Howard County

Gas tax called quick fix for state transportation funding

An increase in Maryland's gas tax could be a quick fix for the state's depleted transportation fund, key members of a blue-ribbon financing commission said Friday, while cautioning that the move — a tough sell on its own — would not solve long-term woes.

The discussion came during a 90-minute session with Gov. Martin O'Malley's Blue Ribbon Commission on Transportation Funding at Slayton House in Wilde Lake. The discussion, before more than 100 people, including a number of local legislators and officials, seemed aimed more at readying the public for decisions that may come next fall or winter. The commission has made some recommendations but won't complete its work until fall.

Del. Sheila E. Hixson, chairwoman of the House Ways and Means committee, and Kathy Snyder, president of the Maryland Chamber of Commerce, said they support a rise in the 23.5-cent-per-gallon tax. Hixson said such an increase "is the easiest tax to pass. People see it as a user fee. … We don't get the push-back on it."

But O'Malley said other lawmakers have proved wary of a gas tax increase.

"There is one tax the business community universally supports — the gas tax. There is one tax the general public universally opposes — the gas tax," he said. "As I met with delegates and senators one by one, they said … 'By golly, don't ask me to vote for a gas tax.'"

Maryland Republican Party Chairman Alex X. Mooney swiftly issued a scathing statement criticizing any discussion of raising taxes for transportation as "outrageous." He said, "Democrats in Annapolis have been stealing" from the transportation trust fund.

Governors of both parties have taken money from the fund during tough budget times. The transportation issue is likely to come up in October, however, when the General Assembly is expected to reconvene for a special session primarily intended to redraw congressional district boundaries based on the new census results.

The General Assembly created the transportation funding commission last year in response to persistent shortfalls in the state's transportation reserve. The gas tax has not increased since 1992, and the state has often looked to transportation revenues to fill broader budget gaps. The commission, composed of business, labor, community and political leaders, issued interim reports in January and February and is due to complete its work this fall.

At Friday's meeting, commission members discussed a variety of options such as applying the state's 6 percent state sales tax to gasoline, giving localities the ability to raise money for road repairs, and raising fees, fares and tolls. Though the group took no official position and O'Malley did not make an endorsement, talk of the gas tax was prominent in the discussion.

"The gas tax is a short-term fix," said Snyder. She said the business community favors "taking care of our infrastructure," but Snyder recommended waiting until the next General Assembly session in January to act because "a lot of mischief takes place" during special sessions.

O'Malley said he is interested in diversifying revenues flowing to transportation to reduce the dependence on the gas tax.

Noting that some counties are cutting property taxes even while complaining about state cuts to local highway maintenance funds, O'Malley suggested letting local governments raise money to pay for their own transportation projects.

But Howard County Executive Ken Ulman, a commission member and president of the Maryland Association of Counties, said only a few counties are cutting taxes this year, while more are raising them. Having local road taxes would lead to wide differences in road and transit facilities, he said.

The panel discussed a variety of options, some of which the commission has already recommended, including raising the gas tax while making it harder to remove money from the state's Transportation Trust Fund. Another idea was a "value capture system," which would collect money from developers based on the increase in value of their land for being near major highways or transit lines.

A 10-cent-per-gallon gas tax increase with built-in inflation adjustments coupled with a measure to prevent future raids on transportation funding was proposed by Sen. Robert J. Garagiola, a Montgomery County Democrat who is also a commission member. His bill failed to win approval during the recent General Assembly session despite support from the leaders of Baltimore City and Prince George's, Montgomery and Howard counties. The legislators did approve doubling vehicle titling and vanity license plates fees, which is expected to raise $50 million a year.

If passed, Garagiola's gas tax increase would have raised about $385 million. Nearly $1 billion has been taken from the fund to fill general state budget holes since 2003.Since O'Malley became governor, the state has used $675 million from the fund, according to the blue ribbon commission's February report.

Despite the need, many legislators are reluctant to raise the gas tax while retail prices are so high, while others representing rural and suburban areas without mass transit are leery of taxing their residents for those programs in the Baltimore and Washington metro areas.

The commission's February report called for raising an added $600 million a year and using that new revenue to leverage another $200 million annually in bond borrowing.