(Continued from page 6)

      transportation-related revenues of the State of Maryland with the
      exception of toll revenues collected by the MdTA and Maryland's share of
      Federal funds dedicated to the Washington Metropolitan Area Transit
      Authority. The Trust Fund is dedicated to paying for all MDOT
      activities, including debt service and transportation system
      maintenance, operations, administration and capital improvements.
      The most fundamental issue for Maryland's transportation program is
      available funding. Transportation is a commodity that requires
      substantial resources to build, operate and maintain. And like many
      other public services, the costs of providing transportation are going
      up as the demands for service are increasing. The predominant issue
      facing MDOT is the reduced availability of funds for the capital
      program. Several factors have limited the availability of funds to
      finance the capital program. These include growth rates of revenue
      sources that are not sufficient to meet the rising costs of providing
      and operating the transportation system.

      MDOT looks to a number of "innovative" financing techniques as one way
      to extend its resources. Among them are joint-development, financing
      through the MdTA for revenue producing projects such as marine terminals
      and parking garages, public-private partnerships and a number of
      flexible funding options made available through the Federal Highway
      Administration. Despite active use of these and other mechanisms,
      available funding falls short of what is needed to maintain an optimal
      transportation system in Maryland. The goal and policies developed for
      the Finance and Funding policy element identify a strategy for
      safeguarding the quality of Maryland's transportation system that relies
      on the strict prioritization of projects and management of the
      transportation system.

      Finance and Funding Goal

      Recognizing that current and projected revenue sources are not
      sufficient to meet the long-term demands of Maryland’s transportation
      system, MDOT will seek to generate and commit adequate resources to
      build, operate and maintain a high quality transportation system that
      meets the needs of all transportation system users.

      Finance and Funding Policies

        MDOT will engage in a public dialogue with Maryland transportation
        system users to generate awareness of as well as consensus on State
        transportation needs and funding options.
        MDOT will remain committed to system preservation as the highest
        capital funding priority.
        MDOT will explore revenue sources that adequately meet the operating
        needs of Maryland's transit systems.
        MDOT will make use of innovative finance mechanisms such as the
        Maryland Transportation Authority; public-private partnerships; joint
        development and utilization of real estate; and Federal flexible
        funding programs as a means to expanding its financial resources.
        MDOT will seek to implement cost-effective solutions to transportation
        needs through value engineering and improvements in the planning and
        procurement processes.

      Freight Transportation Element

      Freight distribution is a critical Maryland industry. Located midway
      along the Atlantic coast, Maryland is well positioned for national and
      international freight distribution. This location provides overnight
      truck access to 80 million people and $1.2 trillion in consumer income,
      representing 30% of the total U.S. population and 35% of U.S. income.
      Maryland has in place a valuable mix of transportation facilities and
      resources that support an active and productive air, rail, truck and
      maritime freight industry. These include the Port of Baltimore with its
      numerous terminals and cargo processing facilities, over 5,000
      centerline miles of State highways, the growing cargo complex at the
      Baltimore/Washington International (BWI) Airport and an extensive
      railroad network. In addition to facilitating freight distribution needs
      through infrastructure maintenance and improvements, MDOT works with the
      private sector to support freight business development through business
      and trade organizations throughout the State.

      The freight industry is in a constant state of flux as companies work to
      cut costs and improve efficiency to remain competitive in a global
      marketplace. Public and private investment in transportation and other
      supporting infrastructure has helped ensure Maryland's position as a key
      freight distribution center despite major shifts in the industry. The

(Continued on page 8)