Under the governor's plan, the gasoline sales tax would go from 2 percent to 4 percent to 6 percent over three years. O'Malley spokesman Rick Abbruzzese said the proposal would also include a capping mechanism to limit the amount of a tax increase if prices spike. Abbruzzese said the administration is still working out details of how that cap would work.
Abbruzzese said the sales tax would be based on an average retail price, but applied at the wholesale level and thus would be built into the price at the pump — much as the current per-gallon tax is. Gasoline is now exempt from the sales tax.
That wouldn't be the highest in the country, but it would be too high, as far as Michael Stachowski is concerned.
Stachowski, who commutes to Baltimore every day from his home in York, Pa., said gas in Maryland is about 15 cents a gallon cheaper than in his home state. The governor's proposal could erase that savings.
"It will be too expensive for anyone to get to work," Stachowski said. "I try to pinch every penny in my pocket that I can, and the government keeps taking the pennies out of my pocket."
One frequently heard objection to proposed gas tax increases is that in the past, money raised for transportation projects has been diverted to balance the state budget. The GBC's Fry said it is critical that any new transportation revenue be put in a legal "lockbox" so that can't happen again.
The governor indicated Monday that he would support a proposal to protect the state's transportation fund from future transfers to balance the budget. He did not say whether that so-called firewall should take the form of a statute or the constitutional amendment that some lawmakers believe is needed.
A blue-ribbon commission on transportation funding made adoption of such a protection its primary recommendation in a report that called on the state to raise an additional $875 million a year to address a backlog in transportation projects.
The panel estimated last year that applying the 6 percent sales tax to gasoline would raise $613 million for transportation — roughly three-quarters of its goal.
Abbruzzese said the governor believes that amount is sufficient for now. He said O'Malley does not plan to propose any of the other major revenue-raisers suggested by the commission, such as an increase in the vehicle registration fee.
"This is somewhere in the middle, but it's what he believes is a reasonable, balanced approach," he said. Fry said business leaders would be satisfied with that target.
The commission had recommended a 15-cent increase in the traditional gas tax — phased in over three years, coupled with increases in the tag fee and titling tax.
Transportation advocates have long contended that the traditional gas tax has become insufficient as vehicle mileage has increased.
"A traditional gas tax, I think we all understand, is a declining revenue source," Abbruzzese said.
In effect, the governor's proposal calls for taxing the same purchase twice in different ways. Maryland would not be alone in doing so. At least nine states apply sales taxes on top of a basic cents-per-gallon tax, according to AAA. Several of those, including California and Michigan, have pegged that rate at 6 percent.
While business leaders have been contending for years that an infusion of transportation revenue is overdue, the issue still doesn't have the urgency of the governor's proposals for balancing the budget.
Busch said meeting that goal — a constitutional requirement — will be a higher priority for the Assembly.
"The first thing they have to do is pass the budget, and then we'll work on other initiatives," Busch said.
Baltimore Sun reporters Annie Linskey and Peter Hermann contributed to this article.
O'Malley wants to put sales tax on gas
Proposal could add 18 cents a gallon over 3 years
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