O’Malley proposes new tax on gas to shore up Maryland’s transportation fund


Gov. Martin O’Malley, center, announces a transportation funding measure in Annapolis, Md., on Monday, March 4, 2013, with House Speaker Michael Busch, left, and Senate President Thomas V. Mike Miller Jr. (Brian Witte/AP)

Maryland Gov. Martin O’Malley proposed a sweeping transportation plan Monday that relies in part on a new tax on gas to shore up a fund projected to run out of money for road and rail projects.

The proposal — expected to yield $3.4 billion over the next five years — was endorsed by the two Democratic leaders of the General Assembly, boosting its prospects in a legislature that has resisted efforts to raise taxes on gas since 1992.

O’Malley’s bill promises to jump-start a stalled debate in Maryland that has taken on greater urgency after Virginia passed a plan last month to put about $3.5 billion in additional revenue into transportation in the coming five years.

The Maryland plan mirrors that of Virginia in some respects, including the introduction of a sales tax on gasoline at the wholesale level intended to keep pace with inflation and economic growth.

“We cannot afford the cost of inaction,” O’Malley (D) said. “This plan will help us generate the revenue we need to ease some of the worst traffic congestion in the nation while building and repairing our transportation infrastructure.”

O’Malley’s plan would trim 5 cents off the state’s existing 23.5-cents-per-gallon gas tax. The lost revenue would be more than offset, however, by a new 4 percent sales tax on the wholesale level, phased in over two years. The flat gas tax also would rise in future years to reflect inflation.

Motorists could expect to pay about 2 cents more per gallon of gas starting in July and an additional 7 cents more a year after that, O’Malley administration officials said.

There has been broad consensus among Democrats who dominate the General Assembly that something needs to be done to replenish the state’s transportation fund but little political will in recent years to take action.

“I don’t think it’s going to be an easy task to pass this, but it’s not insurmountable,” said Senate Majority Leader Robert J. Garagiola (D-Montgomery).

House Minority Leader Anthony J. O’Donnell (R-Calvert) said the fact that some Virginia Republicans supported a similar measure in Richmond would have no bearing in Maryland.

“Virginians haven’t put up with massive tax increases like Marylanders have from this governor,” O’Donnell said. “People can’t afford their gas taxes right now.. . . Any increase is going to hurt the economy and hurt people who are barely making ends meet.”

Maryland has no money budgeted for new highway construction after 2017. And no funding has been identified to pay the state’s share of long-planned rail projects.

Without new funding this legislative session, the state Department of Transportation plans to halt design work on the Purple Line, which would connect Bethesda and New Carrollton, as well as on a dedicated express bus route in the Interstate 270 corridor.

The transportation funding plan adds to what has become an ambitious 90-day legislative session for O’Malley, who is also pushing measures on gun control, repealing the death penalty and wind power.

The transportation proposal — introduced with more than half the session gone — is not likely to be popular with the public. In a Washington Post poll released last week, barely a quarter of Marylanders voiced support for any transportation-related proposals put forward this session that involve taxes.

O’Malley decried “the worst traffic congestion in the country” in his State of the State address in late January but did not endorse a specific plan to address it. Legislation he offered last year, which would have applied a 6 percent sales tax to gas, went nowhere.

During this session, Senate President Thomas V. Mike Miller Jr. (D-Calvert) has been the most vocal proponent of moving forward, crafting his own plan and publicly trying to goad O’Malley to take a leadership role.

Among other provisions, the Miller bill would give taxing power to regional authorities to raise money for major rail lines and allow counties to tack up to 5 cents onto the state’s gas tax for local projects.

The O’Malley plan does not include the local components but instead calls for a study of those options.

O’Malley’s bill also would steer revenue generated from taxing Internet sales to transportation, as does the plan put forward in Virginia by Gov. Robert F. McDonnell (R). Both states are waiting for Congress to allow such collections to commence.

If there is no action taken on the federal level by 2015, O’Malley’s plan would bump up the wholesale sales tax on gas from 4 percent to 6 percent.

The plan passed in Virginia replaces the commonwealth’s 17.5-cents-per-gallon tax on gasoline — which had not been changed since 1987 — with a new 3.5 percent wholesale tax on motor fuels.

The Virginia plan includes several provisions that Maryland’s proposal does not. The Virginia legislation, for example, also calls for boosting the general sales tax on non-food merchandise and devoting a larger slice of existing state revenue to transportation instead of other services.

Aides to O’Malley noted that his plan does not include a new $100 registration fee on alternative fuel vehicles, one of the controversial aspects of the McDonnell plan.

Maryland House Speaker Michael E. Busch (D-Anne Arundel) said that he, Miller and O’Malley had spent weeks trying to craft a consensus plan that, as he put it, “balances the impact on the consumer with the future infrastructure needs of the state.”

John Wagner has covered Maryland government and politics for The Post since 2004.
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