Several business groups say O'Malley bill is not enough

Tax plan changes urged

General Assembly

November 01, 2007|By James Drew | James Drew,Sun reporter

Business groups, auto dealers and transit advocates urged lawmakers yesterday to change Gov. Martin O'Malley's tax proposals, including a measure to link the state gasoline tax to the rising cost of road and bridge construction materials.

Several business groups, including the Greater Baltimore Committee, said O'Malley's bill, which would generate an additional $400 million per year for transportation projects, is not enough.

Other groups, including the Mid-Atlantic Petroleum Distributors' Association, called on legislators to add a "sunset" provision to the governor's proposal for small increases in the gas tax without legislative approval, saying the General Assembly should examine the policy after five years.

FOR THE RECORD - An article in Thursday's Maryland section incorrectly identified the jurisdictions represented by Senate Minority Leader David R. Brinkley. The Republican represents Frederick and Carroll counties.
The Sun regrets the errors.

In a letter sent yesterday to its members, the GBC said it supports a big chunk of O'Malley's plan to eliminate a projected $1.7 billion shortfall in next year's budget, including increasing the sales tax rate from 5 percent to 6 percent, the corporate income tax from 7 percent to 8 percent and the tobacco tax by $1 per pack to extend health care coverage to more low-income Marylanders.

The group said it opposes extending the sales tax to real estate management services. And, though it supports making the state income tax more progressive, the GBC says it "is not comfortable" with the governor's proposal to create two brackets for top earners - at $200,000 and $500,000 for couples and $150,000 and $500,000 for individuals - with income taxed at 6 percent and 6.5 percent.

The GBC also says the legislature should legalize slot machine gambling during the special session instead of placing the issue on the November 2008 ballot, as O'Malley has proposed.

Donald C. Fry, the GBC president and chief executive officer, joined Montgomery County Executive Isiah Leggett and others in urging lawmakers yesterday to support an additional $600 million per year for transportation projects. They said that could be accomplished by indexing the gas tax to the costs of construction materials and also boosting the gas tax by 6 to 7 cents per gallon.

The Maryland Automobile Dealers Association said it would support the governor's proposed increase in the vehicle titling tax from 5 percent to 6 percent if the legislature taxed auto buyers only on the difference between the price of a new vehicle and the value of a trade-in.

John D. Porcari, the state secretary of transportation, told a joint hearing of three legislative committees that an additional $400 million in annual transportation spending would enable the state to "chip away" at an estimated $40 billion in "unmet" needs over the next two decades.

Of the $400 million, about $250 million would be used for maintenance, including resurfacing highways and replacing buses, he said.

"You may ask, `How did we get into this position?' The system has gotten bigger, older and more expensive to maintain," Porcari said.

Maryland last increased the gas tax in 1992, from 18.5 cents to 23.5 cents per gallon.

Instead of calling for a larger one-time increase, O'Malley has proposed tying the tax to the cost of steel, cement, lumber and labor.

Porcari projected small annual increases, from the current 23.5 cents per gallon to 24 cents, starting Jan. 1, 24.7 cents in 2009, 25.4 cents in 2010, 26.1 cents in 2011, and 27 cents in 2012.

The bill would limit yearly increases to 1 cent per gallon.

"It would at least allow us to run in place and not lose ground," Porcari told legislators.

An aide to House Speaker Michael E. Busch said Busch continues to oppose a gas tax increase but is "willing to discuss" O'Malley's indexing plan.

Rural legislators pressed Porcari on why motorists would have to pay higher taxes to help fund transit projects in the Baltimore-Washington corridor.

"You're asking for a [cost-of-living adjustment] on the highway users. Would you support a COLA for transit?" asked Senator Minority Leader David R. Brinkley, who represents Somerset and Wicomico counties.

Brinkley said a regional sales tax could be levied to fund transit projects so that gas tax revenue could be used solely for roadway projects. Porcari said transit users are paying fares and that motorists benefit by enhanced mass transit through less congestion on roadways.

At the afternoon joint hearing, administration officials urged legislators to adopt the proposed increase in the corporate income tax rate and to close a "loophole" that allows some corporations to avoid recordation and transfer taxes by making their real estate part of a limited liability company.

james.drew@baltsun.com

Today in Annapolis

The House Ways and Means Committee, the House Appropriations Committee and the Senate Budget and Taxation Committee hear testimony this morning on Gov. Martin O'Malley's proposed property tax reduction - now linked to new slots revenue - and his proposal to double the tobacco tax to $2 per pack.

The House Republican leadership will issue a statement regarding slots legislation.

Money committees, starting at 1 p.m., take up O'Malley's sales and income tax proposals, and the senior income tax exemption. Two other committees hold a joint hearing to consider expanding health care coverage to more low-income Marylanders.

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