April 29, 2011
Over the last several years, we’ve been able to do a number of things, however difficult politically:
- We’ve been able to forge the precious consensus necessary in order to move forward. We’ve cut by $6.8 billion the spending of our State Government, the largest cuts in spending we’ve ever had to tackle.
- We’ve had to tackle the immutable and unsustainable math in our pension systems, but we were able to do that. And we were able to do it without bringing the cogs of this representative government to a screeching halt. We were able to do it without the drama or the lockouts or the walkouts or the move-outs that some other state houses have gone through.
- And one after another, we’ve confronted these things with honesty and with candor and, most importantly, with respect for one another and also with an understanding that the decisions and the actions that we take today most definitely impact our fellow citizens in the next generation.
So, with that as a backdrop, I wanted to share with you – I’m not sure if you saw it – a great article that was brought to my attention in Vanity Fair. Did any of you see it? It was called “Of the 1%, by the 1% and for the 1%.” It’s by Joseph Stiglitz, a leading economist. It’s a fascinatingly clear and concise sort of take on what’s happened in our country over the last decade, beginning with the Bush tax cuts that benefitted disproportionately the wealthiest among us. And it talks about the tremendous concentration of wealth that has now happened to a greater degree than ever before in our history since 1929, concentrating income and wealth in the hands of just 1% of our nation. So, 40% of our nation’s wealth is now concentrated in the hands of 1% of our fellow citizens
He writes, “An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul. There are several reasons for this.” Which is what gets me into our topic of the day.
He says, “First, growing inequality is the flip side of something else: shrinking opportunity. Second, many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy,… Third, and perhaps most important, a modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports).”
That brings us to the challenge today.
None of you would be taking time out of your days or time away from work to be here were it not for your clear understanding of the connection between the investments we make today in our infrastructure and our ability to expand opportunity and create jobs and to get back on that road of an ascending American Republic, rather than a descending American Republic.
That having been said, I think it’s important to take note of this global economy and what other free-thinking and free-acting people have been doing, even when we have not.
You know, it’s like the old adage of the boxer that’s getting his brains beat out in the boxing ring and he comes over to the corner and his coach says, “It’s not what the other guy is doing to you; it’s what you’re not doing for yourself.” China, Europe, other nations over these last 10 years have been spending about 10 percent of their GDP, their gross domestic product, every year, on investments in infrastructure, rebuilding not only their roads, but their water infrastructure, their cyber infrastructure and other things.
You contrast that with ours, and we’ve been investing less than 2% of our GDP in infrastructure. And it’s not keeping pace. It’s not keeping pace nationally.
In Maryland, we’re doing better than most, but it’s a serious, serious challenge.
A half-century ago, Democrats and Republicans in our State came together to build BWI-Thurgood Marshall Airport, the Bay Bridge, the Baltimore-Washington Parkway, the Harbor Tunnel, the Washington, DC, Beltway, and the Baltimore Beltway, as well.
Over the last few years, we’ve seen big projects undertaken for the first time ever, which has heavily leveraged Mike Lewin, our Maryland Transportation Authority. Never before had we locked in two major projects, the widening of I-95 and the HOV lanes north of Baltimore, up towards White Marsh, and also the ICC. Never before had we so leveraged our Maryland Transportation Authority with those two projects, both of which were roads projects, by the way.
Those projects, whether it’s the more recent ones or the ones in yesteryear, were projects that are oftentimes started and oftentimes never seen to completion by the executives that start them, or sometimes the elected officials that start them. But we understood the importance then, and I think most of us still understand the importance now.
But let’s put out on the table one of the very difficult sort of things in the atmosphere and the zeitgeist here that we’re combating as we wrestle with this challenge. And that is for some reason this sort of fashionable hate for government, loving embrace of austerity, that can be very self-defeating, and self-damaging.
And at the end of this long road of hate for government comes a second-rate nation, second-rate states and a second-rate quality of life. That’s the winds against which we sail. And one of the things that I’ve always loved about the people that I have the blessing to serve, all of you, is that in times of adversity, that’s when the people of Maryland step up and show the rest of the country that we’re still capable of more and that we have better days ahead of us.
As it stands right now, though, our inadequate transportation systems are presenting a growing threat to safety on our roads, to our quality of life, and to our economic competitiveness.
In other words, the pace of our investments is not sufficient for the needs we have to create opportunity, to create jobs, and to create a better-connected modern economy in our State, let alone in our country. And we have to find a better way forward, which is why we’re all here today.
We gather in times when so many, many things are changing. I don’t think that there are two areas that most highlight that – how should we call it – the conflicting desires we have as Americans more so than energy and transportation.
We saw in the last debates in the Maryland General Assembly, for example, the conflicting view, we all want renewable energy, but only if we can pay less for it, right? We all want renewable energy, but we don’t want to pay more for it, even $2 more for offshore wind, which would be a very financially responsible, wise hedge to take. You can measure it, you can lock in to a long-term contract price. For all of us, potential additional costs would have been two light bulbs that we swap out in our homes. We want renewable energy, but we don’t want to pay for it. We know the traffic’s bad; we know it’s getting worse; we know there are more cars on the road; we know we need better transportation solutions. But, again, we really only want to embrace those solutions if we know it will save us money and that it won’t cost anything.
I’d like to tell you all that we can eat cake and lose weight. (Laughter). I would very much like to tell you that, but it’s not true, and I can’t tell you that. What I can tell you, though, is that we’re undergoing a time of phenomenal change in our energy and in our transportation.
Traditionally, we have, for many, many decades – and it worked for a good, long time – funded our transportation needs by a consumption tax on a gallon of gasoline. It’s not a percentage consumption tax; it was a flat consumption tax. And for a while, it worked well. The more people drove, the more gas they used, the more revenues there were to invest in larger transportation infrastructure.
But now, as we acknowledge in a year when we’ve had 600 tornadoes so far, when on average in our country we have 160 a year, this year we had 600, that the climate is changing because of human activity, because of the type of energy we use. We need to change that energy, and we are doing things like voting for investments in electric car infrastructure, voting for rebates when people buy electric cars. Doing all sorts of things with the environmental and energy goal of what? Reducing consumption of gasoline. And that reduction in the consumption of gasoline leads to a reduction in the flat tax that’s paid on a gallon of gasoline and, therefore, we’re in the anomalous or contradictory juncture here of having more and more cars on the road using less and less gasoline and driving fewer and fewer revenues into the collective needs that we have to invest in better infrastructure. So, we have to figure this out.
It would also be nice to embrace one of the frames that government has all the money they need if only they’d invest it in the right places. I’d like to tell you that’s true, but it’s not. It would also be easy to embrace the frame that, well, if only governors, time and time again, didn’t rob the transportation trust fund, there’d be all the money that we need in the transportation trust fund. I’d like to tell you that. That would be a simple solution, but that’s not true, either.
I’d also like to tell you that if we’d just think more creatively and engage in more public/private partnerships that we will be able to build a $90 million bridge for $10 million. I’d like to tell you that, but that’s also not true. Whether you do it by tolls, whether you do it by a public/private partnership, whether you do it entirely the way great Lincoln Republicans like Eisenhower did it, by investing and paying as you go and doing it now – which seemed to be a good way to build highways. Frankly, I think it was a better way to pay for wars, too, but however you do it, there’s no way that all the imagination and creativity in the world is going to take a $90 million bridge and build it for $10 million.
So, we have to figure out how we move forward.
Without fiscal responsibility, nothing else is possible. We’re one of only eight states that has a AAA bond rating. None of these decisions over the last five years have been politically easy. The good Lord in his wisdom has seen fit to make sure that each progressive hurdle becomes a little bit harder, just so that we can build our confidence up to the next one.
We’ve nonetheless made progress over these last five years, the likes of which we haven’t made in our State for a good long time in many cases. The lowest violent crime since 1975. Our public schools named the best in America three years in a row, with Howard County the best among the best. Affordable college four years in a row without a penny’s increase in college tuition. We’ve extended health care coverage to 262,000 people, half of them kids, while many other states are offloading their rolls in the name of budget savings.
The American Society of Civil Engineers gave America’s infrastructure a failing grade of D in a 2009 report. Twenty-six percent of the U.S. bridges are structurally deficient or functioning obsolete. An increase in infrastructure spending increases GDP by that much and more.
Let me keep going. Tom Friedman talks about the need for nation-building. Tom Friedman lives in Bethesda. He says: “… people intuitively understand that what we need most now is nation-building in America. They understand it by just looking around at our crumbling infrastructure, our sputtering job-creation engines and the latest international education test results that show our peers out-educating us, which means they will eventually out-compete us.”
As Marylanders, we know that our ability to lead depends on leadership in the skills of our people, leadership in advancing security, leadership in a more sustainable future, leadership in the health of our people,… and progress on one requires progress on all. And all of these things roll on infrastructure.
We have been facing some difficult budget decisions. We have tapped funds from the transportation trust fund, especially in my last – I felt like Governor Hubbard in the last two or three trips back to the budget blackboard, and we were able to hold off and – on making those shifts for the first six, seven times to the Board of Public Works or to the General Assembly. We have hit the Highway User Revenues, and I didn’t enjoy doing it, and I didn’t want to do it. That was part of the balance and part of the balancing acts that we’ve engaged in.
In far easier times, the previous administration also engaged in that. Over the past three decades, every administration to some degree has transferred some dollars out of the Transportation Trust Fund. We’ve begun to take steps to restore that funding. This year’s budget adds nearly $100 million a year in funding to the Transportation Trust Fund by 2014.
I’d like to bring you back to the 2007 special session, recapping here. We did a couple of things that we had hoped, without being able to predict a recession, we were going to increase transportation revenues that would allow us to put about $1.7 billion in new projects into the capital program. We dedicated part of the corporate income tax to the Transportation Trust Fund. I think we did part of the sales tax, didn’t we, somehow? And we did something else on titling or the other things.
The bottom line, though, is all of that hoped-for progress was wiped out and then some by the biggest national recession our country has had to weather since the Great Depression. It took $2 billion in revenues, boom, right out of the bottom of our capital plans. And it was restored – $600 million of the $2 billion was restored by the Recovery and Reinvestment Act that the President led.
So, sometimes those of you that are in transportation living and breathing this every day, you think, wow, those Recovery and Reinvestment Acts really didn’t add a lot more to what we were already doing. You’re absolutely right. They didn’t. All it did was restore about one-third of what we lost because of the recession. And we have yet to fully realize in so-called normal times, all of the tough revenue actions, unpopular that they were, that we took during the Special Session.
I mentioned the fact we’re changing travel habits. Get this, this was a good one. Total vehicle miles traveled in Maryland have declined over the past three years. More Marylanders are telecommunicating, which is good for the environment, but bad for gas tax revenues; driving fuel-efficient hybrid vehicles, good for the air, good for the environment, bad for gas tax revenues. And those revenues are now falling short of ‘08 expectations by $80 million a year.
As Marylanders, over the last few years, we’ve been buying new cars less frequently, and also buying smaller cars. Excise tax revenues have fallen short by nearly 25%. Vehicle registration fee revenues are also falling over that period of time. We have been able to reduce the number of structurally deficient bridges, though, by 28% since 2002. We’ve very much been embracing a fix-it-first strategy. The decisions we make in deploying limited dollars are based on where they are most needed. But there are 107 bridges that remain deficient and in need of upgrades. We maintain 17,000 miles of highway. The recession’s forced us to cut maintenance by about 22 percent. This graph shows you maintenance activity expenditure per lane mile and how it’s declined over – from 2007 to 2011.
We have a number of strategies that we’re nevertheless forging ahead and pursuing. Advancing the Red and the Purple lines. Encouraging Transit-Oriented Development. And that goal of doubling one of our big 15 goals for our State, strategic goals that fall under opportunity, security, sustainability, and health, is to double transit ridership by 2020. And we’re also funding critical road improvements in construction, preservation funding for important improvements, completing the ICC.
Local governments are receiving this year for the first time ever -- Mayor Davis will confirm that for the first time in three legislative sessions it actually got better for you at the end of it than worse for you, which is the first sign of long-term progress.
And MDTA is studying proposed changes to the State’s toll structures. Tolls go up from time to time. Some of them have not been raised in a long, long time.
Let me now ask Ken Ulman to present on behalf of the Commission the finding of this Commissions’ recommendations. Ken, thank you.