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Gas tax increase bad for business

Instead of blindly raising the cost of gasoline and diesel to Maryland consumers, now is the time to rethink how the more than $3 billion spent yearly on transportation needs in Maryland are funded. We should not allow government to squeeze more money out of Marylanders' pockets without a thorough review of how the funds are administered and utilized.

Motorist-paid gas taxes and vehicle fees are by far the largest source of transportation funding for both highways and mass transit. Maryland can no longer meet the needs of two costly major mass transit systems and adequately maintain and improve our highway system on the backs of motorists. The governor has proposed a sales tax on gas and diesel that would increase fuel prices around 18 cents per gallon, much higher than his own blue ribbon commission's recommendation of 15 cents per gallon. Instituting either of these proposals would take billions of dollars more out of Marylanders' pockets without any guarantee of how or where that money will be spent or any significant improvement in highway congestion or infrastructure. A look at Maryland's transportation spending history over the last 10 years bears this out, as commute times have increased, transit ridership has been flat and millions of dollars of transportation funds have been permanently diverted to the General Fund.

Increased spending by government on this level may create some jobs, but there is no doubt that more jobs will also be lost due to the significant impact on the cost of moving goods, commuting to work and driving children to school and activities. Families don't have unlimited funds, and in this economy, with extremely high gas prices already, increasing costs in one area will require cuts in another area of family spending. The net result will be to create more of a financial burden for families and small businesses in the midst of economic hard times. Maryland's poorest families will be hit the hardest with this very regressive proposal, as more of their income will be required just to meet daily needs.

Most of Maryland's approximately 2,300 gas stations are operated by small businesses and are located within close proximity to our neighboring states; these proposed increases will make our small businesses uncompetitive with their nearby, out-of-state competitors. Under the governor's sales tax proposal, Virginia, Delaware andWashington, D.C., will have at least a 20-cents-per-gallon advantage. Maryland retailers, on average, don't even make 20 cents per gallon and will be forced to pass all tax increases on to their customers. The net result will be the loss of Maryland jobs and tax revenues as consumers make their purchases out of state and reduce in-state spending.

Protecting the Transportation Trust Fund is absolutely essential to prevent our elected representatives from siphoning off funds for other purposes. Money collected as user fees and taxes are supposed to be dedicated to improving highways and commute times and for mass transit. They should be spent for those purposes and protected from the all too-common government raids.

A huge problem facing the Transportation Trust Fund is that billions of dollars of motorist-paid funds (gas tax, titling tax, vehicle registration and Motor Vehicle Administration fees) are being spent supporting two major mass transit systems, with 50 percent of TTF funds spent just on transit operating costs. Fares paid by transit riders cover only a fraction of the operating costs, yet mass transit systems handle less than 10 percent of local travel, while highways and bridges are choked with the remaining 90 percent. This is not sustainable. Out-of-control operating costs must be contained and other, broader-based funding sources identified to separate mass transit operating spending from highway spending.

There are alternatives to raising taxes. Virginia has leveraged about $1 billion into almost $5 billion for transportation infrastructure programs without raising its gas tax, and at present it has no plans to increase gas taxes. Virginia reevaluated on what and how they were spending transportation funds and implemented new and workable alternatives. Maryland should consider doing the same.

Now is not the time to squeeze more money out of Marylanders' pockets. Our state government needs to find other alternatives — including living within its means.

Pete Horrigan is president of the Mid-Atlantic Petroleum Distributors Association. His email is pete@mapda.com.

Copyright © 2014, The Baltimore Sun
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