THE public is largely unaware that the state's transportation trust fund, which provides virtually all of the funds for Maryland's transportation programs, is falling woefully short of meeting the pressing needs of our mass-transit and highway systems as well as our port and airport.
I am convinced that the situation will reach crisis proportions within the next two years unless the General Assembly comes up with a solution by next year.
However, for Marylanders to support a tax increase to cover the shortfall, they must first understand state revenue needs.
Our state government depends on three distinct budget sources. The general fund, which relies primarily on the income tax, is the vehicle that provides aid to local schools and community colleges, health services, higher education and various institutions.
The capital budget, like a homeowner's mortgage, allows the state to build schools and other buildings by selling bonds. The transportation trust fund, which is generated primarily by the gas tax, funds the state's transportation system.
To many Marylanders, it seems contradictory to discuss a transportation shortfall during a year in which the economy is robust, and the state general fund is running a budget surplus. But the much-publicized surplus will disappear over the next several years as the 10-percent income-tax cut is gradually phased in.
Meanwhile, transportation costs are on the rise. More than $400 million in additional revenues are needed in the next several years just to maintain the current transportation program. Without a major change in the trust fund, Maryland's transportation needs will go unmet.
Building a bridge
In addition, there are large transportation projects that are important to the state economy and vital to certain local jurisdictions. These unmet needs include the Woodrow Wilson Bridge, completion of a planned north/south interstate in Western Maryland, mass-transit improvements, some version of an Inter-County Connector for the Washington suburbs, and improvements to the existing interstate corridors.
Also, we need improvements in mass transit and highways for the preservation and growth of the Montgomery County high-tech corridor to help keep and attract industry.
Likewise, a major investment in railway improvements must be made to help attract Maersk Inc. and Sea-Land Service Inc., two of the world's dominant shipping lines, which recently tapped Baltimore as a finalist in their search for a place to build one of the largest cargo terminals in the country.
The present formula for transportation funding is clearly out of step with our goal of maintaining infrastructure and enhancing Maryland's economic competitiveness. The idea of continuing to fund transportation solely on the backs of users through gas and excise taxes is both inadequate and inequitable.
But simply raising the gas tax to meet our transportation needs will cause the price of gas to become uncompetitive. The proposed 5-cents-per-gallon increase raises a scant $140 million, not nearly enough to fund our unmet needs, which could exceed $1 billion.
Not only would the state fail to raise adequate revenue, but Maryland's gas tax rate would soar to the third-highest in the country and higher than our neighboring states.
Every other state with a mass transit system has created a dedicated funding source for mass transit -- usually a sales tax.
Maryland's sales tax is 5 percent, less than all of our neighboring states, except Virginia and Delaware (which has no sales tax), and Maryland's ranks 19th in the country.
By raising the sales tax by one penny, we would generate some $520 million annually. I believe this is a permanent solution to our transportation shortfall.
For those who argue that additional revenue should be raised by the users of mass transit, almost 85 percent of the sales tax is generated in metropolitan areas where mass transit exists. Rural Maryland contributes 16 percent of all sales tax.
The proposed gas-tax increase being considered by the General Assembly is premature and should be taken off the table for the moment. Instead, I strongly urge the immediate creation of a task force of representatives from the legislature, the governor, private industry and the general public to study ways to raise revenue to help provide our transportation needs. I've asked the Ways and Means Committee to draft a bill creating the group.
The task force would spend the next 10 months traveling the state to analyze and create an inventory of our unmet transportation needs. The group would report back to the legislature by Dec. 1. Only then can we move to correct this serious problem.
Casper R. Taylor is speaker of the House of Delegates.
Pub Date: 1/22/99