The affect of the economic downturn on already strained federal and state transportation funds and the outlook for transportation funding were the topics of discussion at the “Transportation Funding Challenges” panel at the Maryland Chamber of Commerce’s 2008 Business Policy Conference.

Jock Menzies, Chairman of the Terminal Corporation and Chair of the Chamber’s Transportation Coalition, moderated the discussion. The panel included Beverley Swaim-Staley, Deputy Secretary of the Maryland Department of Transportation; Lon Anderson, Director of Public and Government Relations for AAA Mid-Atlantic; and Anne Ferro, President and CEO of the Maryland Motor Truck Association, Inc. Swaim-Staley addressed recent cuts to Maryland’s Six-Year Capital Progam—a deferral of $1.1 billion over six years.

“For the first round of reductions we were forced to reduce a lot of the new projects that we had put in the program,” she said. “Unfortunately now because of the economic news we have actually had to reduce some of the projects that we had the good fortune to add last year.”

Swaim-Staley said that despite the cuts, the Department of Transportation was able to save system preservation programs, and though more reductions loom on the horizon, she is hopeful the programs will stay intact.

Anderson said that though the system preservation program is in place, he expects cuts will be seen as budgets shrink.

“I know that Maryland remains committed to highway safety and I know they have the preservation program in place—but let’s be honest, transportation is very expensive and saving transportation is even more expensive” he said. “In tough times maintenance gets deferred.”

Budget reductions are a result of several factors including the depletion of the Federal Transportation Trust Fund and the stagnation of the gas tax rate Swaim-Staley said.

“There was traditionally a gas tax increase about every four to five years for many, many decades. That used to be a funding source you could count on. Many projects would be put in the pipeline about six to ten years ahead of time and there would be funding for those projects to go from planning to design to construction,” she said. “Unfortunately the last gas tax increase was in 1992 and we have not had a gas tax increase since then.”

Anderson said while a raise in the gas tax, the revenue from which is applied to transportation funding, is needed, accountability for what transportation funding is used for is just as important. “The transportation funds are raided so regularly in many states, Maryland included, I just call it the state transportation ‘cookie jar.’ That’s a problem,” he said. “[AAA] has supported higher gas taxes but first we want the trust fund better protected.”

Ferro said the trucking industry, which produces 40 percent of Maryland’s transportation funding, is also a major factor in what is happening in Maryland’s economy and transportation funding.

“By virtue of the slowdown and the slackening in the trucking industry we’ve hurt the Transportation Trust Fund,” she said. “Fuel tax revenue are down because of trucking, toll revenue are down significantly, and we are also hurting the title tax—people are not buying trucks of any size these days.”

She added that the economic downturn and high cost of gas prices have caused several truck drivers to seek other employment or raise their rates for transport, which is reflected in the cost of goods.

“We’re small business owners predominately and it’s a straight cash flow issue. I’m going to fill a 200-gallon tank today to transport a load that I might not get paid for 30 to 45 days,” she said. “I think it’s a significant hit and I think everybody sees it in the prices that you pay for things.”

The panel said that while all the factors combine to create the current challenges for transportation funding, they each have separate solutions, which will then affect transportation funding in a different way. The panel added that though the present outlook seems grim, they are hopeful for actions to be taken by the new White House administration and new investments in infrastructure.

“We hope a new administration in the White House might mean a new commitment to and a redefinition of the important role that the federal government should play in transportation funding,” Anderson said. “We think the federal government should not only continue to be a major funding source for transportation, but more importantly, the federal government can provide dynamic leadership that can guide the states in better ways to manage their finances, rather than being the leading example in how to bankrupt the federal highway trust fund. “