Maryland drivers could face a gasoline tax increase next year, in addition to other revenue-generating recommendations likely to be made by a commission looking for ways to replenish the state’s transportation fund.
Members of Maryland’s Blue Ribbon Commission on Transportation Funding met for a roundtable discussion with Gov. Martin O’Malley in late April at the Wilde Lake Village Center, where they discussed the commission’s interim report.
Although the commission won’t complete its study of the Maryland Transportation Trust Fund until November, its members did have some early recommendations for the governor, few of them easy decisions.
“[The commission] has been in the process of examining how the state should make the changes we need to make in our transportation infrastructure,” O’Malley told a gathering of about 100 citizens attending the presentation along with a handful of state and local elected government officials.
“China, Europe and other nations over the last 10 years have been spending about 10% of their Gross Domestic Product every year on investments and infrastructure,” O’Malley said, including roads, water and cyber infrastructure. “We’ve been investing about 2.5% of our [national] GDP in infrastructure. In Maryland, we’re doing better than most states, but it’s a serious challenge.”
Filling the Hole
The state is currently involved in two major infrastructure projects: construction of the Inter-County Connector, and the widening of I-95 and the HOV lanes north of Baltimore, but much more needs to be done to simply maintain the existing infrastructure.
“Our inadequate transportation systems are presenting a growing threat to safety on our roads, our quality of life, to our economic competitiveness,” O’Malley said. “We have to find a better way forward.”
While the state has begun taking steps to restore some of the funding it transferred out of the Transportation Trust Fund in 2007, the governor said much of the state’s progress was wiped out by the national recession. Of the $2 billion that was lost, only $600 million was restored by the American Recovery and Reinvestment Act of 2009.
Meanwhile, the economy has convinced many citizens to put off buying new cars or to invest in more fuel efficient vehicles, resulting in a drop in revenues both from the gas tax and from registration and titling fees.
“We have been able to reduce the number of structurally deficient bridges by 28% since 2002,” O’Malley said. “We’ve very much been embracing a ‘fix it first’ strategy with decisions based on where [limited dollars] are most needed. There are 107 bridges that remain deficient and are in need of upgrade.”
Still, he said, the state continues to pursue strategies that include advancement of the Red and Purple Lines, encouraging Transit Oriented Development, and seeking to double transit ridership by 2020.
All the state needs to do is find a way to pay for it all.
Recommendations
Howard County Executive Ken Ulman, who is a member of the Blue Ribbon Commission, said the body’s final findings and recommendations will be presented to the governor and the General Assembly by Nov. 1 this year.
“The first recommendation was to protect the Transportation Trust Fund,” Ulman said. “I think the consensus … was to make it more difficult to transfer funding out of the fund with the knowledge that there are times when it is warranted, but it ought to be rare.”
Other recommendations included retaining the existing portions of sales and corporate income tax dedicated to the fund, and restoring highway user revenues to local government to their historic levels.
Additionally, the commission is calling for $800 million in net new annual transportation funding to shore up and expand the trust fund.
Perhaps the easiest way to accommodate that could also be one of the most controversial: raising the sales tax by one cent could generate up to $700 million annually, O’Malley noted.
“Our goal was to create a number of options, put them out there, specify what they would pay for and move forward,” Ulman said.
Among options the commission is weighing are toll increases; increased leverage and bonding; and removing the cost recovery cap for the Motor Vehicle Administration, which is legally bound to collect only such funds as are sufficient to administer the licensing, titling and registration program.
The commission must also consider longer-term funding challenges that include cost savings, value capture, public-private partnerships and transportation user fees such as tolls, congestion pricing, other fees and budget prioritization.
Tough Decisions
Kathy Snyder, president of the Maryland Chamber of Commerce, said businesses generally support an increase in the gas tax.
That sentiment was echoed by Maryland WMATA Board Member Elizabeth Hewlett, who said Maryland Chamber members are “very much in favor” of taking care of infrastructure.
“The gas tax is a short-term fix, not a long-term solution,” she said. “We would prefer that it be done in January, not during a special session when a lot of mischief can take place for other taxes and other things.”
O’Malley, however, said most state legislators are leery of taking up the gas tax issue, or even an index on the gas tax.
“In fact, when we proposed a sliding tax, that got shot down and referred to the Rules Committee without so much as a hearing,” he said. “It’s a tremendous dichotomy.”
When it comes to the trust fund, said Taneytown Councilmember Diane Foster, what her constituents want most is transparency. “They want the discussion out in the open so that they know why money is taken out [of the trust fund] and that it is going to be repaid.”
In the end, Ulman said, most people recognize that something needs to be done.
“It’s all about how we sell this at whatever level we’re talking about, whether to the business community, the constituents, representatives,” he said. “I think there’s a willingness to come together and find solutions, but we’ve got to figure out a way to sell that to [each group].”
“One of my frustrations is that we in government look at what we have to work with … and it stops us from looking forward,” said METRO Union President Jackie Jeter. “We have to think about tomorrow … roll up our sleeves and make some very tough choices. People don’t mind paying taxes as long as they know what they’re paying for and why.”
