March 18, 2010

Another gas tax hike appears stalled

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By Nick DiMarco
Nick@MarylandReporter.com

Lawmakers need to “conjure up some more courage” and increase Maryland’s gas tax, according to testimony heard Wednesday in the Senate Budget and Taxation Committee.

Proposing a fixed gas tax increase has been unpopular among lawmakers for over a decade. That sentiment apparently hasn’t changed for a bill that would tie tax rates to the price of gas, but limit fuel tax increases by 2 cents per quarter.

The 23.5 cent-per-gallon rate has not been raised since 1992, while road costs continue to rise. Gas tax receipts are the largest revenue sources for the state transportation system.

An increase faces strong resistance from drivers. John Townsend, manager of public and government affairs for AAA Mid-Atlantic, says the proposal would devastate all stakeholders.

“You irritate motorists when it goes up and you’re robbing Peter to pay Paul when the gas prices fall,” said Townsend, touching on highway contractors who have lost business because of decreased funding.

He spoke Wednesday at a hearing before the Senate Budget and Taxation Committee.

Highway and road contractors support the legislation because they believe it will help boost the state’s Transportation Trust Fund. According to the bill’s fiscal note, the tax increase would bring in $30.4 million next year.  The funding would continue to grow, as high as $304 million in 2015.

Paul Bramble, who operates David A. Bramble Inc. in Salisbury, said he had to lay off 100 employees because of a drop in funding for road and highway projects. He said ithurts business when transportation funding is diverted to other expenses.

“Adding a few costs to the gas tax loses jobs,” he said.

The state has redistributed hundreds of millions of dollars from the trust fund for other uses. The money is supposed to be put aside for transportation only.

Townsend called the fund “the new social security,” because it being used to pay for other programs like the federal fund that is supposed to be set aside for retirement and disability benefits. This presents a tricky situation for legislators who have opposed both taking more money from the fund and raising gas taxes.

A fuel tax bill in the House aims to increase the levy by 10 cents per gallon over the next five years. The bill was also highly supported in the House Ways and Means Committee by business groups and local contractors.

Gov. Martin O’Malley proposed in 2007 to tie gas tax increases to the price of construction.