ANNAPOLIS – Two House bills that would raise Maryland’s fuel tax received positive testimony in a hearing Tuesday, but it remains unknown whether any tax increase will prove politically palatable in an 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.
“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 and CEO 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 Annapolis Junction-based Corman Construction.
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 Delegate 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.”
Maryland’s tax rates of 23.5 cents per gallon of gasoline and “clean burning fuel” and 24.25 cents per gallon of diesel haven’t changed since 1992.
“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.”
Increasing most fuel taxes — aviation gasoline and turbine fuel are excluded — by two cents a gallon would raise $63 million in the next fiscal year and increase incrementally to $327 million in 2015, according to an analysis by the Department of Legislative Services.
As proposed, revenues would be split approximately 70-30 between the state transportation department and local jurisdictions.
The two-cent increase bill had only one co-sponsor: fellow Montgomery County Democrat William Bronrott.
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 — and 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.
But 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.”
Barkley also echoed a sentiment shared in a bill introduced last month by Delegate Susan Krebs, R-Carroll, that would block the state’s frequent budget-balancing practice of transferring dedicated transportation money to the general fund to cover operating costs.
But while Barkley said he agreed with that bill, similar wording did not appear in his bills specifically dedicating the fuel tax revenue to transportation projects. Several testifiers suggested that amendment, and Barkley said he was amenable.