Transportation panel divided on tax plans


January 08, 1991|By Jon Morgan | Jon Morgan,Evening Sun Staff

A gubernatorial committee, agreeing in principle that more than $1 billion must be raised over the next five years for transportation projects, has left it up to Gov. William Donald Schaefer to pick which taxes he will ask lawmakers to increase.

Meanwhile, Transportation Department officials acknowledged that the new 5 percent sales tax they are seeking on gasoline will not raise the $834 million they are hoping for over five years if fuel prices continue to fall.

Members of the governor's Transportation Revenue Committee were unable last night to endorse anything other than an outline of the plan they think the governor should submit to the General Assembly in the 90-day session that opens tomorrow.

William K. Hellmann, the committee chairman, declined to bring the issues to a vote, saying the members were too divided. But, at his urging, committee members generally agreed that an additional $1.35 billion probably needs to be raised over the next five years to preserve and expand the state's transportation infrastructure.

"I'm not prepared at this time to recommend any program level or revenue sources . . ." said committee member Del. Charles Ryan, who also is chairman of the House Appropriations Committee. "I don't think we want to trade off and say we will build a road and do away with a kidney dialysis machine."

He said he wants to see how the entire state budget comes together before making decisions on transportation issues.

Opposition to tax increases is expected to come from the House of Delegates, where Speaker R. Clayton Mitchell Jr., D-Eastern Shore, has said he will oppose any increase.

"As a member of the committee, I can't look at the numbers and say you don't need the money," said Sen. Barbara Hoffman, D-City.

Transportation Secretary O. James Lighthizer said he will press the governor for a $1.5 billion package of tax increases and programs. The money would be used to make up for projected revenue shortfalls, allow for limited repairs and modernizations of roads, bridges, airports, rail projects and ports.

Without an increase, Lighthizer said, two construction seasons could be lost as new projects await funding.

He said he will recommend the money come from:

* A 5 percent sales tax on gasoline, in addition to the current 18.5 cents a gallon state and 14 cents a gallon federal tax. This would cost taxpayers $834 million over five years and allow for an additional $298 million to be borrowed in a bond issue.

* An increase in fees charged by the Motor Vehicle Administration for such things as providing duplicate licenses, copies of driving records, and other services. This would cost citizens $121 million directly, and provide for an additional $68 million in extra borrowing authority over five years.

* Increases in the registration or other fees charged truckers, the specifics of which are still being discussed. This would cost truckers $52 million over five years and allow for $19 billion in new bonds.

* An increase in the department's debt ceiling from the current $950 million to at least $1.4 billion. The debt limit was established in 1973 and has not been raised since.

However, the Transportation Department softened a recommendation to add 3 cents a gallon to the fuel tax -- an action that would give the state the highest gas taxes in the nation.

The department said it still would like the tax, but suggested as an alternative: higher motor vehicle administration fees, a 20 percent increase in registration charges for all but the biggest vehicles, and raising from 5 to 5 1/2 percent the titling tax for cars and trucks.

Also, the amount of revenues shared with the state's counties and Baltimore would be restricted. Local governments still would come out some $450 million ahead under the program because of increases in other taxes.

Lighthizer acknowledged that the biggest component of the tax package, the sales tax, could be at risk if gas prices fall. Gasoline prices have been falling gradually in recent weeks and analysts expect them to fall further if the Persian Gulf crisis is resolved peacefully.

The $834 million revenue estimate is based on average gasoline prices rising over five years from $1.36 a gallon to $1.51 -- higher than they have ever been before. The tax, as recommended, would apply to the total pump price including other taxes charged.

If prices drop, Lighthizer said, "You got a problem."

But he said the department sees long-term advantage in a percentage tax that would keep up with inflation, as opposed to the static per-gallon taxes. At 5 percent, the tax also would be in parity with the state's merchandise sales tax.

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