Gov. Martin O’Malley acknowledged this week his proposal to put a sales tax on gas was effectively dead, but his suggested alternative — a penny increase in the overall sales tax to fund road improvements — isn’t likely to fare any better, lawmakers say.
“I don’t think [it’s] very likely,” House Majority Leader Del. Kumar Barve (D-Dist. 17) of Gaithersburg said Wednesday, adding legislators from both chambers still were trying to negotiate a budget agreement.
The only revenue increases likely to be enacted were the ones already being discussed by the House and Senate, Barve said.
“The House position is to [avoid taxing] working families and instead focus on the higher-income individuals.”
Members of both chambers are trying to agree on a budget, which is likely to include increases to state income and tobacco taxes.
Senate President Thomas V. Mike Miller Jr. (D-Dist. 27) of Chesapeake Beach said he still was hoping to address the gas tax proposal before the end of session, scheduled for Monday, adding he didn’t think O’Malley’s sales tax increase would work.
The governor initially suggested the 1 cent sales tax increase at the beginning of the session in January, and later introduced a bill that would apply the state’s current 6 percent sales tax to gasoline to raise $613 million for transportation infrastructure. The 6 percent would be in addition to the state’s existing, 23.5 cents-per-gallon gas tax, which was set in 1992.
The governor’s bill also would make it more difficult for the state to use money from the Transportation Trust Fund for other purposes such as closing budget gaps, as has been done in the past.
The gas tax proposal has been met with public outcry and firm resistance from lawmakers reluctant to act with fuel prices on the rise.
Raising the sales tax one penny to 7 percent could generate an estimated $650 million, according to the Office of Comptroller Peter Franchot.
O’Malley’s comments this week drew criticism from the advocacy group Maryland Business for Responsible Government, which issued a statement arguing such an increase would put the state in a tie for second-highest sales tax in the country and burden working families and local businesses.
Maryland is one of 11 states with a 6 percent sales tax rate; 24 states have lower rates.
Among neighboring jurisdictions, Virginia has a sales tax of 5 percent; Washington, D.C., has a tax of 6 percent; and Delaware has no sales tax.
A general sales tax increase would offer less protection for transportation funds than the governor’s gas tax plan, said Allyson Black, vice president for government affairs of the Maryland Chamber of Commerce.
Black was one of several gas tax advocates who urged the legislature to increase transportation funding at a press conference Wednesday in Annapolis.
An increase in revenue from gasoline sales was long overdue and would fund much-need road and bridge improvements and help ease congestion, said Lon G. Anderson, the managing director of public affairs for AAA Mid-Atlantic, which advocates for motorists.
Anderson also was a member of the state’s Blue Ribbon Commission on Transportation Funding, which recommended in November that lawmakers raise $870 million in new annual revenues for transportation to supplement the current $3.5 billion in annual revenues to the Transportation Trust Fund.
“We’re trying to live in 2012 on a 1992 income. It simply is not working,” Anderson said.
The news conference marked the release of a report on Maryland’s transportation needs by TRIP, a Washington, D.C.-based, nonprofit research group. The report outlined 40 projects that were essential to economic growth in the state, both by creating construction jobs in the short term and reducing congestion for residents and visitors into the future.
The most-needed projects included widening the Capital Beltway in Prince George’s and Montgomery counties, a $5.8 billion project; replacing the Gov. Nice Bridge in Charles County, an $885 million project; and widening the highway and rehabilitating bridges along the Baltimore Beltway.
The sales tax on gasoline was a “cash cow,” Anderson said. “It will do the job if you’ll let it,” he said, adding a general sales tax increase needed to be done in addition to the gas tax.
O’Malley told The Baltimore Sun on Tuesday he hoped legislators would have a chance to consider the overall sales tax increase after the fiscal 2013 budget passes and before Monday’s scheduled end of the session.
But while time is running short, there is precedent for enacting last-minute changes. In 2011, a 3 percent sales tax on alcohol was passed by both chambers in the final hours of the General Assembly session.