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A proposal by Gov. Martin O’Malley (D) to restructure the way the state collects the gasoline tax has drawn the ire of Frederick County lawmakers and some local municipal officials, who are unhappy that not enough funding would go to improve area roads and bridges.
The governor’s bill is expected to raise $3.4 billion over the next five years, and some portion of that will have to go toward transit projects like the Purple Line in Montgomery and Prince George’s counties and the Corridor Cities Transitway in Montgomery County.
How much will go to those projects hasn’t been decided, but the governor’s reference to transit projects while introducing the bill on March 4 has rural lawmakers calling the bill unfair, splitting the chambers across the usual fault lines whenever transportation is debated.
The governor’s bill ignores the discrepancy of funding for mass transit when the majority of the state’s population drives more than they use transit, said Sen. David R. Brinkley (R-Dist. 4) of New Market.
O’Malley’s bill also does not require the funding raised from the change to be used for transportation, which could mean it would be used to fill a budget shortfall elsewhere, Brinkley said.
The O’Malley plan overwhelmingly subsidizes mass transit over the aging roads and bridges in the state, he said.
“It doesn’t address it at all,” Brinkley said. “It ignores it entirely.... Those two elements have to be a part of the solution.”
There needs to be subsidization of the state’s mass transit systems, but residents in Frederick and Washington counties have “no business” paying for those systems. Brinkley said.
Brinkley has introduced a bill that would establish a mass transit tax of 2.1 percent to distributors of gas to cover those expenses.
He has also introduced a bill that would require Transportation Trust Funds to be used for specified highway purposes and protect that money from being used to cover other state shortages.
The transit tax had a hearing on Feb. 20, while the transportation fund bill has a hearing scheduled for Tuesday.
Brinkley isn’t alone at introducing gas legislation.
Sen. Ronald N. Young (D-Dist. 3) of Frederick introduced a bill that would allow local jurisdictions to tax gasoline at rates of up to 2 percent at local gas stations to pay for transportation projects. That bill had a hearing on Feb. 20, but its current status is unclear, according to online legislative records.
O’Malley’s bill would lower the flat 23.5-cents per gallon tax to 18.5-cents per gallon — and index that amount to increase with inflation — and gradually apply the state’s sales tax to wholesale gas sales, beginning with 2 percent this July and increasing to 4 percent in 2014.
The total effect of the changes will mean an extra 2 cents at the pump this July, and 7 cents in 2014, based on the current market.
That will mean the purchasing power of the revenue the state collects — $752.3 million in fiscal 2011 — won’t decrease over time, as it has done in the past few decades, O’Malley spokeswoman Takirra Winfield said. The tax hasn’t been raised since 1992.
A portion of the state gas tax revenues have traditionally been given to municipalities as highway user funds, but the amount of money from the state has decreased in recent years.
Frederick Mayor Randy McClement (R) said the funds — which are used to repair potholes, resurface streets and other projects — are frequently raided at the state level, leaving the city without the funding needed for maintenance.
“We’ve been hammered on this,” he said. “How are we going to fix our streets? .... We were getting about $1.4 million this year, but I’m sure that’s going to decrease.”
The raiding of transportation funds has left the city in a serious hole for funding those projects, and the O’Malley plan would leave the city further behind, passing the responsibility on to residents, McClement said.
“You can’t keep throwing it back on the backs of citizens,” McClement said. “... We’re somewhere about $8 to $8.5 million behind. They took it away; at a minimum, they’ve got to make us whole.”
Frederick officials are not the only ones concerned about the change.
James Peck, the director of Research and Information Services for the Maryland Municipal League, sent an email to the group’s legislative committee estimating that municipalities would lose $3.1 million in highway user fund revenues in fiscal 2014, and the fund would decrease 45 percent per year thereafter.
“Should this legislation pass in its current form, monies generated from future indexed gas tax rate increases and monies generated from a new sales tax on gas would not be shared with local government,” he wrote.
But the proposal won’t just mean less money is available at the municipal level.
John Townsend II, spokesman for AAA Mid-Atlantic, said O’Malley’s proposal would also bring drastic changes to consumers.
He said gas prices averaged $3.59 in 2012 but would have been about $3.70 under the O’Malley proposal.
AAA had earlier supported the Blue Ribbon Commission on Transportation Funding which had called for an increase of 15 cents per gallon in the state’s gas tax to raise additional revenues for the Transportation Trust Fund, but with a “lockbox” on the fund to keep the state from raiding it to balance the budget.
He said AAA splits state gas taxes into three tiers: more than 48.8 cents per gallon; between 40 cents and 48.8 cents; and below 40 cents.
Maryland residents currently pay 41.9 cents per gallon in combined state and federal tax, which is 27th in the nation, but that would spike to nearly 50 cents per gallon in total tax next year.
The state is already experiencing its highest gas prices ever for March, and the additional tax would just increase the burden on consumers, Townsend said.
“That tax increase in the sales tax will never go away,” he said. “The assumptions we’re making is the distributors will pass the savings [from the O’Malley plan] on to the consumer — that assumes they’ve had a change of heart and are giving back, despite not doing that before.”
Staff Writer Holly Nunn contributed to this story.