Maryland legislators are looking for ways to raise hundreds of millions in new revenue for roads and other transportation projects, and increasing the state's gasoline tax appears a likely choice.
While supporters say the state is due for the first increase since 1992 on its 23.5-cents-a-gallon excise tax, opponents contend that consumers are already too burdened by high gas prices and another increase could be economically and politically catastrophic.
"The General Assembly should not move forward on gas-tax proposals as long as there's uncertainty in the Middle East and gas prices are as high as they are," said Sen. Richard F. Colburn, Dorchester Republican. "It would be devastating."
The Senate Budget and Taxation Committee will meet Wednesday to discuss possible tax increases, one week after a state-appointed commission recommended lawmakers raise $520 million in new taxes and fees to fund repairs of aging roads and transit systems.
The commission gave legislators several choices, including raising the state's gas tax, instituting a sales tax on gasoline, hiking several vehicle fees and raising property taxes. Lawmakers could consider such increases in the 2012 session of the Democrat-controlled legislature.
State analysts have already done the math on gas-tax increases. They say Maryland could generate more than $500 million in revenue by increasing its fuel tax to 39 cents a gallon — an increase of 15.5 cents a gallon — or by enacting a 5 percent sales tax on gas. Right now, the state does not have a gasoline sales tax.
Maryland has seen diminishing returns on its gas tax in recent years, as motorists have begun driving less while buying more fuel-efficient cars. Meanwhile, the needs for road improvements and expansion have persisted, leading some legislators to think they have no option but to raise the tax.
Maryland's 23.5-cents-a-gallon rate is already the 30th-highest in the country. Connecticut charges the highest rate at 49.6 cents, while New York charges 49.5 cents.
"If we're looking for transportation funding, we should utilize things that impact infrastructure," Delegate Tawanna P. Gaines, Prince George's Democrat, said last week. "It should be a fee for service."
While many states are scrambling to fund road repairs and transit systems, most have shied away from raising gas taxes because of an almost certain backlash from voters who think gas prices — now approaching $4 a gallon in Maryland — are already too high.
States including Maryland, Connecticut and Utah abandoned proposals this year to raise the gas tax under heavy scrutiny. Georgia and North Carolina raised their gas taxes this year by 2.8 and 2.5 cents a gallon, respectively. However, the increases were required by laws that keep the rates in line with inflation, not approved by a vote.
Maryland legislators could raise $520 million in new revenue solely through new gas taxes, or could pursue more modest increases — such as a 5-cents-a-gallon hike or 1 percent sales tax — in combination with property-tax hikes and increases on vehicle titling, emissions testing and other services.
An eventual proposal could also incorporate elements from a failed bill last year that was introduced by Senate Majority Leader Robert J. Garagiola, Montgomery Democrat, and would have raised the gas tax by 10 cents a gallon while increasing several fees.
Critics worry that an excise-tax increase will force distributors to raise gas prices — driving up costs for consumers and vehicle-dependent businesses. But John Felmy, chief economist for the American Petroleum Institute, said whether that will occur remains to be seen.
Mr. Felmy said distributors are unlikely to simply absorb a tax increase, but that gas prices will remain in line with supply and demand and could drop if demand continues to decline.
"We don't oppose raising taxes if they're used to support infrastructure development," he said. "But it's adding a cost. Is it justified? That's for the people to decide."
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