O'Malley considering gas tax rise

Governor supports capital spending to create jobs

October 17, 2011|By Michael Dresser and Annie Linskey, The Baltimore Sun

Gov. Martin O'Malley signaled Monday that he might support an increase in Maryland's gasoline tax as part of a broader effort to create jobs through a massive construction program focused on transportation and schools.

In response to questions at a State House news conference, O'Malley said flatly that he favors raising more revenue — but didn't specify how. He would not rule out backing a blue-ribbon commission's recommendation that the state raise its 23.5-cents-per-gallon gas tax by 15 cents.

"I think all of us need to consider it. And I'm certainly considering it," he said.

The gas tax is not expected to come up in the special session taking place in Annapolis this week but could emerge as the hot-button issue of the regular session that begins in January. Raising the tax would require the approval of the General Assembly, where leaders Monday were noncommittal.

O'Malley tied the state's need for transportation dollars to a broader effort to put Marylanders to work. He said business leaders agree the state should work on a backlog of important capital projects. He said the challenge is to reach a consensus on how to pay for infrastructure improvements.

"There has been a lot of debate in these times of scarcity about less, less, less and cut, cut, cut. In order to create jobs, a modern economy requires modern investments. The question we need to ask each other is what are we willing to do to get people back to work more quickly," O'Malley said.

Some lawmakers were quick to answer that they're not willing to raise taxes at all.

"Families are hurting.. . . yet the governor keeps trying to pass increase after increase after increase. Enough's enough," said state Sen. E. J. Pipkin, an Eastern Shore Republican. "What planet is the governor living on?"

By law, taxes paid on the sale of gas in Maryland go to the state's Transportation Trust Fund, which is used to pay for road and mass transit projects. In practice, however, the fund has been tapped by governors in both parties to balance the state budget.

There is significant support in business circles for increased revenue for transportation — if the money is used for that.

Kathy Snyder, president of the Maryland Chamber of Commerce, said the organization has been on the record for eight years in favor of a 10-cent increase in the gas tax, which hasn't been raised in almost two decades.

"If you invest in your infrastructure, you will create jobs. That's what FDR did in the New Deal," she said.

But Snyder said the chamber has coupled that support with a demand that the General Assembly adopt strong protections against future use of transportation dollars for budget-balancing purposes.

Donald C. Fry, president of the Greater Baltimore Committee, agreed that the state needs a "firewall" around the transportation fund. "That's what the consumer and the motoring public expects, and that's how those funds should be treated," he said.

Fry rejected the argument that the economy is too weak to absorb a gas tax. "We've had 20 years of different economies, and nobody's found a good economy to raise the gas tax," he said.

Every state levies a statewide gas tax at some level — ranging from 7.5 cents in Georgia to 32.1 cents in Wisconsin. In the Mid-Atlantic, Maryland's current rate falls about in the middle. Virginia's rate is 17.5 cents, with an additional 2 percent sales tax on gas in Northern Virginia. The rate is 31.1 cents in Pennsylvania. A 15-cent increase would give Maryland the highest per-gallon rate in the country, although some states impose additional taxes and allow local governments to attach their own levies on gas.

Business leaders are far from unanimous in supporting an increase. Louis Campion, president of the Maryland Motor Truck Association, said even a 10-cent increase would raise the costs to a single-truck driver by $2,000 a year.

"Fifteen cents is an astronomical level," said Campion. He said that while his group supports an increase in the federal gas tax, it opposes raising the state tax because it would put Maryland truck operators at a competitive disadvantage.

Marty Schwartz, executive director of Vehicles for Change, said the low-income Marylanders who receive low-cost cars from his Halethorpe-based nonprofit would be especially hard hit.

"Fifteen cents is a lot — particularly for our families who live in a rural area who have to drive 35-40 miles each way to get to the job," he said. "That's a much bigger percentage of the day-to-day living cost than it is to people who are of upper- and middle-class families."

Any effort to raise transportation revenues could be complicated by the Maryland Transportation Authority's recent decision to adopt the largest package of toll increases in the state's history. While that money stays in the toll facility system and does not go into the Transportation Trust Fund, it could be difficult to explain to voters why the higher tolls can't be used for broader transportation purposes.

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