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Summary of The Intercounty Connector:
Financial, Economic, and Regional Development Costs

With funding from the Abell Foundation, 1000 Friends of Maryland, a statewide organization helping Maryland plan for its future, released an independent fiscal transportation and economic development analysis based on source material and work by members of the ICC study’s Expert Land Use Panel.

Maryland and many other states are confronting a “perfect storm” in their transportation programs, as costs for operations, maintenance, and capital expenditures continue to rise much faster than the growth in state transportation revenues and traditional measures of inflation. If Maryland moves forward with the ICC, the project would absorb more than $160 million annually in new debt service costs, an amount that equates to what Maryland now collects each year with six cents of its gasoline tax. A close look at the Intercounty Connector funding package illuminates serious problems and consequences that should be openly discussed before making a final commitment to this major project. These issues include:

Diverting Toll Revenues
Maryland Transportation Authority (MdTA) debt is a key component to the financing plan. This debt is backed by current revenues from all of the state’s toll roads, bridges, and tunnels (and future users of the ICC). Diversion of MdTA debt and cash to the ICC means less will be available for other transportation priorities, such as Baltimore’s Red Line, bridge maintenance, and new transit facilities elsewhere.

GARVEE Debt Financing
GARVEE bonds, which would cover $750M of the cost, are based on “anticipated” (and quite uncertain) federal revenues, and would bring the state to 93% of its debt capacity, soon foreclosing options for paying for other long-term capital needs such as school construction and renovation in older areas such as Baltimore.

According to the Department of Legislative Services (DLS), as the state gets closer to the debt limit, it becomes less able to meet capital needs, “forc[ing] the State to choose between eliminating previously planned capital projects…or loosening decades-old fiscal standards and jeopardizing the AAA bond rating.” By 2012, debt service on the ICC GARVEE bonds for would consume $84 million annually.

General Funds
In addition to new debt, the ICC would significantly deplete the General Fund, especially in the next few years, when $265 million will not be available for other priorities in the state, from education, to health care, to spending on the environment. This commitment was made when the state budget was perceived to be in surplus, not deficit.

BRAC Infrastructure Needs
The infrastructure needs around Fort Meade and Aberdeen, due to BRAC may easily reach $6 billion and have not yet fully been planned, accounted, or most notably, funded.

Increases the need to raise taxes
To maintain such an expensive project in the face of other needs and commitments, state officials face two unpalatable choices, raising taxes and fees to support this project or cutting general fund and transportation projects while facing the debt limit.

Economic Development Impacts
Major highway investments have small net effects on economic growth and development within metropolitan regions, instead mostly moving development around the region. Induced development is very close to a zero-sum game. In assessing regional growth and the economic development impacts of the proposed ICC, the analysis found:

• More development than was predicted could to occur as a result of the highway in certain places, creating more congestion and adverse impacts.
• Development would shift jobs and homes from Washington, DC, Baltimore and inner Prince George’s to Montgomery and Frederick Counties.
• Baltimore City is likely to lose jobs and residents, supplying much of the growth that would shift near the ICC.
• In Montgomery, places like Cloverly, Burtonsville, and Potomac would experience more residential growth and the growth potential would overwhelm existing zoning capacity.
• The ICC is likely to fill up faster than projected, in part because of development shifts to the ICC corridor from elsewhere in the region.

Recommendations
In order to ensure the state is making the wisest transportation investments, the report recommends eight actions, including:
• Evaluate opportunities for financing all state transportation priorities and consider how funds currently proposed for the ICC could be utilized more efficiently;
• Examine funding priorities for Maryland Transportation Authority;
• Accurately assess land use and economic development impacts on Baltimore, Prince George’s and other jurisdictions; and
• Evaluate land use and transportation needs to support BRAC and assess whether BRAC projects merit higher priority.

The full report is available from 1000 Friends of Maryland at: www.FriendsofMD.org

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