O'Malley offers locals a gas tax sweetener

Gov. Martin O'Malley is offering local governments a significant sweetener — more money for local road projects — as part of an effort to secure their support for his proposal to apply the state's 6 percent sales tax to gasoline.

The governor's bill, which was introduced Tuesday, would partially restore local transportation aid that was cut significantly during the recession. Specifically, it would roughly triple the current level of aid to counties, Baltimore city and smaller municipalities for local road projects.


O'Malley announced two weeks ago that he wants to raise $613 million a year for transportation by extending the sales tax to gasoline over three years – going to 2 percent in the first increment, then 4 percent and 6 percent. But before Tuesday, most the details of the legislation has not been released.

The bill includes a significantly simpler method of calculating the sales tax than many in the petroleum industry had predicted. As promised, the administration has also included what it calls a "braking mechanism." If gas prices spike, it would delay the phased-in increase.


At current prices, O'Malley's legislation would add 18 cents to the cost of a gallon of gas once fully implemented. The proposal has been considered a tough sell in Annapolis, and it was too early to gauge whether the newly released details would make it any more palatable to lawmakers or county officials.

As part of his sales effort, O'Malley pitched his plan Tuesday to the Greater Washington Board of Trade, a business group that has supported as gas tax increase. "I really need all of you, especially this session, to be in the halls of Annapolis," he said. "We need your vision and we need your voices."

In response to concerns raised by the business community and others, the bill includes provisions designed to make it more difficult to divert transportation revenues to unrelated programs in the future.

Since the beginning of the recession in 2008, Maryland transportation projects have been cut back severely, and much of the work that has continued was paid for with federal stimulus money that is now running out.

According to Maryland Transportation Secretary Beverley Swaim-Staley, spending in recent years has largely been limited to maintenance projects and the replacement or rehabilitation of aging bridges. The state has been able to do little in the way of expansion or congestion-relief, she said.

O'Malley's legislation would give 80 percent of the new revenues from the sales tax to the state and 20 percent to the counties. That isn't as generous as the 70-30 split that was routine before the recession, but it improves on the 90-10 division that the General Assembly recently adopted.

Local aid for transportation has dropped from a high water mark of $530 million in 2008 to $147 million in 2012, with some counties experiencing a drop of more than 90 percent in the funds they use to maintain their local roads.

Officials said the bill would increase the amount of local aid by about $85 million.


Winning support from local governments could be crucial to the bill's prospects. House Speaker Michael E. Busch has warned that unless key county executives weigh in and deliver votes from their delegations, the chances of the bill's passage are slim.

Michael Sanderson, executive director of the Maryland Association of Counties, said he was unsure whether the 80-20 split of new revenues would generate much support from county officials around the state. The counties want a return to the 70-30 formula, he said.

"For counties to be returned to 40 cents on the dollar leaves us somewhat better than the starvation diet we have today," he said.

Besides his gas plan, the governor is also proposing increases to the income taxes paid by about 20 percent of Maryland households and a rise in the so-called "flush tax" that goes toward water and sewer improvements – prompting grumbling among lawmakers that he is seeking too much at one time.