O'Malley wants to put sales tax on gas
Proposal could add 18 cents a gallon over 3 years
Michael Stachowski commutes to Baltimore every day from his home in York, Pa. "It will be too expensive for anyone to get to work," he said of an O'Malley administration plan to add a sales tax on gasoline. (Gene Sweeney Jr., Baltimore Sun / January 31, 2012)
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The increase — to be phased in over three years —would be on top of the 23.5 cents per gallon gas tax the state has been charging since 1992. The change would require the approval of the Maryland General Assembly, where its prospects are uncertain.
O'Malley's proposal — which comes as he also is calling for higher income taxes and sewage treatment fees — drew cries of protest from the service station industry and Annapolis Republicans, among others.
"It shows how out of touch this governor is with everyday Marylanders who are struggling to pay their bills and make ends meet and keep their businesses open and meet payroll," said House Minority Leader Anthony J. O'Donnell, a Southern Maryland Republican.
O'Donnell said the increase would cause businesses to raise the price of other goods and services as their transportation costs go up.
But O'Malley's gas tax plan was praised by business leaders who have argued that Maryland desperately needs more money for highway, bridge and mass-transit projects.
"I think that the business community is overall very pleased and excited that the governor is willing to throw his political weight and influence behind this," said Greater Baltimore Committee President Donald C. Fry.
O'Malley, a Democrat, told WTOP radio Monday that he prefers to move away from the traditional flat per-gallon tax to one based on a percentage of the price. The change would protect transportation revenues from being eroded by inflation. The governor said transportation projects funded by that revenue are needed to relieve traffic congestion.
"There is no one that's going to do this for us. Bridges are not like trees, that grow taller and stronger with age," he said.
O'Malley's proposal may not be coming at a propitious time. Gas prices in the state have been on the upswing in recent weeks, increasing 22 cents over the past month to an average of $3.48 Monday. AAA Mid-Atlantic is projecting that they could reach $4 by late spring. In past years, proposals to raise gas taxes have been put on the table early in the year, only to see support wither amid rising spring prices.
Service station industry officials, who generally oppose any type of gas tax increase, contend the shift to a sales tax is more onerous and complicated than an increase in the cents-per-gallon charge.
"It'll put more of a burden on the retailer and make us much less competitive than our surrounding states," said Pete Horrigan, president of the Mid-Atlantic Petroleum Distributors Association.
O'Malley also is calling for a series of other revenue-raising measures that would dig deeper into the pockets of Marylanders. He is proposing an increase in income taxes for the highest-earning 20 percent of households to help close a $1 billion revenue shortfall. He has also called for effectively doubling the state's $2.50-a-month "flush tax" to pay for upgrades to water and sewer systems.
"I see it as a tough sell, especially in the House of Delegates," Senate President Thomas V. Mike Miller said of the gas sales tax plan. "But we've got to have revenues for our roads, bridges and transportation systems. Something's got to happen. We are going to have to find a reasonable solution to our problem."
House Speaker Michael E. Busch said it was good to have a transportation plan on the table but added that he will have to study the proposal and hold discussions before reacting.
"For any transportation initiative to be successful, you're going to need the full support of the major county executives," Busch said, listing Montgomery, Prince George's, Howard and Baltimore counties and Baltimore City. Leaders from all but Baltimore County have testified in favor of a higher gas tax to let the state restore local highway revenue to local governments — assistance that's been scaled back significantly during the economic downturn.
Even with support from the counties, the governor's proposal faces opposition in Annapolis, including from some in his own party.
Joseph Shapiro, a spokesman for Comptroller Peter Franchot, said his boss is "adamantly against" any increase in gas taxes now.
"This is the wrong time to be delivering a hit to family budgets that are trying to regain their financial footing," Shapiro said.