Maryland would raise its tax on gasoline 15 cents per gallon — to one of the highest rates in the nation — and would boost fees on every bus and rail passenger under a plan endorsed Tuesday by a commission created by the General Assembly and Gov. Martin O’Malley (D).
The taxes and fees would have Maryland households paying hundreds of dollars more a year to prop up a transportation trust fund that is failing to keep pace with billions in unfunded projects.
The gas tax increase would be phased in, with five-cent increases in each of the next three years, but costs for titling, registering and inspecting cars, as well as riding on bus and rail lines, could increase all at once next summer.
O’Malley has suggested he would support some hike in the gas tax, and he already has asked lawmakers to begin debating the issue — a potentially defining one for the governor as his star rises in the Democratic Party.
In recent months, O’Malley has forcefully advocated a mix of new state revenue and spending cuts to close Maryland’s budget shortfall while also urging an increase in public infrastructure investments that could promote job growth. O’Malley has cast his as a more balanced plan than the cuts-only approach embraced by Republicans on Capitol Hill.
But a 15-cent hike in the gas tax could make fuel prices in Maryland among the highest in the country, hitting the state’s poor and middle-class residents and putting O’Malley at odds even with many in his own party about how far to go in raising taxes.
Under the plan, Maryland’s gas tax would rise to 38.5 cents from 23.5 cents. It would be more than 60 percent higher than the District’s gas tax and nearly double that in Virginia. It would also be indexed to inflation, inching up indefinitely thereafter.
The proposal is similar to a 10-cent hike and indexing plan endorsed early this year by leading Democrats in the Maryland Senate, and co-sponsored by over a quarter of the members of the General Assembly.
But the full scope of Tuesday’s recommendations is bound to expose rifts among rural, suburban and urban lawmakers about who should be responsible for paying for Maryland’s backlog of transportation-related projects, as well as just what should be in the state’s list of projects — now $40 billion and growing.
Maryland’s Transportation Trust Fund covers not only road and bridge maintenance but also multibillion-dollar transit projects, port and freight-line improvements, and even environmental initiatives to reduce stormwater runoff into the Chesapeake Bay.
“Under this proposal, it comes down to the shoulders of the motorists . . . and there’s not enough money in drivers’ pockets to fund it all,” said Lon Anderson, spokesman for the American Automobile Association-Mid Atlantic.
In all, the plan endorsed by the Blue Ribbon Commission on Maryland Transportation Funding would raise an estimated $870 million annually, with $491 million of that coming from what would be the first gasoline tax hike since 1992. Car registration fees would increase 50 percent, bringing in $165 million. Unspecified bus and rail fee increases would garner about $26 million.
The plan would also require a constitutional amendment to protect the funding for transportation. It would prohibit Maryland lawmakers from tapping into the funding stream, as they have seven times in the past decade, to remedy shortfalls in the state’s general fund.
To use the money for anything other than trust fund projects, the governor and legislature would have to declare a fiscal emergency and devise a plan to repay whatever is borrowed.
Commission Chair Gus Bauman cast the plan as a fresh break from partisan politics and a prudent one given that states’ share of the 18.4-cents-a-gallon federal gas tax could be reduced under plans promoted by House Republicans and under consideration by the congressional debt “supercommittee.”
“We’ve got to be adults about this. We’ve got a serious problem. The federal spigot is running dry, and we can’t print money,” Bauman said. “Once assurances are made that the trust fund will be protected, I think this is a package that people can accept.”
Last week, O’Malley urged Maryland lawmakers to begin debating the size of a gas tax increase, saying shared sacrifice would be needed to get people back to work.
“What we have to figure out is whether we are willing to pay another penny in order to bring those things about, or another nickel, or another dime, or as Gus Bauman and his commission is recommending, another 15 cents,” O’Malley said.
Still, the proposal’s odds of passage in the General Assembly are unclear. Even with a 15-cent gas tax increase, it’s not certain the plan could guarantee funding for enough high-profile projects around the state to win support from a majority of lawmakers.
For one, the plan doesn’t answer the question of how Maryland will pay for its share of the proposed Purple Line light-rail project connecting Montgomery and Prince George's counties, which could cost nearly $2 billion, or the proposed Red Line expansion on Baltimore’s transit system. The commission endorsed studying whether the state should also set up regional taxing authorities to fund those and other projects.
Maryland Transportation Secretary Beverley K. Swaim-Staley said that the combined price tag for just the top projects in each of the state’s 23 counties exceeds $12 billion.
In addition to the Purple and Red Line projects, counties expect the fund to pay for road improvements related to military base realignments and closures and for reducing congestion along Interstate 270.
The potential gas tax hike comes on top of a move by the state’s transportation authority to raise tolls on many bridges by as much as $1.50.