With a little over a month left in the 2013 Session of the General Assembly, Governor O’Malley took a momentary break from his national campaign to make yet another assault on the wallets of Maryland’s citizens. His “Transportation Infrastructure and Investment Act of 2013” (HB 1515/SB 1054) was introduced earlier this week and is yet another example of how out of touch this Administration is not only with the economic realities facing Maryland’s families and businesses, but also with the transportation needs of this state.
The Governor’s gas tax increase has a number of moving parts. First, he decreases the excise tax on gasoline from 23.5 cents to 18.5 cents, but then he indexes the tax to the Consumer Price Index (CPI). As a result, the gas tax will be set on autopilot automatically increasing every year the CPI increases. According to data from the Bureau of Labor Statistics, the CPI has increased an average of 2.43% since 2002. This autopilot increasing is also a one-way street. While the gas tax will increase if the CPI increases, there is no change in the gas tax should the CPI trend downward. The CPI has only declined once since 2002. It gets worse. These automatic increases also apply to the excise tax on diesel fuel – currently 24.25 cents/gallon. So, under Governor O’Malley’s plan the tax on diesel fuel – the fuel that is relied on by a multitude of Maryland’s businesses – will see sharp increases in the future, automatically. But, it doesn’t stop there. Not missing an opportunity to tax an item more than once, Governor O’Malley’s gas tax scheme also imposes a 2% tax at the wholesale level and increasing to 4% in 2014. If the federal government fails to authorize online sales tax collection, this tax increases to 6% in 2015. Over the next five years, the Governor’s bill has the potential to take over $3 billion out of the pockets of the motoring public alone.
Even with all of these dollars coming out of the pockets of drivers, very little will go to roads and bridges – if it gets to transportation at all. Governor O’Malley’s transportation package gives no meaningful protections to the Transportation Trust Fund. It requires the approval of a 3/5th majority of a standing committee to raid the TTF which is no challenge at all when one considers the makeup of the General Assembly and the gamesmanship that can be played with committee assignments. This anemic protection is not extended to Highway User Revenues, which is still owed over $1 billion from previous raids. These funds can continue to be pillaged without the pretense of protective hurdles.
But for arguments sake, let’s say these dollars do actually make it to transportation. Currently, 56% of the revenue that goes into the TTF comes from the motoring public through the gas tax, titling tax, MVA fees, and registration fees. However, 57% of the spending goes to mass transit. This is absurd when you consider the fact that 83% of Maryland’s commuters drive alone or carpool while 9% utilize mass transit. If past is prologue the likelihood of any new gas tax dollars making it to road projects are very slim. While the Governor’s plan indexes mass transit fares to the CPI beginning in 2015, the revenues from that indexing are only $10-$20 million per year. Given that the costs of the Red Line and Purple line are in the BILLIONS of dollars, it is clear that automobile drivers will continue to subsidize a system they do not use.
Perhaps the Governor’s gas tax scheme would be more tolerable if it was not the latest installment in a multitude of tax, toll, and fee increases since he took office in 2007. Maybe citizens would be able to trust that this money would go to transportation if he had not raided that and virtually every other dedicated fund to cover his apparent spending addiction. If the Governor had worked half as hard on solving our transportation challenges (e.g. appointing a permanent Secretary of Transportation) as he has on increasing his national profile perhaps he would have some credibility on this issue. But everything the Governor has done and has not done – down to submitting a complicated piece of legislation in the waning hours of the 2013 Session – has only served as proof of his ineptitude.
The bottom line is this: Maryland does not need this or any other scheme to increase the gas tax. Maryland needs to truly PROTECT the Transportation Trust Fund. Maryland needs to ALIGN its transportation spending with the needs of its citizens. Maryland needs to RESTORE the $1 billion of transportation monies that was taken from but not repaid to the counties. Until these things happen, Maryland’s drivers will constantly be on the hook to feed the transportation beast.