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Panels recommended higher Md. taxes, fees

Two groups charged with figuring out how the state can pay for new roads, a cleaner Chesapeake Bay and other key functions of government suggested the same basic answer Tuesday: Marylanders should be asked to dig a little deeper into their pockets.

A blue-ribbon commission on transportation and a committee looking at sewage and growth issues both urged Gov. Martin O'Malley and the General Assembly to come up with more revenue. One recommended a 15-cent-a-gallon increase in the state's gasoline tax, while the other called for tripling Maryland's so-called "flush tax" to $90 by 2015.

The transportation panel also backed a series of higher fees that would affect every Marylander who owns a car or rides the bus or subway. It proposed higher transit fares, a 50 percent increase in vehicle registration fees and doubling the emission inspection fee to $28. Advocates contend revenue increases are necessary to deal with a backlog of deferred projects, including roads, bridges and transit systems.

A committee of a 28-member task force appointed by the governor to tackle sewage and growth issues recommended that the state raise in two stages the $30 annual "flush fee" that all Maryland homeowners pay to help clean up the bay. Under the proposal, the annual fee would rise to $60 next year and $90 in 2015.

The first increase would close a looming $385 million gap in funds to upgrade sewage treatment plants. The second would help local officials pay for cleanup work they're being required to perform over the next several years under the federal government's bay "pollution diet."

Any increases in taxes and fees are certain to face determined opposition in Annapolis, but the governor and General Assembly leaders have said they would give the recommendations serious consideration. O'Malley signaled this month that he might support a gas tax increase. He also has said an increase in the flush fee – formally known as the Bay Restoration Fund – deserves consideration.

"We're going to take a look at everything," O'Malley spokeswoman Raquel Guillory said Tuesday, "particularly as it helps address our infrastructure needs, and to create jobs."

Chairman Gus Bauman said the transportation panel decided to spell out proposals to the legislature in detail rather than make general recommendations.

"It's got to be something specific and real and not just a bowl of mush," he said.

Both the transportation and the sewer panels were set up to make recommendations at a time when state revenues aren't growing fast enough to meet the state's needs. .

Senate President Thomas V. Mike Miller Jr. has said he would push for a transportation revenue package during the 90-day legislative session that begins in January, but has called the suggested 15-cent increase too high.

House Speaker Michael E. Busch was out of town Tuesday and couldn't be reached for comment. He has previously expressed skepticism about a gas tax increase, but spokeswoman Alexandra Hughes said he would take the commission report under consideration.

Any increase in Maryland's 23.5-cent-a-gallon gas tax would be the first since 1992. Transportation advocates contend that the buying power of that revenue has eroded seriously in the intervening two decades, leaving the state an estimated $870 million a year short of what it needs to keep up with necessary spending on highways, mass transit and other projects.

"We've got a serious problem. The federal spigot is running dry," Bauman said.

Anticipating complaints that money raised for transportation would be used for other purposes, the commission urged lawmakers to adopt a strict guarantee that those revenues would not be diverted to balancing the state's budget.

The transportation commission did not take a formal vote on its report but adopted its recommendations by consensus.

Not joining in the general agreement was panel member Lon Anderson, public affairs director for AAA. Anderson complained that the commission's recommendations put too much burden on motorists while failing to identify an alternative source of funding for transit systems.

"The way it's going, the commission has found the state's new ATM … for transportation, and it's motorists," he said.

But Bauman insisted the proposed increases represent a fair balance.

"This proposal does not put a burden on motorists," he said. "All transportation users are going to share this burden."

Carl Davis, resident tax expert at the nonpartisan Institute on Taxation and Economic Policy, said a 15-cent gas tax increase would cost the average Maryland driver $77.55 a year. But he said the hike is justified because almost half of the buying power of the gas tax has been eroded by inflation over the years. A 15-cent increase, he said, would just about restore the gas tax to its 1992 level in real terms.

Gradually tripling the sewage fee would underwrite new pollution controls at nine of the state's 67 largest sewage treatment plants, plus a handful of medium-sized wastewater plants outside of major metropolitan areas. It would also increase state funds for replacing failing household septic systems and help pay for planting trees, creating rain gardens and other projects to reduce polluted runoff from urban and suburban streets, lawns and parking lots.

The full task force did not vote on the proposal endorsed by its committee. The task force's recommendations are not due until Dec. 1.

Del. Maggie McIntosh, co-chair of the task force, who has previously weighed in favor of doubling the flush fee, said the additional funds would create badly needed jobs.

"You've got 39 percent unemployment in the building trades in the Baltimore area," noted McIntosh, a Baltimore Democrat who heads the House Environmental Matters Committee. Improving wastewater treatment plants and other infrastructure projects are "the kind of thing that grows jobs," she added.

Del. Anthony J. O'Donnell, the House Republican leader, said he couldn't support any increase in the flush fee.

"Some of the problems these folks are dealing with are real problems, and I understand that. But the solution cannot be to tax citizens more and more," said O'Donnell, who represents Calvert and St. Mary's counties. "We're in the worst economic times since the Great Depression. People are out of work, people can't pay their bills, credit card and mortgage defaults are through the roof."

What emerged from the transportation panel's nearly two years of deliberation were specific proposals, setting the stage for what could be a lively debate over the state's highway and transit priorities.

The commission recommended:

•A 15-cent increase in the gas tax, phased in by 5 cents a year over three years. The panel urged that at the end of that period the tax be indexed to inflation.

•A 50 percent increase in the vehicle registration fee, expected to raise $165 million.

•An increase in the vehicle titling tax from 6 percent to 6.5 percent, or the elimination of an allowance for traded-in vehicles that has reduced the amount car buyers owe. Either is expected to raise $70 million.

•An increase in Maryland Transit Administration fares, which have remained frozen during the O'Malley administration. The panel's recommendation echoes a call by the legislature for the agency to increase fares to move closer to its statutory goal of paying for 35 percent of its expenses with fares. The increases -- which would affect bus, light rail, MARC and metro service -- are expected to raise $26 million.

•An increase in the fee for a vehicle emissions inspection from $14 to $28, expected to yield $22 million.

The commission urged the legislature to amend the state Constitution to bar transfers of these transportations revenues for non-transportation purposes. In the interim, the panel urged lawmakers to adopt strict statutory limits permitting borrowing from the transportation trust fund only in an emergency and with a plan for repayment.

Sun reporter Annie Linskey contributed to this article.

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