By Donald C. Fry
Recently, we’ve read and heard from lawmakers and media commentators about what was accomplished in the General Assembly session that concluded on April 11.
Some noteworthy progress was made to strengthen the business climate in Maryland, including a significant expansion of state initiatives for bioscience and technology industry growth and a $15 million increase in economic development assistance funding to help stimulate business growth.
However, when it comes to ensuring that Maryland has a superior transportation infrastructure with a reliable funding source, a primary prerequisite to a strong business climate, the General Assembly session ended the way it began – with our state still facing a transportation funding crisis that threatens to stifle its economic growth.
Maryland still has a more than $40 billion shortfall in funding for critical highway, transit, port and airport projects that are planned but not yet funded for construction.
Lawmakers did not act on legislation supported by a statewide coalition of business advocates that would have implemented Blue Ribbon Commission recommendations that transportation revenue be increased by $800 million annually and that a firewall be established to protect our transportation fund from executive and legislative raids on it for non-transportation uses.
The commission recommended generating $600 million of the new revenue by combining a gas tax rate increase with a number of other potential options ranging from increasing a variety of motor vehicle fees to increasing the portion of sales tax dedicated to the transportation fund. That new revenue could then be leveraged to gain an additional $200 million annually in bond sale revenue for the transportation fund, the commission’s report indicated.
So, what happens next? There is talk in Annapolis that the issue of transportation funding will surface again in either the fall special session or the 2012 regular session of the General Assembly. But there are perplexing dynamics in play among lawmakers that are hampering efforts to resolve transportation funding issues.
While virtually everyone agrees that something must be done to address the transportation funding crisis, legislative leaders are concerned about their ability to muster a majority to vote for a gas tax increase, citing concerns about constituent reactions.
Ironically, increasing the gas tax’s per-gallon rate used to be a relatively routine vote for lawmakers. What may be even more surprising is that it was a tax that enjoyed support from both sides of the aisle. Democrats and Republicans in the legislature routinely voted for a gas tax.
After the Transportation Trust Fund was created in 1971 as Maryland’s consolidated transportation funding resource, lawmakers voted to increase the gas tax rate five times in the next 21 years. In 1992, they increased the gas tax to its current 23.5 cents per gallon. They haven’t voted to increase it since.
During the last two decades, lawmakers have somehow come to view a gas tax rate increase as a lethal third rail, as opposed to a means of enhancing economic growth and investing in our state’s future as it once was.
So, given this change of legislative attitude, why do members of the Blue Ribbon Commission and business leaders continue to advocate for a gas tax increase? The answer is basic. It’s because the gas tax remains the primary source of revenue to the Transportation Trust Fund.
The fact that the gas tax’s per-gallon rate has not been increased in 19 years is a major cause of the fund’s lagging revenues. It’s the inevitable outcome of failing to adjust a tax that does not increase with inflation.
Do our elected leaders think that construction and labor costs have remained flat since 1992? Are concrete, steel, or asphalt costs the same as two decades ago? Are they naive enough to think that the additional environmental regulations that have been placed on transportation projects over the last 20 years have not increased costs?
I hardly believe they think this way – yet they have done nothing to help address those growing cost factors impacting every transportation infrastructure project in the state. And that doesn’t even begin to consider the demand needs because of population growth in our state.
In 1992, gasoline taxes made up 21 percent of the cost of a gallon of gasoline. Today, with gas prices hovering around $3.90 a gallon, the state’s 23.5 cent gas tax amounts to 6 percent toward the cost of a gallon of gasoline.
A gas tax rate increase is the most immediate, straightforward, and broad-based way to generate a significant portion of the magnitude of new revenue needed to adequately address Maryland’s infrastructure funding shortfall.
As a business advocate, I generally am not a proponent of new taxes and fees. But I know that increasing transportation funding for badly-needed infrastructure is essential for growing our economy, creating and maintaining jobs, increasing productivity, and improving quality of life. It also addresses environmental concerns by reducing congestion.
Governor O’Malley said it best in his post-session e-newsletter. “In this fight for our economic future, we are in a battle for jobs and opportunity,” he wrote. “The states that win will be those that spur innovation and protect key priorities.”
There is little argument that superior mobility — and the transportation infrastructure to support it — is a critical stanchion of any business climate.
The operative question that our state’s lawmakers must ask themselves regarding transportation funding is simple: If not the gas tax, then what revenue (tax) are you willing to approve that will sufficiently address our transportation funding crisis?
One thing is certain — if we are to sustain our strong transportation infrastructure system, grow our economy and preserve our quality of life — Maryland’s answer to that question can’t be “nothing.”