that the state has to cover, plus operating, maintenance, etc..
If one adjusts that $3.5 billion to $4 billion in nominal dollars to current dollars, it's still a lot more than $2.5 billion.
In 2008, even as he was cutting programs and furloughing state workers, O'Malley demanded $80 million from the General Fund for the ICC.
That might say something about his priorities.
Thanks for posting that list of ICC funding sources.
One main error. You left out the massive interest on the GARVEE debt and the MDTA revenue debt.
That's not your fault, The Ehrlich and O'Malley administrations have self-servingly chosen not to publicize that additional cost, and main stream media typically have bought that line.
The interest on the GARVEE dent equals about $250 million.
The interest on the $1.2 billion or so in MDTA could equal about $1.2 billion, depending on the terms.
So you do the math. The cost of the ICC in nominal dollars is closer to $3.5 billion to $4 billion.
That's the nut that the state has to cover, plus operating, maintenance, etc..
If one adjusts that $3.5 billion to $4 billion in nominal dollars to current dollars, it's still a lot more than $2.5 billion.
In 2008, even as he was cutting programs and furloughing state workers, O'Malley demanded $80 million from the General Fund for the ICC.
That might say something about his priorities.
If anybody still has a Maryland EzPass account, return it to Maryland and activate an account from a state that does not have a monthly fee (Pennsylvania and Virginia are 2 examples). You do not have to be a resident of a state to get an EzPass account through that state either. Paying a monthly fee is stupid especially if you do not need to pay it.
This reminds me of what the Post writes every May when you BASH Md. racing during Preakness week. Nice timing...You can fuel the ICC anger all you want OR do like me and embrace it. You try driving from Olney to Silver Spring OR Gaithersburg to Laurel everyday and you'd see why this road is not only welcome but a necessity! Thanks Md. You promised me this ICC in 1988 and it's nice to see it finally happen!!
If a few very committed and very obsessed brown trout enthusiasts had not been so effective at delaying the construction of the ICC for decades, it would have been far less costly, and there would have been far greater help from the Federal government to pay for it
The state should send the bill Trout Unlimited, the Sierra Club and any other organization who obstructed it for so many years. The road would, could have, and should have been built and paid for 50 years ago.
The state should send the bill Trout Unlimited, the Sierra Club and any other organization who obstructed it for so many years. The road would, could have, and should have been built and paid for 50 years ago.
Stevestegman, don't forget the odium that is also due politicians like the late Idamae Garrott (died 1999), who built much of her political career on various attempts to obstruct construction of the ICC. Robin Ficker (yes, that Ficker) was once a member of the Maryland House of Delegates, where he was also involved in efforts to block the ICC from ever getting built.
True enough. No more podium for the odium.
Still, I sense a groundswell of support for re-naming the ICC in favor of that exalted yet nonendangered specie; the Salmo trutta, otherwise known to us uninformed pedestrians as "brown trout".
I've got it, why not the BTE, a.k.a. The Brown Trout Expressway!
Still, I sense a groundswell of support for re-naming the ICC in favor of that exalted yet nonendangered specie; the Salmo trutta, otherwise known to us uninformed pedestrians as "brown trout".
I've got it, why not the BTE, a.k.a. The Brown Trout Expressway!
From this start, the ICC was an environmental travesty and boondoggle for the developer and road-building industry. At a public town meeting several years ago, I asked Gov. Martin O'Malley why, with all his ongoing verbal support for environmental sensitivity, and in view of severe budget problems, he was still determined to go ahead with it. He did not even try to respond; he simply ignored my question and moved on to the next questioner.
Now Marylanders and our environment will pay the price for O'Malley's gift to developers.
Now Marylanders and our environment will pay the price for O'Malley's gift to developers.
so you don't think roads should be built? how do we get to work without roads? if you want to complain about money being spent. complain about new stadiums for the Redskins, Ravens, and Orioles. If you want to complain, complain about the percentage of the gambling money that will actually go to Maryland, and how Maryland was used as a pawn by the gambling industry to get tables in West Virginia and Delaware.
i like it when politicians build infrastructure. without roads and rails, how do you propose we transport ourselves and the products that we use?
i like it when politicians build infrastructure. without roads and rails, how do you propose we transport ourselves and the products that we use?
http://voices.washingtonpost.com/annapolis/2011/02...
The first ribbon cutting was in February. Ehrlich was there because he is the Governor who signed on for building the ICC.
"Pretty much, he got the road done," said [former Press Secretary] Massoni, who also accompanied Ehrlich at the ceremony. "It should be called the Ehrlich Highway."
The first ribbon cutting was in February. Ehrlich was there because he is the Governor who signed on for building the ICC.
"Pretty much, he got the road done," said [former Press Secretary] Massoni, who also accompanied Ehrlich at the ceremony. "It should be called the Ehrlich Highway."
O'Malley was at the first ribbon-cutting, too, and he claimed credit for the ICC as well. I know, because I was there carrying the sign that said: "O'Malley 4 Prez" with the big red "NO" sign through the words:
http://ww2.gazette.net/stories/02212011/montnew182...
After our strong anti-ICC protest that day, apparently O'Malley was afraid to come around yesterday, and sent his Lt. Gov. instead.
http://ww2.gazette.net/stories/02212011/montnew182...
After our strong anti-ICC protest that day, apparently O'Malley was afraid to come around yesterday, and sent his Lt. Gov. instead.
If you actually read what I wrote, you would see that I was referring to the strong protest at the *first* ribbon-cutting ceremony.
As for yesterday, I reiterate my comments above: If the ICC is so great for Maryland, why were the elected officials who supported it too chicken to show up? Their failure to show speaks loudest of all.
As for yesterday, I reiterate my comments above: If the ICC is so great for Maryland, why were the elected officials who supported it too chicken to show up? Their failure to show speaks loudest of all.
Tax dollars funding the building of roads and bridges that help ease our daily commute is good.
Tax dollars funding the building of stadiums and the roads and bridges that connect them is bad.
Maybe if the state had not spent money building the Ravens, Redskins, and Orioles stadiums we would have had the money to build the ICC long ago.
Tax dollars funding the building of stadiums and the roads and bridges that connect them is bad.
Maybe if the state had not spent money building the Ravens, Redskins, and Orioles stadiums we would have had the money to build the ICC long ago.
Yes, he got state money, but no county money. Wayne Curry made sure of that. Also Cooke provided $3 million towards building the Wayne Curry Sports and Learning Complex as well as $1.5m in college scholarship funding.
But that should have been expected of a politician who actually grew up in and loves Prince Georges County. Unlike that carpetbagger Jack Johnson.
But that should have been expected of a politician who actually grew up in and loves Prince Georges County. Unlike that carpetbagger Jack Johnson.
Don't like this those of you who won't use it but have to pay for it? Just wait for the Purple Line in Montgomery County, designed (for now at $2 billion and going up every day) to reduce the commute time incrementally of those from PG County who currently take the bus to MoCo to work.
Anyone want to bet that part of the proposed $0.15/gal gas-tax increase will not be dedicated to this project instead of going to the projects long neglected because the pols in Annapolis raided the transportation fund to pay for unrelated projects?
Anyone want to bet that part of the proposed $0.15/gal gas-tax increase will not be dedicated to this project instead of going to the projects long neglected because the pols in Annapolis raided the transportation fund to pay for unrelated projects?
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