Maryland tax increases: What's in it for you?

Our view: Less traffic congestion, a cleaner Chesapeake Bay and thousands of new jobs for Maryland make a compelling case for the latest tax proposals

October 30, 2011

It's been a tough week for Marylanders on a tight budget (and presumably that's most of us). Just as a blue-ribbon commission recommended a 15-cent gasoline tax increase and other transportation-related fees, another called for a tripling of the flush tax to $90.

Nationwide, distrust of government is running high just like the unemployment rate. Wages are stagnant, real estate values show little sign of recovering, and economic growth was a modest 2.5 percent in the most recent quarter. So why are elected officials in Annapolis seriously considering asking taxpayers to pay more?

Here's one possibility: Because it might actually be in the economic interests of the taxpayers. Those who believe government can do no right, that every dollar spent by Annapolis is wasted, will never, ever entertain that thought, of course, but there are good arguments for both these possible tax increases that deserve consideration.

On the transportation front, the situation is fairly cut and dry. Without continuing investment in roads, bridges, airports, ports and public transportation, the state would become gridlocked and its economy moribund. Right now, Maryland has billions of dollars in unmet transportation needs, and Baltimore-Washington commuters have one of the worst (if not the worst) commuting times in the nation. Traffic congestion is costly — to individuals and to businesses — and the only cure is to improve the infrastructure, and that costs money.

There are two basic counter-arguments to this, and they've already been raised by opponents. First, that the economy is so bad right now that any tax increase ought to be postponed until times are better. The other is that a transportation tax increase, particularly a gas tax increase, is undeserved because governors and lawmakers have so frequently "robbed" the Transportation Trust Fund to pay for general fund needs in past years.

As for the first criticism, the timing of a tax increase is actually fortuitous. By raising the revenue now, the state can move forward with a more aggressive capital campaign that could employ thousands of Marylanders and boost what has been a stagnant rate of job growth. The construction industry has been hit particularly hard by the recession, so the labor is available and costs would be favorable.

As for the robbery claim, that's a common misconception. While it's true that much has been taken out of the trust fund to help balance the budget (and thus avoid other forms of tax increases), less often observed is that the legislature has also occasionally supplemented the trust fund with general fund revenue as a form of repayment or to enable certain projects to be built.

A recent analysis performed by the Department of Legislative Services found that since 1984, $574.1 million has been taken out of the Transportation Trust Fund and used for general fund purposes. During that time, the state has paid back $279.4 million and adopted legislation that will transfer another $336.9 million from the general fund to the transportation fund in the coming years, for a total of $616.3 million.

That's right. The trust fund will actually be ahead overall by more than $40 million. If that's robbery, most of us would like to be victims.

There are equally compelling arguments for raising the flush tax. The goal of the $30 annual fee — first proposed by Republican Gov. Robert L. Ehrlich Jr. — is to upgrade sewage treatment plants, a major source of pollution into the Chesapeake Bay.

The bay's health remains fragile, and a new federally-guided effort to improve water quality, commonly called the "pollution diet," requires states in the watershed, Maryland included, to do substantially more. The higher fee will give the state one of the tools necessary to meet the U.S. Environmental Protection Agency's cleanup goals.

And like the transportation taxes, the flush tax will boost employment almost immediately. It's the kind of jobs bill that polls show the public supports. These aren't tax dollars frittered away on bureaucrats or extravagances but bricks and mortar, asphalt and steel, infrastructure that will support development and growth for years to come.

Make no mistake, we don't relish the prospect of paying more money to the government in these challenging times. We suspect others will feel strongly about that. Already, Senate President Thomas V. Mike Miller, a reliable gas tax supporter in the past, has suggested that a 15-cent increase may be too much for his chamber to swallow.

But for the average driver, a 15-cent tax increase translates into $77.55 per year when full implemented in three years. The flush tax would add $60 to a total of $90 in 2015. Together, that's $137.55 or slightly less than 38 cents per day in three years. Even if the legislature adopted the other fees endorsed by the transportation commission, the tab would grow to a bit less than 75 cents a day, on average, for Maryland households.

What might taxpayers receive in return? Some major transportation projects including Baltimore's Red Line (a potentially transformative project for this city), reduced congestion, jobs and economic development and a substantially cleaner Chesapeake Bay — with all the economic benefits to tourism, fisheries, real estate values, etc., that go with it.

One can debate the details of both proposals (extending the 6 percent sales tax to gasoline might make more sense than raising the wholesale tax to the nation's highest rate, for instance), but there's clearly much benefit for the money. If advocates can make their case and demonstrate exactly when and where the money would be spent, we suspect the public will support such worthwhile investment even if it means paying 75 cents a day for it.

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