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EDITOR'S NOTE: An earlier version of this release inadvertently omitted MDOT MVA. It is included here.
FOR IMMEDIATE RELEASE: September 1, 2020
Contact: Erin Henson, MDOT Public Affairs – 410-865-1025
MDOT Releases Draft Six-Year Capital Budget for FY 2021 – FY 2026
Revenue Reductions Amid COVID-19 Drive Billions
in Capital and Operating Cuts Across All Transportation Business Units Statewide
HANOVER, MD – The Maryland Department of Transportation (MDOT) today released its Draft FY 2021 – FY 2026 Consolidated Transportation Program (CTP), which details MDOT's $13.4 billion six-year capital budget. The Draft CTP shows a $2.9 billion reduction compared to the $16.3 billion Final FY 2020 – FY 2025 CTP released in January. This $2.9 billion reduction reflects capital budget reductions of $1.9 billion necessitated by revenue declines associated with the COVID-19 pandemic health crisis as well as project cash flow changes and completions following record-setting investments in transportation over the last several years. MDOT also is reducing its FY 2021 operating budget by $98 million to respond to the revenue decline.
“From day one, our focus has been to keep Maryland's transportation network moving in a safe way for both the customers and employees," said Transportation Secretary Gregory Slater. “Despite the challenges of operating during a pandemic health crisis, more than 10,000 MDOT employees and our private sector partners continued to deliver outstanding customer service in every business unit across the department. As the state's economy and transportation network begins to recover, this budget focuses on preserving our critical infrastructure and essential connections, continuing all active construction, planning for future projects, and building what we can to further support Maryland's economic recovery."
The necessary capital and operating reductions are being made across every one of MDOT's transportation business units funded by the Transportation Trust Fund including: Maryland Aviation Administration (MDOT MAA), Maryland Port Administration (MDOT MPA), Maryland Transit Administration (MDOT MTA), Motor Vehicle Administration (MDOT MVA), State Highway Administration (MDOT SHA) and The Secretary's Office (MDOT TSO). A list is available online for both the $1.9 billion in capital reductions and the $98 million in operating reductions.
COVID-19 IMPACTS ON STATEWIDE TRANSPORTATION
This draft CTP is a direct result of revenue reductions from COVID-19 impacts. Since the pandemic hit at the very end of FY 2020, immediate reductions to operating and capital spending were necessary at a time when MDOT also was maintaining essential transit services and the critical supply chain. The steep declines in service usage and revenues were unprecedented.
During the peak of the stay-at-home order, transportation volumes were down across the network in the second week of April compared to the same week a year ago: highway traffic volumes - down 52%, truck volumes - down 27%, toll transactions – down 57%, Port of Baltimore Seagirt Marine Terminal truck transactions – down 51%, Baltimore/Washington International Thurgood Marshall Airport (BWI Marshall Airport) passenger traffic – down 95%, all MTA transit – down 70% with MARC – down 97%, Commuter Bus – down 95% and Core Local Bus – down 61%.
In the third week of August compared to the same week a year ago, transportation volumes were ramping back up: highway traffic volumes - down 16.7%, truck volumes - down 16.6%, toll transactions – down 19.88%, Port of Baltimore Seagirt Marine Terminal truck transactions – up 1%, BWI Marshall Airport passenger traffic – down 67.3%, all MTA transit – down 55% with MARC – down 91%, Commuter Bus – down 87% and Core Local Bus – down 47%. For updated statewide travel and transportation services statistics, visit: mdot.maryland.gov/coronavirus.
While the numbers are starting to come back, our current six-year CTP estimates Transportation Trust Fund revenue declines across the board: motor fuel (- $636 million), titling tax (- $190 million), corporate income tax (- $183 million), MDOT MTA operating revenue (- $174 million), MDOT MAA operating revenue (- $146 million), and other revenues (-$100 million).
Over the six-year forecast period, MDOT is forecasting a total six-year revenue decline of $1.4 billion and a decrease in bond sales of $1.5 billion for a total $2.9 billion impact on the Transportation Trust Fund. The impact of COVID has hit every single revenue source to the Transportation Trust Fund and most revenues are not expected to return to their pre-COVID 2019 levels until fiscal 2023 or beyond.
Motor fuel tax, which is MDOT's largest revenue source, took the biggest hit and is revised downward more than $600 million (reduction in both gallons sold and lower prices). Operating revenues for the port, airport, and transit decline by nearly $400 million over the six-year period due to steep declines in operations and a slower recovery period. Reduction to bond sales include a $1 billion reduction of bonds to support the capital program and a deferral of $500 million in airport revenue bonds to fund construction of certain improvements at BWI Marshall Airport.
FEDERAL GOVERNMENT SUPPORT
In April, MDOT MTA was awarded $392 million in funding from the federal Coronavirus Aid, Relief and Economic Security (CARES) Act to maintain essential services for BaltimoreLink Local Bus, Light RailLink, Metro SubwayLink, MARC Train, Commuter Bus and Mobility operations. The federal CARES Act funding also assisted local transit providers in Baltimore City and each of the state's 23 counties through a combined $151.3 million.
CARES Act funding through the U.S. Department of Transportation Federal Aviation Administration provided $87.6 million to BWI Marshall Airport, which has seen steep ridership declines as a result of COVID-19. Another $20 million was distributed to regional airports across the state.
CARES Act funds distributed to MDOT MAA were exhausted prior to the close of FY 2020, and funds supporting the MDOT MTA transit network are expected to run out by the end of this month. Additionally, Congress has until the end of the month to reauthorize important surface transportation funding to the states. With surface transportation funding through the FAST Act expiring on September 30, there is further uncertainty as to the final Consolidated Transportation Program funding levels.
MDOT TSO BUDGET REDUCTIONS
At MDOT TSO, $23 million in cuts were made on the capital side including consultant contracts, information technology projects facilities and vehicle purchases.
On the operating side, MDOT TSO cut $5 million, 5% of its FY 2021 operating budget. These cost containment actions include reductions to various information technology contracts and activities that support MDOT's network and programs and various administrative reductions.
MDOT SHA BUDGET REDUCTIONS
At MDOT SHA, more than $900 million in cuts were made on the capital side resulting in development of major projects and system preservation activities being deferred. Reductions of were made across the board for system preservation including: paving, traffic signal installations, geometric improvements, environmental improvements, sidewalk installations and lighting upgrades.
The construction funding for a project to upgrade the I-695/I-70 “Triple Bridges" interchange was deferred until a proposed solution is selected for the adjacent I-695 Transportation Systems Management and Operations contract. Continuing with the $9 million for design allows work to continue this important project while construction funding is deferred until FY 2024. Other major project deferrals include design on MD 97 Montgomery Hills, I-95 Active Traffic Management, MD 197 in Bowie, and on US 15/US 40 in Frederick.
At MDOT SHA, $15.4 million was added for two bridge replacements along US 1 over Toll Gate Road and Winters Run.
On the operating side, MDOT SHA cut $21 million, 7% of its FY 2021 operating budget. These cost containment actions include reductions to: roadside landscaping and cleaning activities, minor road and bridge repair and maintenance, contingency funds to respond to public requests for minor improvements, and various administrative reductions. The operating budget reduces funding for certain minor maintenance and repair activities without sacrificing safety.
MDOT MTA BUDGET REDUCTIONS
At MDOT MTA, $150 million in cuts were made on the capital side resulting in projects and system preservation being deferred, including: equipment replacement, bus division upgrades, parking lot maintenance, and state funding for the Locally Operated Transit Systems. Deferred projects include fare collection replacement and freight rail upgrades.
In an effort to advance recommendations by the Central Maryland Regional Transit Plan, $1 million was added to the Draft CTP to study two corridors that will be identified in the final Central Maryland Regional Transit Plan that is due to be released this fall. An additional $5.9 million was added to MDOT MTA's budget for a Zero Emission Bus Pilot with the assistance of a USDOT Federal Transit Administration grant.
Preserved projects include: Purple Line construction, Metro SubwayLink cars and signal system replacement, mid-life Light RailLink vehicle overhaul, and bus purchasing.
On the operating side, MDOT MTA cut $43 million, 5% of its FY 2021 operating budget. With this reduction, MDOT MTA is proposing service adjustments for MARC, Commuter Bus and BaltimoreLink Local Bus route realignments to optimize transit service for core bus riders, especially transit-dependent households. The proposed Local Bus network changes focus on connecting Baltimore City and major job centers and would have fewer suburban routes in Baltimore and Anne Arundel counties. MDOT MTA used ridership data and trend analysis to ensure riders have access to employment hubs, educational systems and other essential services.
MDOT MTA will hold 10 virtual public hearings for Local Bus between October 5 and October 16 about the proposed changes as part of a 30-day public review and comment period that ends November 15. The proposal would affect approximately 3.6% of riders and would go into effect January 3, 2021. MARC and Commuter Bus public hearings and effective dates will be announced this fall.
In addition to modifying service, MDOT MTA will implement reductions to the Locally Operated Transit Systems operating and capital subsidies. For FY 2021, operating subsidies will be reduced $12 million and capital subsidies will be reduced $2.4 million. Locally Operated Transit Systems received nearly $149 million in CARES Act funding, which local systems can use to offset the state funding reduction.
MDOT MAA BUDGET REDUCTIONS
At MDOT MAA, $522 million in cuts were made on the capital side resulting in projects and system preservation being deferred in the Draft FY 2021 – FY 2026 CTP. The U.S. Department of Transportation Federal Aviation Administration CARES Act funding provided $107.7 million in funding to Maryland. This funding included $87 million to help BWI Marshall Airport in FY 2020 to maintain ongoing operations and assist us in preparing for the post-COVID-19 recovery, but that funding was depleted before we entered the current fiscal year.
The $500 million A/B Connector and Baggage Handling system project was moved from construction back to the development and evaluation program as a result of uncertainty in the bond market caused by the COVID-19 pandemic. This project is almost entirely funded by airport revenue bonds. Due to significant declines in airport passengers nationwide and the uncertain timing of recovery for the airline industry, MDOT determined it is in the state's best interest to defer this bond sale until the market for airport revenue bonds has fully reopened and stabilized. As a result of this delay, the state-funded enabling projects have also been deferred. The Draft CTP preserves $16 million to continue engineering on the A/B Connector and Baggage Handling System project and $71,000 to continue engineering for the Concourse A/B Enabling Central Utility Plant Upgrades.
The $26.3 million in system preservation projects at BWI Marshall Airport and Martin State Airport also were deferred, including: taxiway paving, equipment replacement and signage.
Several MDOT MAA projects were deferred from FY 2020 to FY 2021. Among the projects deferred are an Environmental Assessment of Martin State Airport and numerous projects at BWI Marshall Airport: an Environmental Assessment of BWI Marshall Airport, Aircraft Maintenance Facility Infrastructure, Concourse A Improvements Phase 2, and Taxiway F Relocation Design. The Federal Inspection Service Hall Reconfiguration Project for U.S. Customs and Border Protection at BWI Marshall Airport also has been deferred from FY 2020 to FY 2022.
On the operating side, MDOT MAA cut $18 million, 8% of its FY 2021 operating budget. These cost containment actions include reductions to landscaping, repair and maintenance, and other contracts at BWI Marshall Airport and Martin State Airport due to current reduced operations. These actions right size the provision of passenger shuttle services based on the closure of certain airport parking lots due to current passenger demand and various administrative reductions.
MDOT MPA BUDGET REDUCTIONS
At MDOT MPA, $227 million in cuts made on the capital side resulting in projects and system preservation being deferred, including $175 million for berth improvements, expansion of Masonville Dredge Placement Facility, and operations and maintenance in our dredge placement program.
While both aviation and transit received some relief from the federal CARES Act, there has been no federal relief provided for the maritime industry. MDOT MPA has worked closely with our congressional delegation in requesting federal funding designed to assist United States seaports, wrote an editorial that ran this summer explaining the urgent needs of ports, and continues to support federal legislation designed to provide relief to the maritime industry.
The draft CTP maintains the funding for the Howard Street Tunnel construction. To support the continued growth at the Port of Baltimore, $33 million was preserved for Cox Creek Dredge Placement Management Facility to ensure we maintain the 50-foot shipping channel for the megaships coming to the Port of Baltimore. The current CTP also provides $8.6 million in additional funding for the Mid-Bay Islands Dredge Placement Project.
At MDOT MPA, $4 million also was added for the Hawkins Point Algal Flowpoint, which is an environmental project geared at reducing pollutants flowing into the Chesapeake Bay.
On the operating side, MDOT MPA cut $3 million, 6% of its FY 2021 operating budget. These cost containment actions include various administrative reductions to reflect current operating activities and cost containment efforts.
MDOT MVA BUDGET REDUCTIONS
At MDOT MVA, $25 million in cuts were made on the capital side including system preservation for Information Technology systems and facilities.
On the operating side, MDOT MVA cut $8 million, 4% of its FY 2021 operating budget. The operating budget reduces the need for additional temporary employees and overtime that been expected as the REAL ID deadline approached. However, the adjustment of the REAL ID deadline from October 2020 to October 2021, combined with MDOT MVA's appointments-only operating status will reduce the impact on customers.
MDTA BUDGET REDUCTIONS
Like tolling agencies around the nation, the Maryland Transportation Authority (MDTA) also experienced impacts to its financial outlook as a result of lower traffic volumes during the COVID-19 pandemic. For FY 2021, MDTA is forecasting a revenue loss of $111 million, or 16%, compared to the previous forecast.
The MDTA's fiduciary responsibility to its customers and bondholders is always a priority. Staff regularly looks for cost saving opportunities within its operating and capital budgets, which are both funded solely from toll revenues at the agency's eight facilities.
At its June 2020 meeting, the MDTA board approved a FY 2021 operating budget of $323.6 million. This FY 2021 Final Operating Budget reflects a decrease of $14.4 million, or 4.3%, compared to the FY 2021 Preliminary Operating Budget. The approved operating budget includes a decrease in personnel expenses as a result of not funding vacant positions, a decrease in contractual payroll from the non-renewal of temporary toll collection contracts, and the deferral of replacement and additional equipment.
The board also approved a Draft FY 2021 - FY 2026 CTP budget of $2.846 billion, which reflects a decrease of $334 million compared to the $3.18 billion Final FY 2020 - FY 2025. Nearly all budget reductions came from two program changes. The first is a one-year delay in the completion of the I-95 Express Toll Lane (ETL) project, which currently has construction ongoing. The second is reductions in cash flows in FY 2021 to FY 2026 for the Nice-Middleton Bridge Replacement project, as this project completed more work in FY 2020 than originally forecasted. These changes help to offset the noted COVID revenue losses, while not compromising safety programs.