State won't raise gas tax; With budget surplus, Glendening rules out boost for rest of term; 'In very, very good shape'; $1.3 billion increase proposed in spending for transportation


With Maryland enjoying a surging budget surplus, Gov. Parris N. Glendening ruled out yesterday any increase in the state's gasoline tax for the remaining three years of his term.

Glendening said an increase would be unnecessary with tax collections far exceeding projections and the state expecting to collect hundreds of millions of dollars this year from the national settlement with tobacco companies.

"The bottom line is that we're in very, very good shape, extraordinarily so," Glendening told reporters yesterday. "It also means we clearly do not need a gasoline tax [increase]."

He added, however, that he would oppose any major tax reduction in the coming legislative session, saying the state has too many unmet needs.

While rejecting a tax increase, Glendening said the state can afford to spend an additional $1.3 billion on transportation projects over six years -- bringing the state's budget for such projects during that period to $7.3 billion.

Glendening's announcement was endorsed by legislative leaders, who saw little political will to increase the state's 23.5 cents-per-gallon tax on gasoline despite pressing transportation needs.

"Common sense dictates there's no need for a gas tax increase, with state coffers overflowing," said Senate President Thomas V. Mike Miller, a Prince George's Democrat.

"I think the governor is just stating the obvious," said Sen. Martin G. Madden of Howard County, the Senate Republican leader. "The chance of the gasoline tax increase passing had gone very close to zero."

Advocates for increased transportation spending said the governor's stance would only postpone difficult decisions about the state's transportation woes.

"We had hoped that this year, with three years before the election, this would be a good time to take a good hard whack at solving the problem," said Robert E. Latham, executive director of a coalition of highway contractors and others interested in improving Maryland's road network.

"I think it's going to be a major problem for the next governor and the next legislature," Latham added.

Glendening resisted efforts to increase the gasoline tax during his first term but had indicated that he would support one this year.

Instead, he pushed for a cigarette tax increase and appointed a high-powered task force to study the state's transportation needs and consider raising the gas tax.

That panel began meeting two months ago and has made no recommendation. Glendening said yesterday that he hopes the group will continue to explore long-term transportation issues.

Instead of resorting to a gasoline tax increase, Glendening said, the state can find other ways to increase transportation spending by $1.3 billion over six years.

He said the Department of Transportation will borrow nearly a half-billion dollars to cover much of the increase, borrowing that administration officials said would not push the state over its self-imposed debt limits.

Federal aid is also expected to grow by $485 million over that time. And state transportation revenues -- including gas tax collections and vehicle titling fees -- are projected to be $165 million more than expected.

Glendening said he will propose to the legislature that the state use $200 million from its general funds over the next three years for Maryland's share of the $1.9 billion cost of replacing the Woodrow Wilson Bridge on Interstate 95 south of Washington.

Such a move would mark the first time in memory that the state has paid for a road project with general funds rather than transportation-related revenue.

The governor said it makes fiscal sense to use some of the state's budget surplus for the Wilson Bridge project.

"It is very clear to us that we'll be able to pay cash for this project," Glendening said.

The governor announced his tax and spending plans one day after killing the Intercounty Connector, a long-debated billion-dollar highway proposed to connect Montgomery and Prince George's counties.

Glendening's transportation plan allows the state to add a variety of new projects to its six-year plan -- roughly a quarter of them in congested Montgomery County.

The governor said Wednesday that, while he would not build the Intercounty Connector, he would commit $200 million to road improvements in Montgomery County.

Glendening released a list of new spending totaling $900 million and said an additional $200 million will be allocated later. This includes $95 million to repair deteriorating facilities at the port of Baltimore and $6 million to finish planning for a proposed light rail line between Bethesda and Silver Spring.

The governor also proposes adding $40 million for roadside sound barriers, $100 million in extra maintenance funds for state roads and bridges, and $10 million to start work on a new garage at Baltimore-Washington International Airport.

The state closed out the fiscal year June 30 with an unexpectedly high budget surplus of $319 million, money that will be available to the governor and General Assembly to appropriate during the legislative session beginning in January. Glendening said he expects the surplus to grow by $100 million by December.

Over the 12 months ending in June, the state collected $593 million more than anticipated -- a sizable boost to Maryland's General Fund, which this year totals about $9 billion. The state also has $695 million set aside to cover fiscal emergencies.

The state is also collecting increased revenue from the 30 cents-a-pack increase in the cigarette tax, and expects to receive $290 million in coming months from the national tobacco settlement -- an extremely rosy fiscal situation that made any talk of increasing the gasoline tax politically risky.

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