Maryland Gov. Martin O'Malley proposed sweeping changes to the way the state funds transportation Monday, including reducing the gas tax while at the same time indexing it to inflation.
The plan, which he says would generate $3.4 billion in new revenue for the state over five years, comes just weeks after neighboring Virginia passed a transportation funding overhaul using many of the methods O'Malley is now championing.
O'Malley's plan would reduce the state gas tax by 5 cents to 18.5 cents per gallon; at the same time, it would be indexed to inflation. A state sales tax of 4 percent would be applied to the wholesale price of gasoline. The plan also says that if Congress passes legislation that allows states to start collecting online sales tax, a portion would be dedicated to transportation. If that doesn't happen, the whole state sales tax -- 6 percent -- would be applied to gasoline, instead of just 4 percent.
The governor's office has pitched the plan as one that would address the declining purchasing power of the gas tax -- which hasn't been increased since 1992 -- and as one that would provide much-needed funds to help repair infrastructure and mitigate congestion.
"Building a 21st-century transportation network won’t happen by itself," O'Malley said in a statement. "We cannot afford the cost of inaction."
According to state transportation officials, the highway administration's budget for new construction will be reduced to almost nothing by 2017 -- with most of the money simply going towards road and bridge maintenance -- unless something is done to generate more transportation revenue.Transportation officials have also warned that the state's most ambitious transit plans, including the construction of two new lines, would be jeopardized without new transportation revenue.
Last year O'Malley, aware of the growing pinch, offered a plan to increase transportation revenue by applying the state sales tax to gasoline, but it didn't gain steam. The latest proposal comes as the legislature is already two months into its 90-day session.That delay has prompted the president of the state Senate, Mike Miller, to prod O'Malley to take up the issue, arguing that while increasing taxes aren't popular, state leaders faced no other choice. Miller and House Speaker Michael Busch, both Democrats, joined O'Malley in announcing the proposal Monday.
But the proposal is getting opposition from the legislatures Republican leadership. Del. Anthony O'Donnell, the House Minority Leader, said the move is a big tax increase at a time when Marylanders, still recovering from the recession, are unable to afford it.
O'Donnell added that he and his Republican colleagues are "appalled" the governor would introduce such complicated legislation more than halfway through the session.
O'Malley's proposal borrows many of the ideas from a plan put forth by neighboring Virginia Gov. Bob McDonnell to shore up transportation funding in his state. Both the Maryland and Virginia plans reduce the gas tax, increase wholesale taxes on motor fuels and dedicate potential Internet sales tax revenue to transportation.
Unlike the Virginia plan, O'Malley's would not increase general sales taxes. Virginia's plan also doesn't involve indexing, like O'Malley's does. Both plans would generate almost the same amount of new revenue.
While O'Malley appears to have the support of the legislature's leadership, he could face resistance from the public: A recent Washington Post poll of Marylanders found that only about a quarter of Marylanders supported various means of raising taxes to pay for transportation.