O’Malley proposes tying gas to sales tax, to alter traffic woes

(Live Blog below)

WASHINGTON – Many of Maryland’s traffic woes would be alleviated by allowing a percentage tax on gasoline, the state’s governor said Monday.

While speaking on WTOP’s “Ask the Governor,” Martin O’Malley said he would like to “phase out” the sales tax exemption on gas, which would allow a percentage tax on the fuel in additon to the existing 23-cent flat tax.

The current flat tax has not changed since the early 1990s when gasoline was about $1.08, the governor says, adding the regional arteries wouldn’t be so clogged if the state had more to invest in transportation infrastructure.

“The best option…is to get away from the flat, per-gallon tax and instead move to a percentage,” O’Malley said. The outdated scheme “is why we have one of the most congested metropolitan areas in the country.”

That won’t change on its own, he said. The gas tax is the state’s primary means of funding transportation projects, and no other resources are as impactful.

“There is no one that’s going to do this for us. Bridges are not like trees, that grow taller and stronger with age,” he said.

China and India are not going to build our infrastructure for us, O’Malley said. “Our middle class was also built by our middle class.”

The state would probably have an additional $4 billion if it had instituted this earlier, he said.

Maryland currently has a 6 percent sales tax. O’Malley’s proposal would include a mechanism to alter that for gas if the price of fuel spikes.

Later on the program, O’Malley stated he would be open to raising the speed limit on the current InterCounty Connector, currently funneling the amount of traffic the state had projected, he said.

Learn more about the governor’s take on the “download tax,” county pension payments and tax brackets in our live blog:

10:56 a.m., speaking about the Republican primary:

When Gov. McDonnell and I get together we don’t talk about national politics. We talk about public safety, transportation, and Metro.

I would say I hope his party has a long and robust discussion about the future of it.

A bird can only fly with two wings. We need both to be functioning to make our country soar.

10:53 a.m., speaking about state college tuition increases:

We went without a penny’s increase for four years in a row, for a the last couple years have kept to 3 percent. Here’s the problem with a permanent cap: It feeds the myth that there’s a magic wand or an “easy button.”

If you want to get what you pay for, it should cost what it costs. “It doesn’t seem to be a healthy exercise.”

I do think we should make college affordability a much higher priority.

10:51 a.m., speaking about allowing drunk driver victims to sue the establishment that served the alcohol:


10:47 a.m., speaking about his wife using the term “coward”:

She has profusely apologized and clarified that she wasn’t speaking about all who oppose gay marriage. “She feels very badly about it.”

I believe justice produces justice, to quote Ralph Waldo Emerson.

10:44 a.m., speaking about gay marriage:

We thought it was going to pass last year. We need to persuade a half-dozen members of the House of Delegates that we can maintain religious freedom while also protecting marriage freedoms.

10:42 a.m., speaking about the digital projects “download tax”:

This is nothing like the “high tech tax” a few years ago.

There are a lot of retailers who are hurt when there’s no online sales tax, it’s a windfall for the Amazon.com businesses of the world.

10:41 a.m., speaking about raising the speed limit on the ICC:

We are considering it, potentially to 65 mph. The limit is enforced not just by state police, but also the Maryland Transportation Authority, which built the ICC.

10:36 a.m., speaking about shifting the pension payments to the counties as well as the state:

(County leadership say that would be a “budget breaker.” )

I met with a series of county executives. Every year for the last six years, whenever the budget comes up there are those who say Maryland should not have to pay for 100 percent of teacher retirement costs.

10:35 a.m., speaking about ICC ridership, and potentially raising the speed limit and lowering the fares:

The traffic counts are on target for the projected ridership. There is the traffic on it we had anticipated being on it.

I haven’t seriously considered that question.

10:27 a.m., speaking about income tax brackets:

This is not so much about defining who is or is not wealthy. It’s about supporting programs, like public education, that allow our middle class to grow.

We’re looking at a “modest cap” on deductions to those of us who earn a significant salary.

The revenues that are generated by this, we need to support public education.

10:24 a.m., speaking about altering homeowner taxes:

My focus is on the next generation, not the next election — I cannot run for reelection. What’s contained in the proposal…I’m going to ask everyone to do a little more.

When it comes to income tax deductions on your state portion, we’re asking for a cap, for the 20 percent who own more than 80 percent than us. Roughly, it means that a family that makes $150,000 would get a $190 less back, if we cap deductions at 90 percent.

If you move up to the next bracket cutoff, it’s capped at 80 percent.

Some other things in the budget, like the flush tax, that will affect all of us. If the legislature decides we should, after 20 years, increase or index the gas tax by repealing the sales tax exemption on it, that will affect all of us.

10:21 a.m., speaking about improvements to Maryland public services:

In the middle of this recession, we’ve been named the No. 1 public schools four years in a row. Violent crime is down to a 30-year low. Foreclosures are way, way down. Our state had a “very positive” year of job creation.

Making the right cuts is important, paying for these things is important, but it’s all for the goal of strengthening the middle class.

10:15 a.m., speaking about potential new bridges across the Potomac:

It’s certainly a reality to talk about. Our state has a lot of priorities. A second crossing is not on our short-term horizon. A crossing around Point of Rocks is something we’re willing to explore.

You should take a ride on the ICC. It will cost you something because part of the payment scheme was through tolls. We spent more effort on the environment of that any other highway.

10:11 a.m., speaking about transportation investments from a gas tax:

We’ll phase out the sales tax exemption, with options to reduce a percentage tax if the price on gas spikes.

“There is no one that’s going to do this for us. Bridges are not like trees, that grow taller and stronger with age.”

China and India are not going to build our infrastructure for us. Our middle class was also built by our middle class.

There are a number of things that go into the infrastructure trust fund. “None of them is as impactful as the gas tax.”

Instead of ‘”death by a thousand fees,’ I’d rather be straight up with people.”

I’d rather invest in highways like 301 on the Eastern Shore, connectors in Western Maryland that will aid economic development in that hard-hit part of the state.

10:03 a.m., speaking about the proposed gas tax:

Haven’t had any increase in primary source of transportation funding, the gas tax, since the early 1990s. Gas was about $1.08 a gallon then, now it’s over $3.60.

The flat 23 cents is the same now as it was then.

“The best option, as it would seem to me…is to get away from the flat, per-gallon tax and instead move to a percentage.”

The best way to do that is to roll back the exemption on the sales tax we currently have in Maryland. There currently is no sales tax on gasoline.

A series of business groups all recognize we are not investing what we should be in transportation infrastructure. “That’s why we have one of the most congested metropolitan areas in the country.” That won’t change on its own, and the gas tax is our primary means of funding.

We’d probably have another $4 billion if we’d instituted this earlier.

This money would go to transportation solutions.

WTOP’s Paul D. Shinkman contributed to this report. Follow Paul and WTOP on Twitter.

(Copyright 2012 by WTOP. All Rights Reserved.)

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