ANNAPOLIS — Supporters of raising taxes on gasoline in Maryland say now is the time for the state to generate badly needed new revenue for transportation, while opponents say a plan backed by Gov. Martin O’Malley will make drivers pay some of the highest gas prices in the nation.
Business leaders who support the governor’s proposal held a news conference last week to underscore the significance of raising money for economic development as well as quality of life. Many Maryland residents battle terrible traffic congestion, particularly in the Washington suburbs. Supporters of the revenue package also note that Maryland has not raised its 23.5-cent gas tax since 1992.
At the current pace, without new revenue, supporters also note Maryland will run out of money for any new transportation projects after 2017.
Don Fry, president of the Greater Baltimore Committee, said that while it’s politically unpalatable to raise taxes for transportation, the state can’t afford to wait.
“We are at that crisis point today, and it’s time for the Maryland Legislature to act,” Fry said.
Opponents said the governor’s plan would be too costly for drivers. The tax on a gallon of gas would rise from 23.5 cents to 42.7 cents by fiscal year 2018, according to AAA Mid-Atlantic.
“First and foremost, virtually all of the money the governor is proposing to raise is from more taxes on motorists,” said Mahlon Anderson, AAA Mid-Atlantic’s managing director of public and government affairs.
The plan would apply a new 2 percent sales tax on gasoline starting in July. The tax would increase to 4 percent in July 2014.
It would reduce the current excise tax on a gallon of gas by 5 cents, from 23.5 cents to 18.5 cents. The excise tax would be linked to the Consumer Price Index, so it would rise to keep up with inflation.
By fiscal year 2018, the plan would raise an estimated $833 million a year in new funding for transportation, once new bonding capacity created by the additional revenues is added into the mix. Overall, in a 5-year period, the plan would create $3.4 billion for Maryland highway and transit projects.
The measure also includes a provision that making it harder for transportation money to be used for other purposes. O’Malley, a Democrat, has been criticized for using transportation funds to plug other budget holes during the recession and its aftermath.