Business backs gas tax hike -- again

Business groups and contractors are again supporting raising Maryland’s gasoline tax in two House bills that challenge the pledge by Assembly leaders for no tax hikes in this election year.

Supporters of the bills, including construction groups and chambers of commerce, testified at the House Ways and Means Committee that the state's transportation budget needs an immediate cash infusion and that a fuel tax increase would be an easy way to do that.

One bill would raise the tax by 10 cents a gallon over the next five years, raising a total of over $1 billion. The 23.5 cents a gallon fuel tax hasn’t been increased since 1992, and is now 5.5 cents below the national average.

"We've got to find creative ways to finance our infrastructure needs in order to support our economy and job creation," said Gigi Godwin, president of the Montgomery County Chamber of Commerce.

The hearing room was also filled with owners and employees of construction companies who see any increase in transportation funding as a stimulus to their flagging businesses, especially as federal American Recovery and Reinvestment Act funding runs out.

"I think everybody would agree the (federal) stimulus plan was helpful and beneficial, but that's certainly not a long-term plan," said Scot Brown of the Corman Construction based in Annapolis Junction.

A tax increase would be a temporary solution to cover transportation costs to prevent further job losses and infrastructure deterioration while the state develops a long-term strategy, said Del. Charles Barkley, D-Montgomery, who sponsored both bills.

One bill mandates a two-cent fuel tax increase annually for the next five years and the other caps annual increases at one cent.

"If we come up with a better solution in the next few years, we can change it any time," Barkley said. "But I think two cents right now, most people won't even see it, won't even feel it."

"I just think it's time to do something," Barkley said. "This would be something we could do to get some money rolling into the Transportation Trust Fund."

As proposed, revenues would be split approximately 70-30 between the state transportation department and local jurisdictions.

Barkley's second bill mandates an immediate half-cent increase in fuel taxes and ties future increases of up to one cent per year to the "Construction Cost Index" -- a widely used trade group estimate of labor and materials costs. It would generate an estimated $15 million next year and $89 million by 2015.

This second bill, which has six co-sponsors, isn't as helpful but may have a better chance politically, Barkley said.

"And yes, I got the memo that we're not going to have a gas tax this year, or any tax increase this year," he said at the hearing, adding in a subsequent interview that either bill's chances are "probably not good."

The only opposition to the bills at Tuesday's hearing came from the trucking and petroleum industries, which said they too have suffered layoffs in the down economy and can't bear another tax burden.

Republican legislators said either bill would be a terrible idea.

"Oil is hovering around $80 a barrel. Gas prices are hovering near $3 a gallon," said House Minority Leader Anthony O'Donnell, R-Calvert. "This is the last thing we need to be doing in these tough economic times when we're trying to get the economy up and running."