WHEN THE STATE legislatures of Maryland and Virginia convene next month, a politically unpleasant but critically important issue facing the lawmakers will be taxes: how to cover costs of transportation improvements in general and of Metro in particular. Proposals will differ in each state, in spite of constant unrealistic urgings by the District of Columbia government that there be a uniform regionwide tax for Metro. Neither the fiscal fitness nor the political mood of the two states is ripe for that solution. Instead, there are separate approaches that could benefit people across each of the states while satisfying the federal government's requirement of a "stable and reliable source of revenue" to cover Metro obligations. Here are some of the choices:
The federal government's end of the bargain may come before the U.S. Senate today. It is a bill to provide matching funds for the transit system and thereby obligate the local governments to designate and commit their own specific and regular sources of revenue. The House already has passed a laboriously, negotiated version of this legislation. But the measure coming to the Senate floor lacks a provision for any operating funds for any operating funds for Metro. This authority is an important part of the financial package that was put together by the administration, the local governments and the House -- and senators who favor the soundest possible financing arrangements should vote to add the House-passed operating-fund authorization to their version before approving a bill.
In Annapolis, a curious situation opens the way for constructive action: the state has come up with a surplus of revenues from sales and incomes taxes -- which do not pay for transportation projects. This money could be rebated to taxpayers as a trade-off for a gasoline-tax increase for transportation. The gas-tax money would be used to repair the state's deteriorating highways as well as to support mass transit programs in the Baltimore and Washington areas. Under consideration is a change in the gasoline tax, now 9 cents a gallon, that would mean a minimum increase next year of a penny a gallon and continuing increases or decreases after that, based on the rate of inflation.
Also, transit districts throughout Maryland, such as Montgomery and Prince George's counties, would be permitted to impose up to a 1 percent general sales tax for transportation purposes; and the state would assume 75 percent of operating costs of transit systems in the Maryland suburbs of Washington and in Baltimore. This arrangement is fair, for it would equalize state payments that currently are covering 100 percent of Baltimore's annual operating deficit but only 40 percent of the Montgomery-Prince George's share. (As homeowners know all too well, the rest of the share has been coming from local property taxes.)
Historically, Maryland has been a national leader in creating and paying for a balanced transportation system -- for highways, transit systems, shipping, aviation and railroads. These latest, carefully crafted proposals would continue that tradition under Gov. Harry Hughes, whose own history of leadership in this field is impressive.
In Richmond, there are encouraging signs, too. This week Gov. John Dalton's administration took a tentative, intelligent stop toward proposing a dramatic increase in state aid for Metro. Transportation Secretary George Walters suggested that Metro be treated much like a highway project -- under which the state would assume 95 percent of the remaining Virginia cost of construction, including the retirement of revenue bonds. Virginia has done this sort of thing already for bus purchases elsewhere around the state, so the Metro move would amount to an equalizing effort. This could further smooth the way for Northern Virginia legislators to support an increase in the gasoline tax to cover transportation improvements -- which the governor is said to be interested in -- in exchange for permission to raise local taxes to cover the operating budget.
Obviously none of these tax-and-trade-off proposals in Annapolis and Richmond would exactly line the taxpayers' pockets with extra cash. But in both states -- where transportation improvements are necessary and desired well beyond the Metro service area -- the financing arrangements offer some tax relief and a politically realistic combination of steps to keep Metro financially alive and kicking.