1. Presented to the
Transportation Summit
December 12, 2012

2. Presentation Outline
• The Transportation Sector in Maryland
• Conceptual Foundations: Supply and Demand Side Effects
• Demand Side Effects: multiplier effects, regional effects, employment
effects.
• Supply Side Effects:
– Employment effects
– Property value effects
– Productivity effects
• Transportation Finance
• Concluding Comments

3. The Maryland Transportation Sector in
Context

4. The Maryland Transportation Sector
by Region

5. Changes in the Maryland
Transportation Sector over Time

6. Jobs by Skill Level by Industry
120
Percent of Jobs by Skill Levels
100
80
60
40
20
0
High-skill Middle-skill Low-skill

7. The Maryland Transportation Sector
• Proportionately smaller than US, Virginia,
and New Jersey;
• Proportionately largest in Western Maryland,
Southern Maryland and the Upper Eastern
Shore;
• Growth stopped in the 2000s; and
• Employs a large proportion of low skilled
workers.

8. Demand-Side Effects of
Expansion in the
Transportation Sector
• Direct Effects
• Multiplier Effects
Price
S
• Most effective in recession—
P1
P0
like now;
• Higher proportionate effects in
D’
Eastern and Western Maryland
Q0 Q1 Quantity
D
• Larger benefits for low skilled
workers.

9. Multiplier Effects of Expenditure on
Transportation

10. Supply-Side Effects of
Expansion of
Transportation Sector
• Employment Effects
– Localization economies
• Property Value Effects
Price
S S’
– Access capitalization
• Productivity Effects
P0
P1
– Production costs
D
– Time cost savings
Q0 Q1 Quantity

11. Transit Impacts on Property Values

12. Maryland’s One Percent

13. Importance of Maryland’s One Percent
• 1.2% of land
• 38.8% of all jobs
• Compared to the rest of the state, Maryland’s Economic
Centers feature—
– High employment densities
– High industrial diversity
– High relative wages
– High employment growth
– High share of total trips
– High transit share of trips
– Shorter trip lengths.

14. Determinants of Job Growth in Maryland’s Economic Center
• # firms in the same industry (+)
• # firms in different industry (+)
• Average firm size (-)
• Property Value (-)
• Average Peak Hour Speed (+)
• Distance from Highway ramp (-)
• Distance from Highway (-)
• Distance from Nearest Bus Stop (-)
• Within half mile of transit station (+)

15. Dollar Value of Freight Flows
17
Source: 2009 IMPLAN data, EcoNorthwest Haul-Choice Model of truck-dependent industries

16. Freight Flows in Dollars to Baltimore
18

17. Congestion in 2030

18. There’s No Free Lunch
• Raise $800 million in net new annual funding for
transportation through a combination of net new
revenues and bonding.

19. Gasoline Prices and Taxes
in Other States and Nations

20. External Costs of Driving
• The National Academy of Science estimated
external damages on a per-gallon basis, with a
range of 23 to 38 cents per gallon (with gasoline
vehicles at 29 cents per gallon).

21. Who Pays the Gas Tax?
• Most analysts agree: gas taxes are regressive.
• Persons in the bottom half of the income distribution
average 0.85 percent of income.
• ―Nevertheless the magnitude of the tax burdens is
moderate enough so that, when combined with a
reasonably simple compensation scheme, gasoline tax
increases could be implemented that would generate
substantial revenues and provide efficiency benefits, yet
protect the poor from undue hardship.‖
HOWARD CHERNICK & ANDREW RESCHOVSKY
National Tax Journal, June 1997

22. Concluding Comments
• Transportation plays a critical role in the Maryland
economy--as everywhere else;
• Transportation expenditures stimulate demand and
job growth—especially during recessions;
• Capital investments in transportation infrastructure
can reduce costs, spur productivity, and increase
property values;
• Increases in gas taxes would push prices closer to
true marginal social cost.