Summer Sale Extended! Get unlimited digital access for 13 weeks for $13.
News Opinion Op-Eds

The cost of transportation

When Gov. Martin O'Malley gives his annual State of the State address Wednesday, he will officially unveil his plan to apply a 6 percent sales tax to gasoline. The public's mood about gas prices being what it is, the governor probably shouldn't expect huge applause — despite the fact he deserves it.

Maryland hasn't raised the gasoline tax since William Donald Schaefer was governor two decades ago, and the current rate — applied as a 23.5-cent charge per gallon — has been rendered insufficient by inflation. The state faces tens of billions of dollars of unmet highway, bridge, transit, port and other transportation needs, but its Transportation Trust Fund has little more than enough for basic maintenance.

What's been done in the past to avoid raising the gas tax — the usual motley assortment of fees, fares and transportation-related taxes — is no longer good enough. If Maryland continues to embrace a 1992 tax rate, it will have to settle for crumbling 1992-era infrastructure.

Polls show a majority of Maryland residents oppose a gas tax increase. Twenty years ago, the public was largely indifferent about the tax, which at least has the benefit of being a "user's fee" (the more you drive, the more you pay). Rising gasoline prices have obviously caused people to become much more sensitive about prices at the pump.

But the tax — even if Mr. O'Malley convinces lawmakers to approve his increase — isn't what's driving fuel costs. What the governor is proposing would be collected at the wholesale level and would not apply to existing state and federal excise taxes — that is, motorists would not be paying a tax on a tax. Mr. O'Malley would also phase in the tax over several years — and plans to offer a "circuit breaker" to delay any of those incremental steps if average gasoline prices rise too steeply (perhaps 15 percent) during the year.

Thus, someone paying a theoretical $3.52 per gallon at the pump would see a first-year 2 percent tax applied to roughly $3.10 ($3.52 minus the state's 23.5-cent and federal government's 18.4-cent tax) or about 6 cents per gallon. Taken together, that's about 48 cents per gallon, or less than 14 percent of the cost of a gallon of gasoline. Even when fully implemented, the total cost of fuel taxes would be around 60 cents, or 17 percent of the price. In 1992, state and federal taxes represented closer to 20 percent of the price of gasoline.

What would motorists get in return? When the full gas tax increase is realized, about $613 million annually to spend on badly-needed transportation infrastructure. It means reduced congestion, upgraded mass transit service, safer roads and bridges and a more robust state economy (not to mention thousands of construction-related jobs).

Household budgets may be hurting, but many will be suffering a whole lot less if Maryland businesses are thriving. Small wonder that the gas tax increase is a top priority for the Greater Baltimore Committee and many other business-related advocacy groups.

Critics will claim that such a tax increase wouldn't be necessary if Mr. O'Malley (and his predecessors) hadn't drawn money out of transportation projects to balance the general fund. But that's not true. Those transfers have been largely paid back. Only local transportation aid (also known as highway user revenue) that is not used for state capital projects was reduced permanently — the same fate forced upon all other forms of local aid during the economic downturn.

Could the gas tax be postponed? Of course, but the benefits to the economy would be postponed as well. The problem Maryland faces is that it's been delayed too long already. If the last gasoline tax increase had simply been required to keep pace with inflation, Maryland would have collected $4.4 billion more over the past two decades, and Mr. O'Malley's plan would not be needed.

As the governor's own blue-ribbon commission on transportation finances pointed out last year, Maryland's transportation network is the lifeblood of the state, yet its finances are on the verge of collapse. Merely funding the one top priority of each political subdivision would require $12 billion more in transportation spending.

Convincing lawmakers to approve the tax won't be easy. Republicans and most rural lawmakers are likely to oppose it. Even support from the key jurisdictions of Baltimore City and Montgomery and Prince George's counties is far from automatic. Business leaders will have to stand up and voice their approval. So will many city and county elected leaders.

But at least nobody can accuse Mr. O'Malley of showing political cowardice. His plan is actually more forward-thinking than the commission's proposed 15-cent gas tax hike. By applying a sales tax on a percentage basis, revenues will now rise with inflation (although higher fuel efficiency and reduced demand for gas could offset the effect).

Lawmakers will have to ask themselves, if now is not the time to raise the gas tax, when would it be? When the 2014 election is drawing near? When prices at the pump rise further? When crucial economic development projects like the Red Line are shelved for lack of funds?

Mr. O'Malley seems willing to be flexible. If legislators want transportation funds put in a lock box (requiring a General Assembly super-majority to approve any future transfers), aides say he's ready to sign on. We think that's a bad idea that carries unintended consequences, but at least it would send the message that transportation is a high priority and not a piggy bank.

The fact is, it's time to pay the piper. Higher prices at the pump may be unwanted, but a deteriorating transportation system is costly, too. Not only in mere congestion but also in lost economic opportunity. Raising the gas tax is the right thing to do today if Maryland is to preserve its quality of life tomorrow and for the next generation.

Copyright © 2015, The Baltimore Sun
Related Content
  • The offal truth

    The offal truth

    On Friday afternoon, my neighbor reported a dead deer in front of his house to Baltimore County animal control. On Saturday night, the deer having not been picked up, I contacted them again. By Monday morning, the deer, being completely disgusting and mostly eaten by flies, vultures and foxes,...

  • No major tax rollbacks?

    No major tax rollbacks?

    Senate President Thomas V. Mike Miller told some reporters this week what most State House observers have long suspected — we should not expect some sweeping reduction in taxes during the upcoming legislative session. He also produced a spirited defense of the tax increases approved during Gov....

  • Tax breaks are divisive

    Tax breaks are divisive

    The commentary opposing the proposed tax breaks for corporate donations that help pay for private school tuition by Sara Love of the ACLU of Maryland strikes me as another example of how our new governor acts to ensure his re-election in four years by picking "winners" with his politically-motivated...

  • Rodricks is wrong: Md. tax system is progressive and fair

    Rodricks is wrong: Md. tax system is progressive and fair

    As usual Dan Rodricks gets it wrong. The Maryland tax structure is both progressive and fair ("Beyond race, building a movement for economic fairness," March 30). Let's look at two families A and B. Family A earns $60,000 and B $300,000. For 2014, excluding exemptions and deductions, A pays $2,800...

  • Md. can't keep robbing Peter to pay Paul

    Md. can't keep robbing Peter to pay Paul

    While I applaud the hard work on the state budget put in by House Appropriations Committee Chair Del. Maggie McIntosh and others, I am a little alarmed at their consistent kowtowing to the unions and their annual demands for increased funds despite reports of irresponsible spending.

  • Congress must create a level playing field for bricks-and-mortar businesses and online vendors

    Congress must create a level playing field for bricks-and-mortar businesses and online vendors

    During the next few weeks Congress will have the opportunity to pass e-fairness legislation, which will update our sales tax system and restore fairness to small businesses in our community.

  • Why isn't there enough money to sustain the governor's promised tax cuts?

    Why isn't there enough money to sustain the governor's promised tax cuts?

    Regarding your recent editorial criticizing Gov. Larry Hogan for submitting cuts in education funding, I am among the majority of Marylanders who favored Mr. Hogan in the last election because we supported his proposed budget cuts and call for fiscal responsibility and accountability ("Hogan, Busch...

  • Md. Democrats offer ruinous agenda

    Md. Democrats offer ruinous agenda

    I wonder where the rulers in the Maryland Senate and House of Delegates are going to get the money to fund what Senate President Thomas V. Mike Miller described as the Democratic agenda ("Senate panel rewrites Hogan's charter school law," March 26)? I guess they will do what they do every year...