O’Malley promotes his fiscal plan to GBC board

Maryland Governor Martin O’Malley met with the Greater Baltimore Committee board of directors to outline details of the fiscal plan the governor will put before a General Assembly special session, now slated to begin on Oct. 29.

The governor’s plan would eliminate the state’s $1.7 billion operating deficit, increase transportation funding and expand health care access, among other things. The GBC has posted a comprehensive summary it has compiled of the governor’s plan on it’s Web site.

O’Malley emphasized that elements of his plan – which include increasing the state’s sales tax, raising income tax rates for higher-bracket earners, enacting slots legislation and closing so-called “loopholes” in taxing corporations – were developed around what he sees as the consensus that could be reached with legislative leaders and members of the General Assembly.

For instance, the governor said insufficient support in Annapolis for a gas tax hike is the primary reason that the $392 million annual revenue increase he is proposing for Maryland’s Transportation Trust Fund falls far short of the $600 million in new transportation funding that the GBC and other business leaders say is needed. The governor’s $392 million proposal “came about because of the need for consensus,” O’Malley said, adding he recognizes his proposal is “too low,” but a politically achievable amount. He urged the GBC and business leaders to make their transportation funding case to the public and to lawmakers.

“We need popular acceptance in order to drive the political consensus,” O’Malley said. The GBC has launched a month-long TV advertorial campaign supporting the $600 million increased funding level. The largest elements of the governor’s proposed $392 million transportation funding increase include raising the vehicle titling tax, indexing the state gas tax for inflation, and dedicating 50 percent of the corporate income tax increase to transportation. The other half would go to higher education, another GBC priority.

GBC president Donald C. Fry has called transportation funding “the biggest economic growth challenge facing Maryland in the next decade.” The GBC has urged the passage of a 10-cent increase in the state’s gas tax to bridge the gap between the governor’s plan and the GBC’s proposal. The GBC contends that a $600 million annual transportation revenue increase is the minimum amount needed to address the state’s more than $40 million backlog of highway, transit, port and airport projects that are planned, but not yet funded for construction.

Under current revenue trends for the state’s Transportation Trust Fund, available capital funding for new projects will begin declining significantly in the next fiscal year. By FY 2013, the trust fund will have $700 million less available capital funding per year than now, according to Maryland Department of Transportation projections. The GBC argues the primary reason the governor’s proposed $392 million increase is too little is because $250 million of that amount would go toward system preservation and another $50 million is needed for a new federally-mandated state match for the Washington Metropolitan Area Transit Authority. This would leave less than $100 million in additional annual funding for new projects.

The GBC, Greater Washington Board of Trade and the Maryland Chamber of Commerce all agree funding for new highways, transit, port and airport facilities is equally important to Maryland’s future vitality as is resolving the state’s General Fund operating deficit. While the GBC strongly supports increasing transportation funding, it has not voiced positions on the other elements of the governor’s plan pending further review of the proposals and their potential impacts on the business climate.

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