Business leaders urge gas tax rise

But Ehrlich may consider auto fee increases to raise transportation revenue

Panel suggests $300 million goal

January 15, 2004|By Michael Dresser | Michael Dresser,SUN STAFF

Maryland business leaders are growing concerned that Gov. Robert L. Ehrlich Jr. will not propose an increase in the gasoline tax -- a measure they consider vital to meeting the state's transportation needs.

The governor won't say what he intends to do on the issue. However, Comptroller William Donald Schaefer, who supports a 10-cent-per-gallon increase, said that he has been told by administration officials that Ehrlich would not raise the gas tax.

Ehrlich has been under strong pressure from Republican lawmakers to leave the gasoline tax at 23 1/2 cents a gallon.

"Gas taxes have always been the foundation of our transportation fund," said Donald C. Fry, president of the Greater Baltimore Committee, which has endorsed an increase.

Also supporting an increase is the Maryland Chamber of Commerce and the Greater Washington Board of Trade.

One source familiar with the administration's discussions, who asked not to be identified, said the administration is putting together a package of other revenue measures, such as increases in auto title and registration charges, that will all be described as fee increases.

Administration officials said it could be weeks before his decisions are announced.

Transportation advocates are still hoping that the governor can be persuaded to support some increase in the tax to meet the goal of raising $300 million in new transportation revenue, as recommended by a high-level panel created by Ehrlich.

The gasoline tax is traditionally the largest source of revenue for the state's Transportation Trust Fund, which has been depleted by growing costs and borrowing to balance the state budget. Some leading legislators and business leaders say it is hard to envision how the state can raise $300 million a year without raising the tax.

Republican legislators have been hinting in recent days that the administration might propose a package of fee increases and other measures amounting less than the full $300 million.

Ehrlich's budget secretary, James C. "Chip" DiPaula Jr., refused yesterday to promise that the administration would reach the goal set by the commission headed by former Transportation Secretary William K. Hellmann. The panel set the figure at $300 million in an effort to meet two-thirds of the state's estimated transportation needs.

DiPaula said Ehrlich is "supportive" of the Hellmann panel's revenue goals. However, when asked whether that means the governor would propose the full amount, the budget chief said, "I didn't say that."

A gasoline tax increase was one of the items on a "menu" of options the commission presented to the governor -- along with such items as an increased vehicle registration fee and an increase in the titling tax. According to the Transportation Department, a 10-cent rise in the gasoline tax would raise $318 million a year, while a 5-cent increase would get the state better than halfway to its goal.

During his 2002 campaign, Ehrlich did not rule out raising the gas tax -- as he did with the sales tax and the income tax -- raising the hopes of some of his supporters in business circles that he would do more to shore up the trust fund than former Gov. Parris N. Glendening.

Over the past year, however, Ehrlich has consistently expressed distaste for the prospect. The opposition of Republican legislators, some of whom made it clear they would defy any call to raise the tax, apparently sealed the decision.

"It would raise a hue and cry in the rural areas of the state," said House Minority Whip Anthony O'Donnell of Calvert County.

Ehrlich spokeswoman Shareese DeLeaver said yesterday that she would not comment on the possible components of a transportation revenue package. She noted, however, that the governor has said publicly that raising the gas tax is "not his preference" for raising revenue.

Democratic legislators have been openly contemptuous of efforts to distinguish between fees and taxes. Del. Sheila E. Hixson, chairwoman of the House Ways and Means Committee, said yesterday that any administration bill that comes in with a fee increase will be amended to call it a tax.

Other Democrats contended that some of the fee increases being considered would be no less disputed than a tax. For instance, a $30 increase in the annual vehicle registration fee would raise about half the money to get to $300 million. But motorists could see their bills, which are paid every other year, go from $81 for a passenger vehicle to $141.

Senate President Thomas V. Mike Miller said Ehrlich should consider the fate of former California Gov. Gray Davis, whose increase in what was labeled a "car tax" helped lead to his recall last year.

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