O'Malley considering gas tax rise

Gov. Martin O'Malley signaled Monday that he might support an increase in Maryland's gasoline tax as part of a broader effort to create jobs through a massive construction program focused on transportation and schools.

In response to questions at a State House news conference, O'Malley said flatly that he favors raising more revenue — but didn't specify how. He would not rule out backing a blue-ribbon commission's recommendation that the state raise its 23.5-cents-per-gallon gas tax by 15 cents.

"I think all of us need to consider it. And I'm certainly considering it," he said.

The gas tax is not expected to come up in the special session taking place in Annapolis this week but could emerge as the hot-button issue of the regular session that begins in January. Raising the tax would require the approval of the General Assembly, where leaders Monday were noncommittal.

O'Malley tied the state's need for transportation dollars to a broader effort to put Marylanders to work. He said business leaders agree the state should work on a backlog of important capital projects. He said the challenge is to reach a consensus on how to pay for infrastructure improvements.

"There has been a lot of debate in these times of scarcity about less, less, less and cut, cut, cut. In order to create jobs, a modern economy requires modern investments. The question we need to ask each other is what are we willing to do to get people back to work more quickly," O'Malley said.

Some lawmakers were quick to answer that they're not willing to raise taxes at all.

"Families are hurting.. . . yet the governor keeps trying to pass increase after increase after increase. Enough's enough," said state Sen. E. J. Pipkin, an Eastern Shore Republican. "What planet is the governor living on?"

By law, taxes paid on the sale of gas in Maryland go to the state's Transportation Trust Fund, which is used to pay for road and mass transit projects. In practice, however, the fund has been tapped by governors in both parties to balance the state budget.

There is significant support in business circles for increased revenue for transportation — if the money is used for that.

Kathy Snyder, president of the Maryland Chamber of Commerce, said the organization has been on the record for eight years in favor of a 10-cent increase in the gas tax, which hasn't been raised in almost two decades.

"If you invest in your infrastructure, you will create jobs. That's what FDR did in the New Deal," she said.

But Snyder said the chamber has coupled that support with a demand that the General Assembly adopt strong protections against future use of transportation dollars for budget-balancing purposes.

Donald C. Fry, president of the Greater Baltimore Committee, agreed that the state needs a "firewall" around the transportation fund. "That's what the consumer and the motoring public expects, and that's how those funds should be treated," he said.

Fry rejected the argument that the economy is too weak to absorb a gas tax. "We've had 20 years of different economies, and nobody's found a good economy to raise the gas tax," he said.

Every state levies a statewide gas tax at some level — ranging from 7.5 cents in Georgia to 32.1 cents in Wisconsin. In the Mid-Atlantic, Maryland's current rate falls about in the middle. Virginia's rate is 17.5 cents, with an additional 2 percent sales tax on gas in Northern Virginia. The rate is 31.1 cents in Pennsylvania. A 15-cent increase would give Maryland the highest per-gallon rate in the country, although some states impose additional taxes and allow local governments to attach their own levies on gas.

Business leaders are far from unanimous in supporting an increase. Louis Campion, president of the Maryland Motor Truck Association, said even a 10-cent increase would raise the costs to a single-truck driver by $2,000 a year.

"Fifteen cents is an astronomical level," said Campion. He said that while his group supports an increase in the federal gas tax, it opposes raising the state tax because it would put Maryland truck operators at a competitive disadvantage.

Marty Schwartz, executive director of Vehicles for Change, said the low-income Marylanders who receive low-cost cars from his Halethorpe-based nonprofit would be especially hard hit.

"Fifteen cents is a lot — particularly for our families who live in a rural area who have to drive 35-40 miles each way to get to the job," he said. "That's a much bigger percentage of the day-to-day living cost than it is to people who are of upper- and middle-class families."

Any effort to raise transportation revenues could be complicated by the Maryland Transportation Authority's recent decision to adopt the largest package of toll increases in the state's history. While that money stays in the toll facility system and does not go into the Transportation Trust Fund, it could be difficult to explain to voters why the higher tolls can't be used for broader transportation purposes.

Unlike tolls, which can be raised by a non-elected board, taxes can be raised only by elected officials. And unlike tolls, which are paid by the users of specific bridges, tunnels and toll roads, the gas tax affects virtually every Marylander — either in the cost of driving or the cost of goods delivered by truck.

Senate President Thomas V. Mike Miller described the fight over toll increases as a "flea" compared with what he said would an "elephant"-sized fight on the gas tax.

"The toll is something that you have to do. You have to pay for the bonds. You can explain these tolls. People don't like them, but you can explain them," the Calvert County Democrat said. "In terms of the issue of raising the gas tax, no matter how hard you explain it ... people do not like the gas tax."

House Speaker Michael E. Busch also stressed the difficulty of building a consensus that includes local government leaders.

"You can't do anything unilaterally except try to build a case and see if there is support," the Annapolis Democrat said. "There is no revenue that is going to pass without the support that comes from local county governments that believe the need is great enough."

Two years ago, wary of raising the gas tax in an election year, the General Assembly voted to set up the blue-ribbon commission to in effect tell lawmakers what they already knew: that Maryland was not raising enough money to keep up with its transportation needs.

Last year, the commission issued an interim recommendation for an increase during this year's legislative session, but neither the governor nor legislative leaders was prepared to act.

The panel, which has found that the state needs about $800 million more in transportation revenue annually, is poised to recommend a 15-cent gas tax increase phased in over three years, higher vehicle registration fees and an increase in the cost of getting a vehicle emissions test. It is also expected to recommend strong protections — possibly in the form of a constitutional amendment — against diversions from the trust fund.

For many decades, the General Assembly raised the gas tax in small increments every few years — usually with some bipartisan support. But the rate hasn't been raised since 1992. While Gov. Robert L. Ehrlich Jr. and O'Malley both raised transportation revenue through other means, they shied away from increasing the politically touchy tax.

Baltimore Sun reporter John Fritze contributed to this article.