Tuesday, March 19, 2013

O'Malley Raises Taxes, Again. This Time For Transportation

Martin O'Malley's legacy will be that he raised taxes against hard-working middle class Marylanders more than any Governor in the history of Maryland.  This year is no exception.

In the latest episode of raising taxes in the guise of "investing in our future", we're examining the proposed gas tax.  If you're not aware, the gas tax helps fund the Transportation Fund.  Maryland definitely has a Transportation Fund problem.  There is no money left to maintain highways, expand highways, and build transportation infrastructure, including mass transit options.  But that's not the problem.  The problem is that Martin O'Malley spent all the money in the Transportation Fund to fill revenue gaps in other areas.  You've heard the expression, "He raided the transportation fund." Well, that is the problem.  He raids the fund, spends it elsewhere, then comes back to the citizens and says, "We need to raise taxes to invest in our transportation infrastructure."  If he hadn't raided the transportation fund in the first place, we wouldn't need to raise taxes on fuel.
I-695 \ I-95 junction reconstruction in Eastern Baltimore County in 2009
But let's be clear.  Though we are pointing the finger at Martin O'Malley for spending all of the money from the Transportation Fund on things that are not transportation related, he is certainly not the first Governor to do so.  The Republican's beloved Bob Ehrlich did it, too.  Why do our leaders continue to raid the Transportation Fund?  Because they can.  Need more money to spend on social programs?  Raid the Transportation Fund!  Balance the budget? Raid the Transportation Fund!

To the rescue comes Carroll County House Delegate Republican Susan Krebs and her house bill HB176, the Transportation Trust Fund Protection Act, that would have prevent raiding of the fund.  However, she wrote:

Proposing an amendment to the Maryland Constitution to establish a Transportation Trust Fund to be used only for purposes relating to transportation with a specified exception; prohibiting the reversion or crediting of any part of the Transportation Trust Fund to the General Fund or a special fund of the State; requiring that specified taxes, fees, charges, and revenues be credited to the Transportation Trust Fund; etc

Her bill will most likely not be passed, as the Maryland General Assembly votes NO to ANYTHING Republicans propose.  If it's not the Democrats' idea, it's a bad idea.  Some up and coming Democrat from the suburbs will then propose the same bill in the next session and the overwhelming Democratic majority will rally around it.  Remember the slots bills?

I agree with her that the Transportation Fund should not be every governor's piggy bank for other pet projects.  On the other hand, I totally disagree with the editorial she forwarded to constituents from Pete Horrigan.  I thought his editorial to be another hard right-wing non-compromising opinion that gets us nowhere.  What I totally disagree with is that the funds should not be used to help pay for mass transportation.  His argument is that mass transportation is not financially independent and highway drivers are forced to unfairly subsidize mass transportation.

I-795 in Owings Mills, Baltimore County, with Metro Subway in the middle
Perhaps there's a bit of liberal in me.  I don't have hard proof, but common sense tells me that the poor overwhelmingly use mass transportation.  Without it, they would be forced to find alternate forms of transportation, thus pushing them further into poverty or financial instability.  The unintended consequence of cutting mass transit is that the poor would become and even greater burden on the tax-paying part of society, and we don't want that.

Secondly, by experience, I know that many middle class people use light rail and the subway in Baltimore and Washington.  If we cut mass transit, which could result in higher fairs, fewer trains, or even no trains, then all of these suburbanite commuters will be forced onto the highways.  If the pundits argue that the highways are too jammed now, wait until you add everyone that's sitting on a train in the morning.

I hate that Martin O'Malley is promoting "investing in transportation" as one of his priorities, when in fact he is covering up that he needs to replace the money that he took.  I agree that the money needs to be there, but I do agree with Delegate Krebs that he can't be stealing the money for other purposes anymore.

Baltimore's Light Rail near the Baltimore Convention Center
Here's the editorial that Delegate Krebs sited.  And note that Mr. Horrigan is the President of the Mid-Atlantic Petroleum Distributors Association.  He WANTS more people on the roads so that they use their fuel.  This reminds me of the General Motors Streetcar Conspiracy, which, interestingly, was brought to my attention by the movie Who Framed Roger Rabbit.

Once again, Virginia has beaten Maryland to the punch regarding taxes on business and consumers. Virginia eliminated its gas tax completely and replaced it with a 3.5 percent sales tax on the wholesale price of gasoline. Gov. Martin O'Malley's new tax increase proposal would reduce the gas tax rate 5 cents but add a sales tax to the retail price of gasoline and diesel, resulting in a 63 percent increase in the tax on gas and a 90 percent increase in the diesel tax.

Only in Maryland would we claim to "reduce" taxes in a way that results in increases - and leaves Maryland retailers at a devastating competitive disadvantage. The Virginia tax rate in particular will be almost 28 cents per gallon less than Maryland's, and we will have the highest fuel tax rate compared to all our surrounding states. Most of Maryland's approximately 2,300 gas stations are operated by small businesses, and many are located within close proximity to our neighboring states. These increases will make our small businesses uncompetitive with their nearby, out of state competitors.

Maryland fuel retailers, on average, don't even make 20 cents per gallon and will be forced to pass all tax increases on to their customers. The net result will be the loss of Maryland jobs and tax revenues as consumers make their purchases out of state.

Equally concerning is the fact that the governor's proposal does nothing to address the real issue of why we have a transportation revenue problem, and that is mass transit: two systems (the Maryland Transit Administration and the Washington Metro) where highway users already pay over 50 percent of the operating costs. Fares paid by transit riders cover only a fraction of the operating costs, yet mass transit systems handle less than 10 percent of local travel while highways and bridges are choked with the remaining 90 percentThis is not sustainable. Maryland, like Virginia, must change its approach and recognize that highway users already pay more than their fair share, and raising gas taxes is not the solution. Other, broader-based funding sources need to be identified.

Protecting the funds in the Transportation Trust Fund is absolutely essential to prevent our elected representatives from siphoning off funds for other purposes. Although the governor's plan includes a "lockbox" intended to ensure that the funds collected are used for their intended purpose, in reality his proposal does nothing to protect these funds, because all it takes is a three-fifths vote of a standing committee to raise the funds. Moreover, the governor's proposal specifically indicates that the state can continue to divert Highway User Revenue funds that are supposed to be shared with the counties.

Motorist-paid gas taxes and vehicle fees are by far the largest source of transportation funding for both highways and mass transit. Maryland can no longer meet the needs of two costly major mass transit systems and adequately maintain and improve our highway system on the backs of motorists. A look at Maryland's transportation spending history over the last 10 years bears this out, as commute times have increased, transit ridership has been flat and millions of dollars of transportation funds have been permanently diverted to the General Fund.

Now is not the time to raise our gas taxes 63 percent and squeeze more money out of Marylander's highway users' pockets. Our state government needs to find other alternatives - including living within its means.
- Pete Horrigan, President of Mid-Atlantic Petroleum Distributors Association 

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