HB 114
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Enrolled - Revised
House Bill 114 (Delegate Lierman, et al.)
Appropriations Budget and Taxation
Transportation - Maryland Transit Administration Funding and MARC Rail
Extension Study (Transit Safety and Investment Act)
This bill alters and extends (by seven years) provisions of the Maryland Metro/Transit
Funding Act (Chapters 351 and 352 of 2018) that require increased operating and capital
spending for the Maryland Transit Administration (MTA). The bill also establishes
minimum required funding levels for MTA’s operating and capital spending, as specified.
The Maryland Department of Transportation (MDOT) must conduct a Western Maryland
Area Regional Commuter (MARC) rail extension study, as specified. The bill also
establishes a Purple Line Construction Zone Grant Program in the Department of
Commerce. In each of fiscal 2023 and 2024, Commerce must provide $1.0 million in
general funds to the grant program to assist “qualified small businesses.” The bill takes
effect June 1, 2021.
Fiscal Summary
State Effect: No effect in FY 2021. Transportation Trust Fund (TTF) expenditures
increase by $1.1 million in FY 2022 and 2023 and by $100,000 annually thereafter. General
fund expenditures increase by $1.1 million in FY 2023 and 2024 for the grant program.
Because MDOT’s capital program is fully subscribed, MDOT must redirect a total of
$322.9 million in TTF funding from other projects from FY 2023 through 2029, which
includes $110.1 million in redirected funding from FY 2023 through 2026. Revenues are
not materially affected. This bill establishes a mandated distribution for FY 2023 and
2024 and a mandated appropriation for FY 2023 through 2029.
($ in millions) FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
Revenues $0 $0 $0 $0 $0
GF Expenditure 0 1.1 1.1 0 0
SF Expenditure 1.1 1.1 0.1 0.1 0.1
Net Effect ($1.1) ($2.2) ($1.2) ($0.1) ($0.1)
Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
Local Effect: The bill does not directly affect local government operations or finances.
Small Business Effect: Meaningful.
Analysis
Bill Summary:
Purple Line Construction Zone Grant Program
The purpose of the Purple Line Construction Zone Grant Program, which must be
implemented and administered by Commerce, is to provide funds to qualified small
businesses to assist in offsetting business revenue lost as a result of the construction of the
Purple Line light rail project in Montgomery and Prince George’s counties. In each of
fiscal 2023 and 2024, Commerce must provide $1.0 million in general funds to the grant
program to assist qualified small businesses.
Commerce must adopt regulations to implement the grant program, including regulations
to establish eligibility and grant application requirements and a process for reviewing grant
applications and awarding grants to eligible qualified small businesses. In developing the
regulations, Commerce and MTA must consult qualified small businesses to ensure that
the eligibility and application requirements for the grant program are not overly
burdensome to qualified small businesses. Commerce must make the application
developed for the program available to qualified small businesses as soon as practicable.
A “qualified small business,” as defined by the bill, is a sole proprietorship, a partnership,
a limited partnership, a limited liability partnership, a limited liability company, or a
corporation that (1) employs 20 or fewer employees; (2) is independently owned and
operated; (3) is not a subsidiary of another business; (4) is not dominant in its field of
operations; and (5) is impacted by the construction of the Purple Line light rail project in
Montgomery and Prince George’s counties. Subject to the eligibility requirements
established by Commerce by regulation, if a qualified small business is required to be
registered with the State and is registered with the State, the small business may apply for
a grant regardless of ownership or location.
Commerce must also establish, by regulation, guidelines to calculate the amount of a grant
awarded under the program, as specified. A grant awarded under the program may not
exceed $50,000. Commerce may award grants until all the money allotted for the program
has been awarded or until December 31, 2024, whichever occurs first; however, Commerce
may not award more than one grant to the same qualified small business in a 12-month
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period. Any money that has not been awarded on or before December 31, 2024, must revert
to the Maryland Economic Development Assistance Fund (MEDAF).
Consolidated Transportation Program
MDOT must include in the Consolidated Transportation Program (CTP) each year a report
that provides MTA’s state of good repair budget for the current fiscal year and projections
for the subsequent fiscal year.
Transportation Funding
It is the intent of the General Assembly that MDOT (1) maximize its use of Consolidated
Transportation Bonds to support its capital program by forecasting TTF estimates to
include assumed bond issuances that would result in net income debt service coverage
ratios of two-and-a-half times maximum future debt service in each year of the forecasts
and (2) explore all other options to maximize ancillary revenues through the operations of
its units, including the leasing of unused real estate, the sale of air rights, the sale of
advertising, such as naming rights, and other marketing efforts.
The required capital appropriations must be in addition to any funds appropriated for the
capital planning, engineering, right-of-way acquisition, or construction of the Purple Line
in Montgomery and Prince George’s counties.
The bill may not be construed to limit the authority of the MTA Administrator to use
available funds appropriated to MTA to increase the State investment in locally operated
transit agencies.
Capital Funding for State of Good Repair Needs
The Governor must include in the State budget an appropriation for the state of good repair
needs of MTA in the following amounts from the revenues available for the State capital
program in TTF:
 at least $402,037,183 in fiscal 2023;
 at least $502,081,501 in fiscal 2024;
 at least $450,000,000 in fiscal 2025;
 at least $450,000,000 in fiscal 2026;
 at least $450,000,000 in fiscal 2027;
 at least $450,000,000 in fiscal 2028; and
 at least $318,558,000 in fiscal 2029.
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An appropriation for MTA’s state of good repair needs as required by the bill may be
reduced if the total appropriation for state of good repair needs in a prior fiscal year
exceeded the amount mandated by the bill for that fiscal year. Such a reduction may only
be applied to one fiscal year and may not exceed the difference between what was
mandated by the bill and what was actually appropriated in the preceding fiscal year.
By January 20, 2022, and by January 20 each year thereafter, MTA must submit to
specified legislative committees an accounting of the capital funds programmed,
appropriated, and expended for the prior fiscal year on each of the projects identified in the
capital needs assessment required by Chapters 351 and 352.
MARC Rail Extension Study
MDOT must conduct a study and develop recommendations on the feasibility, including
the cost, of extending MARC rail service to Western Maryland. MDOT must submit a
report its findings and recommendations to the Governor and the General Assembly by
July 1, 2023. MTA must incorporate the recommendations of the study into the
Statewide Transit Plan. In conducting the study, MDOT must:
 examine existing commuter rail facilities in the State and current transportation
options in Western Maryland;
 explore up to three potential routes for expanding rail service to Western Maryland;
 identify the possibilities and challenges related to establishing and operating
MARC rail service in Western Maryland;
 study the public transportation needs of Allegany and Washington counties in the
vicinity of interstates 70 and 81;
 confer with specified stakeholders, including specified local governments;
 identify infrastructure needs;
 perform a cost analysis of the capital and operating costs of extending MARC rail
service to Western Maryland;
 identify all potential stops and estimate the potential ridership for each stop;
 study and compare the potential ridership for rush-hour-only service and all-day
service;
 develop recommendations on the potential start and end points of a MARC
extension; and
 explore the potential effect that extending MARC rail service to Western Maryland
would have on CSX.
MDOT’s recommendations must address the feasibility of planning, financing,
constructing, and operating a MARC line that extends commuter rail service to
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Western Maryland. MTA must incorporate the recommendations of the study into the
Statewide Transit Plan. Regardless of any alteration or postponement of the
Statewide Transit Plan, MDOT must conduct the study in the manner required by the bill.
Current Law:
Maryland Metro/Transit Funding Act
The Maryland Metro/Transit Funding Act (Chapters 351 and 352) mandates additional
capital and operating spending for MTA and requires MTA to complete an assessment of
its unconstrained capital needs. Chapters 351 and 352 are set to terminate June 30, 2022.
Specifically, for fiscal 2020, the Governor was required to include in the State budget an
appropriation from TTF for the operating expenses of MTA that is at least 4.4% greater
than the appropriation in the fiscal 2019 State budget as introduced. For fiscal 2021 and
2022, the Governor must include in the State budget an appropriation from TTF for the
operating expenses of MTA that is at least 4.4% greater than the preceding fiscal year. The
Acts also require the Governor to include in the State budget, for fiscal 2020 through 2022,
an appropriation for the capital needs of MTA of at least $29.1 million from the revenues
available for the State capital program in TTF. This appropriation may not supplant any
other capital funding otherwise available for MTA.
At least every 3 years, MTA must assess its ongoing, unconstrained capital needs. In doing
so, MTA must (1) compile and prioritize capital needs without regard to cost; (2) identify
the backlog of repairs and replacement needed to achieve a state of good repair for its
assets, including a separate analysis of those needs over the following 10 years; and
(3) identify the needs to be met in order to enhance service and achieve system performance
goals. MTA must submit the required assessment to specified legislative committees by
July 1, 2019, and by July 1 every 3 years thereafter.
Long-term Transportation Planning
Long-term transportation planning in the State is a collaborative process designed to
consider input from the public, local jurisdictions, metropolitan planning organizations,
and elected officials. Among the numerous reports, meetings, and discussions that take
place, two important documents are developed to guide transportation planning in the State:
the CTP and the Maryland Transportation Plan (MTP).
The CTP, which is issued annually to the General Assembly, local elected officials, and
interested citizens, provides a description of projects proposed by MDOT for development
and evaluation or construction over the next 6-year period. The MTP is a 20-year forecast
of State transportation needs based on MDOT’s anticipated financial resources during that
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20-year period. It must be revised every 5 years through an inclusive public participation
process. Furthermore, it must be expressed in terms of goals and objectives and include a
summary of the types of projects and programs that are proposed to accomplish the goals
and objectives, using a multimodal approach when feasible. The MTP was last updated in
2019.
State Expenditures:
Department of Commerce – Purple Line Construction Zone Grant Program
As noted above, the bill requires, in each of fiscal 2023 and 2024, Commerce to provide
$1.0 million in general funds to the grant program to assist qualified small businesses.
Accordingly, general fund expenditures increase by $1.0 million in each of fiscal 2023 and
2024 for the Purple Line Construction Zone Grant Program. To the extent Commerce
diverts funding intended for other programs to this purpose, the increase in general fund
expenditures is mitigated.
Additionally, Commerce cannot administer the grant program with its existing staff and
resources and needs one full-time temporary contractual grant coordinator to do so.
Including those administrative costs, general fund expenditures increase by a total of
$1.1 million in both fiscal 2023 and 2024 for the grant program.
FY 2023 FY 2024
New Contractual Position 1.0 0
Salary and Fringe Benefits $59,704 $61,733
Grant Expenditures 1,000,000 1,000,000
Operating Expenses 5,745 655
Total GF Expenditures $1,065,449 $1,062,388
This estimate does not include any health insurance costs that could be incurred for
specified contractual employees under the State’s implementation of the federal Patient
Protection and Affordable Care Act.
Although the provisions establishing the grant program do not explicitly terminate, the bill
appears to contemplate a temporary grant program; not only does the bill identify funding
for the program for two fiscal years (fiscal 2023 and 2024), but it also requires that any
money that has not been awarded on or before December 31, 2024, must revert to MEDAF.
For purposes of this analysis, it is assumed that the grant program remains in effect only
for fiscal 2023 and 2024. This analysis also assumes that all of the general funds distributed
to the grant program are expended each year and that no funds revert to MEDAF.
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MARC Rail Extension Study
MDOT has 25 months to conduct the required study pursuant to the timeframe established
by the bill. In addition, the study is likely to be extensive and involve significant research,
data collection, stakeholder outreach and collaboration, surveys, and analysis.
Accordingly, MDOT must rely considerably on consultant assistance. As a result,
TTF expenditures increase by $1.0 million in both fiscal 2022 and 2023. The estimate
assumes that MDOT does not incur any study-related costs in fiscal 2021, despite the bill’s
June 1, 2022 effective date.
Incorporating the recommendations of the study into the Statewide Transit Plan may have
an effect on transportation spending for transit projects in future years; however, any such
impact depends on the outcome of the study and cannot be predicted.
Capital Needs Assessment – Project Accounting
TTF expenditures increase by $100,000 annually beginning in fiscal 2022 for MDOT to
engage consultants to assist with the capital needs assessment accounting report due
January 20, 2022, and every January 20 thereafter. MDOT advises that it employs several
third-party consultants to assist with various aspects of the annual CTP development process.
The estimate reflects the cost of adding the accounting report to their ongoing duties.
Maryland Transit Administration – Operating Expenditures
The bill’s requirement that the appropriation for MTA’s operating expenses for fiscal 2023
through 2029 may not be less than the fiscal 2022 appropriation is unlikely to affect State
operations or finances. MDOT advises that the projected operating expenditures for MTA
for fiscal 2023 through 2026 (which is as far out as it projects) exceeds MTA’s projected
operating expenditures for fiscal 2022, and MTA’s operating expenditures in fiscal 2027
through 2029 are likely to exceed the fiscal 2022 operating expenditures as well.
Maryland Transit Administration – Capital Expenditures
The bill establishes mandated appropriations from TTF for MTA’s state of good repair
capital needs from fiscal 2023 through 2029. The bill’s mandated funding is designed to
fill the funding gap identified by MTA in its 10-Year Capital Needs Inventory and
Prioritization report. In total, MDOT must redirect $322.9 million in capital spending from
other projects from fiscal 2023 through 2029, which includes a redirection of
$110.1 million from fiscal 2023 through 2026.
For fiscal 2023 through 2029, Exhibit 1 summarizes the planned capital spending for
MTA, the spending mandated under the bill, any applicable overage in funding from the
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preceding year that allows a reduction in the mandated spending, and the amount that must
be redirected in MDOT’s capital program to meet the bill’s requirements. The estimate for
MTA’s planned capital spending excludes planned spending for the Purple Line (as
required by the bill) and spending identified by MDOT to be for purposes other than
MTA’s state of good repair needs (which averages about $35.3 million each year).
Exhibit 1