Let the battle of the budget begin

Miller backs boost in gas tax of 50%

Senate president also wants cuts, slots to close budget gap

March 01, 2007|By Andrew A. Green | Andrew A. Green,Sun reporter

Senate President Thomas V. Mike Miller, insisting that the state must not wait until next year to fix its long-term fiscal problems, proposed a 50 percent increase in the gasoline tax yesterday and resumed his push for slot machine gambling.

Gov. Martin O'Malley was receptive yesterday to a gas tax increase, though he did not explicitly endorse Miller's plan, which would tack 12 cents onto the current gas tax rate of 23 1/2 cents per gallon.

But Miller's introduction of a bill calling for 15,500 slot machines at seven locations around the state puts him at odds with the new governor, who has repeatedly said he fears that reviving the divisive slots debate will halt progress on other fronts, and with House Speaker Michael E. Busch, who has long opposed slots. All three are Democrats.

Miller said he doesn't expect a gambling bill to pass during the current 90-day legislative session, but he insisted that it needs to be part of the solution to a $1.3 billion budget shortfall projected for the fiscal year starting in July 2008. He said the legislature should either take up the matter before it adjourns in April or return for a special session to tackle budget issues.

"There are going to be cuts, there are going to be slots, there are going to be tax increases," Miller said. "It's going to be a three-pronged approach to solve this problem. It's going to be tough for some people but they're going to have to suck it up and move forward for the good of the state of Maryland."

Slots were among the most contentious issues during Republican Gov. Robert L. Ehrlich Jr.'s four years in office, and the results of the November election suggest the division will be as stark as ever. However, O'Malley signaled that an increase to the gas tax, which has not been raised since 1994, may find an easier path to passage.

O'Malley highlighted the need for more transportation funds in his State of the State speech, and his transition team last week suggested a gas tax increase to help pay for roads and mass transit.

"On transportation, in the legislature, I think we are closer to coming to a consensus," O'Malley said yesterday. "On the other issues, we're not close at all."

O'Malley has said he wants more time for his administration to find savings in government operations that could shrink the size of the state's budget problem.

Miller's bill would increase the tax to 35 1/2 cents per gallon, which would amount to an extra $1.44 to fill a 12-gallon tank. He said his plan would generate $400 million a year, which would translate into $3 billion in projects over five years because it would allow the state to issue more bonds.

Some business leaders back a gas tax increase because they say greater transportation investments are needed, but the proposal is also likely to face strong opposition from gas station owners and energy companies. Moreover, since money from that tax goes into the transportation trust fund, a rate increase would have no direct impact on Maryland's budget problems.

Busch, an Anne Arundel County Democrat, cast doubt yesterday on Miller's plan, telling service station owners in a meeting that he doesn't think the public would stomach a 12-cent increase in the gas tax, given the already high price of fuel.

However, Del. Sheila E. Hixson, the Montgomery County Democrat who chairs the House Ways and Means Committee, has proposed a 10-cent-per-gallon increase in the tax. A hearing on that proposal is scheduled for March 13. Both her bill and Miller's include mechanisms for the tax rate to automatically increase with the price of gas.

Donald C. Fry, president and CEO of the Greater Baltimore Committee, said a gas tax increase is one that the business community can get behind. It goes to a dedicated fund and produces immediate results that benefit the state's economy, he said.

"Transportation funding is one of the most important economic growth challenges the state faces," said Fry, who chaired the transportation group of O'Malley's transition team.

According to the American Petroleum Institute, Maryland's current gas tax is slightly below the national average, though higher than the rates in Virginia and Delaware. An increase of 12 cents a gallon would give Maryland the fourth-highest rate in the nation, behind New York, California and Connecticut.

Paul Fiore, director of government affairs for the Washington, Maryland, Delaware Service Station and Automotive Repair Association, said higher taxes will hurt service stations near Maryland's borders.

"Over a fifty percent increase in the gas tax?" Fiore said. "It's kind of crazy."

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