Increase in gas tax seen as preferable to other possibilities AAA survey found narrow opposition

Ken Knopp hates to admit it, but he may not even notice if Maryland's tax on gasoline goes up a nickel as Gov. William Donald Schaefer has proposed.

Not that he wants any tax increase. The 28-year-old Baltimore man recently lost his job in a greenhouse and can scarcely afford much of anything.


But his point is, with the ups and downs of gasoline prices, who would know if the tax went up or not?

"Gas prices are creeping up slowly now," said Mr. Knopp, after pumping $4 worth of regular unleaded into his Ford Festiva at the St. Paul Amoco downtown. "You don't even realize it."


That notion is not lost on Will Dolch, 56, the service station's owner, who fully expects the state legislature to hit him at the pumps any day now.

"It's a few pennies a gallon, compared to a few hundred dollars on somebody's property tax bill," said Mr. Dolch, a Severna Park resident who has owned the station at St. Paul Street and Mount Royal Avenue for 20 years. "That's an important part of the public accepting it."

He may be right.

As the General Assembly begins deliberating tax and budget issues this session, Mr. Schaefer's proposed 5-cent increase in the fuel tax stands out as one of the least objectionable to both taxpayers and legislators.

A survey taken last fall by the Maryland division of the American Automobile Association found that despite the recession, club members opposed the gas tax increase by a relatively narrow 5-4 margin.

"People are more inclined to go for a gas tax this year than last," said William F. Zorzi Sr., a AAA lobbyist.

Even House Minority Leader Ellen R. Sauerbrey, one of the General Assembly's most staunch tax opponents, will admit to a preference for the fuel tax above all the other tax increases being considered in Annapolis this year.

"It's the only area of indecision in my mind when it comes to taxes," said Delegate Sauerbrey, R-Baltimore County. "It is clear that every so many years, a gas tax increase is inevitable."


Currently, the state taxes gasoline and diesel fuel at 18.5 cents per gallon, ranking it 26th among the 50 states and the District of Columbia. Raising it to 23.5 cents would lift it to a tie for third, according to a survey conducted last fall.

Each penny added to the gas tax would allow Maryland to raise another $25 million for its Transportation Trust Fund, so a nickel increase would generate about $125 million in transportation spending annually.

Without at least a 2-cent increase, transportation officials fear the state could lose out on more than $1.2 billion in federal highway and transit construction funds. The federal money, which was authorized last year as part of a six-year plan, requires states to produce a one-fifth matching share.

"If we want a program similar to what we've had in previous years, we need the full nickel," said Stephen G. Zentz, deputy transportation secretary.

Between 1986 and 1991, the state Transportation Department spent nearly $900 million annually on capital improvements to roads and transit systems. With no gas tax increase, spending would fall to about $545 million each year -- enough money to resurface roads, replace buses and rail cars periodically but not to expand highways or mass transit, officials said.

Last year, legislators rejected a proposed 5 percent sales tax on gasoline, but they agreed to raise motor vehicle fees during a special session over the summer when it appeared the state would lose federal funds.


Some lawmakers blamed last year's gas tax defeat on Transportation Secretary O. James Lighthizer for not specifically spelling out what projects a tax increase would finance. Others point to key opposition from House Speaker R. Clayton Mitchell Jr., D-Kent, who has yet to indicate any change of heart.

"I'd bet against a gas tax bill right now," said House Majority Leader D. Bruce Poole, D-Washington. "There's a lot of concern about what effect it might have on the economy. It's a matter of timing."

A significant strike against the legislation is a provision in the federal transportation act that allows states to defer paying their matching share for the next two years. That could give lawmakers an excuse to delay the gas tax increase until 1993 without jeopardizing any federal funds.

Many in Annapolis believe the fate of the gas tax will inevitably be tied to all the other tax increases and spending cuts being considered by the legislature to fix a projected $1.2 billion deficit in the 1993 budget.

While a gas tax increase does nothing to erase the deficit -- the Transportation Trust Fund is held by the state as a separate account -- it may help indirectly. There is talk among legislators of diverting money from the trust fund, perhaps to help pay for emergency medical services.

"The Transportation Trust Fund isn't broke. The general fund budget is," said Delegate James C. Rosapepe, D-Prince George's, who has proposed diverting transportation money into higher education.


In addition, the gas tax could provide crucial political leverage. Legislators in the gridlocked Washington suburbs want it most. Baltimore lawmakers may be willing to talk about a swap to keep city aid.

"It's going to be a package [of taxes] or nothing," said Sen. Barbara A. Hoffman, D-Baltimore. "I won't vote for a gas tax unless there's help for Baltimore City and the other poor subdivisions."

Still, the gas tax increase could mean more jobs in the state economy at a time when they are desperately needed. And if legislators approve it now, it probably will be forgotten by the 1994 state elections.

Top 10

Maryland would tie Illinois for third among states with the highest taxes*on fuel if the proposed 5-cent tax increase is approved. The state is ranked 26th now.

1. Rhode Island. . . . . . 26 cents per gallon


2. Nebraska. . . . . . . . 23.9

3. (tie) Illinois. . . . . 23.5

. .Maryland. . . . . . . . 23.5

5. Washington. . . . . . . 23

6. North Carolina. . . . . 22.55

7. Wisconsin . . . . . . . 22.2


8. (tie)Colorado . . . . . 22

.Connecticut . . . . . . 22

10. Pennsylvania . . . . . 21.45

*Rankings reflect sales tax, which some states also charge on gasoline sales.