- The Enterprise
- The Recorder
As the first gas station along U.S. 301 north of the Gov. Harry W. Nice Memorial Bridge, the Glasva Citgo in Newburg would seem to be ideally situated to serve drivers crossing over from Virginia to Southern Maryland.
But talk to Ronnie Copsey and it soon becomes clear that he considers his family’s business to be on the wrong side of the Potomac River. After he sets up shop each morning, Copsey estimates that half of the cars with Virginia tags that stop by do it so their drivers can either use the restroom or fill their tires with free air.
Robert Copsey, Ronnie’s son, takes it a step further.
“I haven’t seen a person from Virginia buy gas here in 10 years,” he said. “A lot of people I see come in here to get $3 of gas just to make it across the bridge.”
Gas currently costs about a dime less in Virginia than in Maryland. As of Tuesday, the average price of a gallon of unleaded regular gasoline in Maryland was $3.50, compared to $3.40 in Virginia, according to AAA’s daily fuel report.
That gap is set to widen significantly this coming Monday, July 1, when Maryland’s current excise tax on gasoline will go up from 23.5 cents per gallon to 27.3 cents. At the same time, Virginia will replace its 17.5 cent excise tax with a wholesale levy expected to reduce the cost of gas by close to 6 cents per gallon.
Do the math, and on July 1, there potentially could be a 20-cent difference between what Maryland and Virginia service stations charge for a gallon of gas, which could add up fast in a region with some of the longest commuting times in the nation.
“That seems like a small increase, but it’s pretty large to people who are commuting,” said Kirk McCauley, head of government relations for the Washington, Maryland, Delaware Service Station and Automotive Repair Association.
The Maryland General Assembly approved March 29 legislation proposed by Gov. Martin O’Malley (D) to raise the gas tax for the first time since 1992.
Proponents argued that the state’s transportation fund would be empty in a few years without additional revenue and that 23.5 cents does not go as far as it did two decades ago.
O’Malley originally proposed reducing the gas tax to 18.5 cents per gallon and adding a 4 percent wholesale tax, but lawmakers instead tied the gas tax to the price of gasoline, which state analysts project will drive the tax to 44.6 cents per gallon by fiscal 2018.
Expected to raise $4.4 billion for transportation projects over the next six years, the bill also imposes a 1 percent sales tax before increasing it to 2 percent in January 2015 and 3 percent in July 2015. Critics have been quick to note that the legislation conveniently skips increasing the sales rate in 2014, an election year.
“We all know gasoline’s not going to drop [in price],” said Donnie Burch, vice president and director of operations for Burch Oil Co. Headquartered in Hollywood, the company owns and operates nine Burchmart convenience stores and gas stations throughout Southern Maryland, and has four additional franchise stations. “With the indexing … that’s going to go on forever, so there’s going to be an increase, the way the law is written right now, every year.”
The sales tax will go up to 4 percent in January 2016 and then to 5 percent in July 2016 if Congress does not pass legislation allowing states to charge sales tax on online purchases.
Commuters may not notice the full tax difference immediately because Virginia stations will be depleting their tanks of gas purchased prior to the wholesale tax going into effect, said Christine Delise, a spokeswoman with AAA Mid-Atlantic.
Southern Maryland lawmakers did not greet the bill with much enthusiasm. The entire Charles County delegation voted for the governor’s plan under the auspice of parlaying their votes into the inclusion of several local priorities in the state’s six-year transportation plan.
Sen. Thomas “Mac” Middleton (D-Charles) wrote the governor earlier this month reminding him of the commitment the administration made to putting the county’s light-rail initiative, improvements along U.S. 301 in Waldorf and Route 5 in Brandywine and Accokeek, and additional commuter bus service into the plan.
Outside of Charles County, Del. John Bohanan (D-St. Mary’s) was the region’s only legislator to vote for the bill, citing the state’s need to pay for the increasing cost of transportation projects and highway maintenance.
After signing the legislation, O’Malley announced a series of new transportation projects, including $20 million for the design and engineering of a new Gov. Thomas Johnson Memorial Bridge linking Calvert and St. Mary’s counties.
But some remain skeptical that the state will follow through on promises made to legislators who supported the bill.
“The improvements that are supposed to come from the increase in this transportation funding are vague,” said Lock Wills, chairman and CEO of The Wills Group, the La Plata-based parent company of Southern Maryland Oil. “Time will tell if the promises pan out. When I travel around the state and see different proponents [of the gas tax increase], they all say, ‘Well now our project is at the top of the list.’ You have to give them credit for knowing how to work the legislature. Now, whether the voters are happy with that, next year we’ll see.”
Plenty of local residents already cross the bridge to buy cheaper gas and cigarettes, which are taxed in Virginia at a rate of 30 cents per pack, far less than the $2 per pack charged in the Free State.
“In the state of Maryland, everything is taxed to death,” Robert Copsey said. “They just put it on the working man. After a while, they’ll tax you for breathing.”
Throw in the Walmart Supercenter that opened a couple summers ago just over the bridge in King George, Va., and Ronnie Copsey thinks many locals might start crossing the border for some one-stop shopping.
“They can get it all in one shot,” he said. “When people go over there, they buy their gas, get a fast-food sandwich, go to Walmart and get their groceries, get their clothes, and they get their cigarettes — and I don’t blame them.”
Just as the 2007 tax increase on cigarettes drove Maryland smokers across the border, Wills fears the gas tax increase will do the same. “People voted with their feet” in 2007, he said. “I can see here in Charles County, instead of shopping here, people going across the bridge and doing their shopping. Common sense tells you people will drive a little further to save a few pennies.”
McCauley said Maryland service stations near Virginia already lose out on customers traveling in both directions — either they wait to fill up in Virginia when coming from Maryland or make sure to get gas in Virginia before crossing into Maryland. He expects the states’ respective tax policies will only fuel Virginia stations’ competitive advantage.
“Down [U.S] 301 it’ll be no different, at the Harry Nice bridge. You’ll have people go over the bridge to buy their cigarettes like they do now and just buy their gas over there,” McCauley said.
A 2.1 percent sales tax charged by fuel distributors to retailers makes gas more expensive in Northern Virginia than in other parts of the state, but its service stations will still offer gasoline at about 10 cents less than those in Maryland, McCauley said.
It won’t only be gas stations along the border that are affected, McCauley said. In Southern Maryland, residents in Prince Frederick or Leonardtown heading out on vacation to a Southern beach might start waiting until they cross the Nice bridge to fill up for the long drive, he said.
“I think it’ll be particularly bad in Southern Maryland and the Eastern Shore near the borders of Virginia and Delaware,” which has a 23 cent per gallon gas tax.
When the full brunt of the tax increase hits in 2015, “it’ll be a total disaster,” McCauley said. “You’ll have people going 10 or 15 miles out of their way to fill their tanks.”
In addition, industry analysts forecast gasoline consumption to steadily decline over the coming decades as cars become more fuel efficient, more motorists opt for hybrid or electric vehicles, and metropolitan regions build or expand mass transit systems.
“Maryland has doubled down on a declining revenue source in gasoline,” Wills said. “You don’t go to a source that’s declining, and I think that’s a fatal flaw in O’Malley’s reasoning.”
Adding to the consternation for commuters is that the taxes they pay for gasoline will in large part go to fund transit systems in Baltimore and the Washington, D.C., suburbs, including the construction of the Red and Purple lines.
The Maryland Transit Administration estimated that fares would cover less than 30 percent of the fiscal 2013 operating expenses of its commuter bus service and the Baltimore transit system, while the state’s portion of the D.C. metro would pay for little more than half of its costs.
There is a “valid argument” that motorists should contribute to the cost of mass transit systems, which reduce traffic congestion, but “they can’t pay the whole tariff,” said Peter Horrigan, president of the Mid-Atlantic Petroleum Distributors Association.
“The gas tax cannot pay for two mass transit systems. It just can’t do it, and that is what the governor and the legislature is essentially saying: The motorists can pay for the total cost of maintaining two mass transit systems. It’s not going to happen,” Horrigan said. “Last time I looked in Southern Maryland, you don’t have any subways down there. The next governor, whoever that’s going to be, is going to be rich. He’s going to have more money than he’ll know what to spend it on. Probably more subways.”