Panel urges gas tax, public transit fare increases to fund projects

A blue-ribbon commission set up to recommend ways to finance Maryland's growing backlog of transportation projects recommended Tuesday that the state raise its gas tax by 15 cents a gallon and increase public transit fares as well as protect that revenue from being diverted to other purposes.

The panel, set up by the General Assembly, also urged legislators and Gov. Martin O'Malley to back a series of other revenue-raising measures, including a 50 percent increase in vehicle registration fees and doubling the emission inspection fee to $28.

The increase in Maryland Transit Administration fares would affect bus, light rail, MARC and metro service.

Any increase in Maryland's 23.5-cent-a-gallon 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.

The 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 that state's new ATM … for transportation, and it's motorists," he said.

At a time when the economy is weak, the recommendations are expected to meet with fierce resistance in the legislature. And while O'Malley has hinted he might throw his support behind a gas tax increase as part of an effort to create jobs, the panel's recommendations are not binding on him or legislative leaders.

Both House Speaker Michael E. Busch and Senate President Thomas V. Mike Miller Jr. have been noncommittal about pushing for a transportation revenue package in the session that begins in January. But state Sen. Rob Garagiola, a Montgomery County Democrat who has been the chief champion of raising additional transportation funds, has said that if the Assembly doesn't act in 2012, it is unlikely it would raise taxes or fees later in the 2014 election cycle.

What emerged from the panel's nearly two years of deliberation were specific proposals, setting the stage for what could be a lively debate over the state's transportation 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. Those changes would raise an estimated $491 million a year, making it the largest component of the revenue plan.

•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 to traded-in vehicles that has reduced the amount car buyers owe. Either is expected to raise $70 million.

•An increase in MTA 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 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.

A gas tax increase is backed by some of the state's leading business groups, including the Maryland Chamber of Commerce and Greater Baltimore Committee — organizations that are usually cool to government revenue-raising efforts. But those groups also want to see the legislature adopt strong protections, including a constitutional amendment, to prevent future diversions of money from the Transportation Trust Fund to make up for revenue shortfalls in the general fund budget.

The trust fund has been a irresistible source of funds for governors of both parties when facing budget gaps — both O'Malley and his predecessor, Robert L. Ehrlich Jr., have turned to it. Transportation advocates says these "raids" have eroded support for transportation funding and are expected to urge that any revenue increase be coupled with a "firewall" provision preventing future diversions.

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