MDOT warns of $3.3 billion capital shortfall as one‑time $150M eases 2025 pressure

The Public Safety, Transportation, and Environment Subcommittee heard Tuesday that Maryland’s Transportation Trust Fund faces structural revenue pressures that produced a six‑year capital shortfall in MDOT’s planning documents. Analyst Steven McCulloch told the panel the combined operating and capital budget rises to $6.2 billion in the 2025 allowance but that the department must “backfill” nearly $1.8 billion of operating costs that were previously supported by federal COVID relief. Secretary Paul Wiedefeld said MDOT’s December fiscal plan showed “a shortfall of roughly $3,300,000,000,” prompting significant cuts to the six‑year capital program.

Why it matters: debt service and operating expenses are paid before capital projects, MDOT said, so sustained growth in operating costs reduces money available for construction and maintenance. The department told legislators that motor fuel tax receipts — which now support about 21% of the trust fund — are expected to decline over time as vehicles become more fuel efficient and electric vehicle usage rises, compounding the shortfall.

What MDOT proposed: the governor’s budget includes a one‑time $150 million general fund infusion for fiscal 2025 that MDOT officials said restores highway user revenue distributions and locally operated transit operating grants for 2025 and helps maintain high‑ridership commuter bus service. McCulloch cautioned that this is a one‑year reprieve: the department’s financial plan assumes cost savings or offsets return in FY26–FY29, and “unless other equal cuts or offsetting revenues are identified in 2026, we’re going to be right back here.”

Program priorities and tradeoffs: MDOT described a preservation‑first approach. Secretary Wiedefeld said safety and state‑of‑good‑repair work will take priority over expansion, adding that project selections will consider federal funding leverage. The updated Consolidated Transportation Program (CTP) still shows a multibillion‑dollar program — the department cited a $20.2 billion six‑year investment — but analysts flagged $1.2 billion in capital reductions from the September draft to get the program balanced.

Numbers and assumptions: McCulloch outlined revenue assumptions and actions used to close an earlier $2.1 billion five‑year gap, including re‑estimates, increased federal operating assistance, additional bond issuance and an assumed $81 million in new fee revenue (about $40M from MVA fees, $30M from aviation fees and $11M from port fees). He also noted a starting trust fund balance of $822 million at the end of FY23 and cautioned that current year shortfalls in major revenue sources could produce a roughly $100 million underattainment by year‑end if trends continue.

Next steps and oversight: lawmakers asked how MDOT will prioritize projects that are strong candidates for federal funding and urged more transparent communications about which projects will be protected. The secretary said the department meets regularly with the congressional delegation and will continue to pursue discretionary federal grants but emphasized that awarded federal dollars are project‑specific and cannot be shifted to other uses.

The committee will return to more detailed hearings on individual MDOT modes and the WMATA line later in the decision cycle; the $150 million in the governor’s proposal applies only to FY25 and does not change the department’s longer‑term fiscal gap.