The tax that saves jobs

Our view: Crowded roads, insufficient transit service and a failure to invest enough in transportation are hurting Maryland's economy as surely as any tax increase

November 09, 2010

Before newly reelected Gov. Martin O'Malley and Democratic leaders in Annapolis commit themselves to avoiding any tax increases in 2011 in the name of jobs, they ought to consider how neglecting public infrastructure can be just as harmful to economic growth.

Don't take our word for it. Listen to the U.S. Chamber of Commerce, the Greater Baltimore Committee, and many other business groups that have this to say about how much the government spends on highways, bridges, transit and other forms of transportation: Spend more, please.

The chamber argues that the nation's inadequate transportation network is costing the economy $78 billion annually in lost time and fuel. Studies show for the last 20 years, the primary source of tax revenue for such projects — state and federal taxes on gasoline and diesel — has failed to keep pace with inflation so many states are losing ground.

Customers, employees and deliveries are stuck in traffic, and businesses can't operate efficiently. This is one instance where raising taxes would create jobs, not take money out of the economy.

Yet here in Maryland, an incumbent Democratic governor who won a second term by a landslide in a state where voters clearly rejected the right-wing agenda on taxes and spending appears unwilling to pursue this overdue investment. Instead, he has coyly suggested he would consider a tax package in 2011 only if lawmakers approve one first (something they, too, appear reluctant to do).

Would the economy suffer if the gas tax increased by a nickel or a dime? Consumers see a bigger price fluctuations at the pump in an average week. Only this isn't money that would go to BP or other energy multinationals' profit margins, it would go to make Maryland's roads and transit systems safer, more effective and efficient.

Building a new east-west light rail route through Baltimore would create thousands of jobs, but the state's depleted Transportation Trust Fund can't afford the proposed Red Line — or the Purple Line in suburban Washington — without an infusion of new revenue.

Opponents can argue for a one- or two-year delay, but that's not going to solve the state's transportation problems, particularly as jobs related to the military's Base Realignment and Closure program continue to pour into Maryland from other states. It only means construction will have to wait until prices are higher, congestion is worse, and taxpayers get less bang for their buck.

Others claim that the General Assembly should wait for the findings of a commission studying the way Maryland finances transportation. But while that study may be informative, lawmakers are already sufficiently schooled in the subject to make an informed choice on the gas tax, which hasn't been raised in nearly two decades.

Granted, a transportation tax increase isn't going to get much public support unless legislators can make sure the money goes to transportation and not to balance the general fund. There's already been enough trust fund thievery over the past eight years to erode public confidence in the system, and the public appetite for expanded discretionary government spending is not high — even in Maryland. Meanwhile, the federal government needs to solve its own transportation funding woes or there won't be enough money available for a lot of big ticket projects anywhere.

But it's noteworthy that Mr. O'Malley raised money for transportation (modestly) in the 2007 tax package and suffered no adverse impact at the polls. Even his Republican opponent, former Gov. Robert L. Ehrlich Jr., expressed interest in spending more on transportation. Voters just want some assurance that transportation taxes and fees are spent on transportation.

What's frustrating to many in the business community is the need for a greater sense of urgency on this issue in the State House. Maryland's economic woes aren't improved by passive leadership or politicians who instinctively postpone tough choices. What the state needs is a greater investment in transportation and a governor and legislature willing to make it happen in order to bolster the economy — now.

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