Virginia’s Transportation Funding Debate

February 17, 2012

Maryland is not the only state debating how to fund roadways in a difficult economy.  As reported by the Virginia Statehouse News, Virginia’s legislature is also embroiled in a battle over whether to increase the gas tax this year.

Senate Bill 639, sponsored by state Sen. Frank Wagner, R–Virginia Beach, would index the gas tax annually to the U.S. Department of Labor’s producer price index for nonresidential construction. 

It cleared the Senate on Tuesday, 26-14, but a similar proposal — House Bill 899, sponsored by Delegate David Albo, D-Fairfax — was rejected in committee.

“There are some on our side of the aisle who say, ‘Why are you going to force Virginians, solely Virginians, to fund a transportation system and let out-of-state people use it for free?’” said Delegate Jenn McClellan, D-Richmond, who supports raising the gas tax.

Democrats and Republicans acknowledge that repairing the state’s shoddy roads must be part of the final budget, but they disagree on how to do it.

Leave a Comment » | Taxes and Revenues, Transportation and Public Works | Permalink
Posted by Andrea Mansfield

MACo Supports Bills That Provide a “Lockbox” for Transportation Funding

February 17, 2012

As previously reported, a number of bills have been introduced to provide a “lockbox” to protect transportation funds from being transferred to the General Fund.  SB 403, Transportation Trust Fund – Dedicated Highway Funds, sponsored by Senator David Brinkley, seeks to do the same.  As reported by the Frederick News Post:

Maryland Sen. David Brinkley is seeking to amend the state constitution in an effort to protect the transportation trust fund, a pot of money fueled by gas and car titling taxes, as well as fees and other revenue sources. In past years, the state has siphoned dollars from the fund to bolster the general fund, a practice Brinkley said needs to stop.

“The integrity has to be restored to the transportation ‘mistrust’ fund,” the Republican lawmaker said in an interview. “You can’t go harvesting dedicated funds to balance the budget.”

Whereas, this bill would protect funds in the Transportation Trust Fund from transfer to the general fund, it does not include language to protect the local share of Highway User Revenues (HUR) and restore the HUR distribution back to the historical 70% State/30% local government split.  MACo’s Legislative Committee has reviewed this bill and approved the organization supporting this bill with amendments to protect and restore the local share of HUR.

MACo will be taking the same position on Senator Garagiola’s bill, SB 441, since it also does not protect and restore the local share of HUR.

MACo has supported HB 23, introduced by Delegate Herb McMillan and HB 146, introduced by Delegate Susan Krebs, because both bills protect transportation funding and the local share of Highway User Revenues.

 

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Posted by Andrea Mansfield

Governor Proposes Gasoline Sales Tax, Partial Restoration of Local Road Funding

February 15, 2012

After weeks of waiting, the Governor has released his transportation plan, the Maryland Transportation Financing and Infrastructure Investment Act of 2012.  Straying from the recommendations of the Blue Ribbon Commission on Maryland Transportation Funding, this legislation would apply the State’s 6% sales tax to the price of motor fuel.  This revenue raising tactic was considered by the Commission, but not adopted in its final report.  From a press release from the Governor’s Office:

The proposed legislation phases in a six percent sales tax on motor fuel at two percent each year for three years that will generate an additional $613 million in revenue to address Maryland’s urgent transportation infrastructure needs and support an estimated 7,500 jobs for Maryland families. The sales tax would be applied to the retail price of motor fuel minus any federal and state taxes.  An average retail price of motor fuel will be calculated by the Comptroller’s Office every six months based on the average of the prior six months of actual prices of regular unleaded gasoline.

The Governor’s legislation includes a “braking mechanism” that will temporarily cease the phasing of the tax for consumers in the event of a dramatic spike in the price of gasoline. If the price of gasoline in year one were to increase by more than 15 percent over the prior year, the rate in year two would remain at 2 percent.  This test will be calculated in each subsequent year until the full rate of 6 percent can be applied.

This legislation would also restore some level of transportation aid to local governments.  However, not in the same manner as historically advocated by MACo.  MACo has consistently advocated for full restoration of Highway User Revenues back to the historic 70% State/30% local share.  Instead this proposal maintains the current 90% State/10% local share and establishes the Local Transportation Infrastructure Aid Account to allocate new revenues generated by the sales tax to local governments. According to Summary Document outlining the proposal:

  • The new revenue generated by the application of sales tax would be shared with the local governments on an 80% State /20% local basis.
  • The distribution of funds would be:  Counties=70%; Municipalities=20%; and Baltimore City=10%.
  • As with the application of the sales tax, the revenue sharing would be implemented in three phases.  At a 2% rate, local governments would receive 10% of the new revenue generated.  The local share would increase to 15% at the 4% rate and 20% at the 6% rate.
  • When combined with Highway User Revenues, the revenue generated from the application of the sales tax will restore both municipalities and Baltimore City to approximately 70% of their 2008 funding levels and will restore the Counties to nearly half (42%) of their 2008 funding level.

Read the Baltimore Business Journal coverage of the proposal here.

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Posted by Andrea Mansfield

Transportation Funding May Fall Short Even With Additional Revenues

February 7, 2012

On February 3, budget analysts from the Department of Legislative Services briefed  the House Appropriations Committee on transportation funding issues.  The briefing, the first in a series of budget hearings on the Maryland Department of Transportation, provided an overview of the Transportation Trust Fund, actions that have occurred with the fund over the past several years and a summary of recommendations from the Blue Ribbon Commission on Maryland Transportation Funding.  As reported by MarylandReporter.com:

In a hearing on the state’s transportation budget Friday, legislative analyst Jonathan Martin told members of the House Appropriations Committee that Maryland’s aging infrastructure is demanding more and more dollars.

“Because of all the funding pressure for transit lines and system preservation, the amount raised is insufficient to meet those needs,” Martin said. “With a shortfall, as policymakers, you have difficult choices to make.”

The shortfall is exacerbated by two major factors. The state is planning to build two major commuter transit projects – the Red Line to connect Baltimore suburbs and the Purple Line to connect Washington, D.C. suburbs – without a funding source. The federal government is paying half of the planning costs, but estimates for construction costs are as much as $724 million in a single year. Congress has not come to a consensus on how to fund transportation in the future, causing uncertainty about continued funding.

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Posted by Andrea Mansfield

Bills Introduced to Provide Transportation “LockBox” and Restore Local Share of Highway User Revenues

February 3, 2012

Numerous bill have been introduced this year to provide a “lockbox” to protect transportation funds from being transferred to the General Fund.  The most recent bill, SB 441,  was introduced in the Maryland Senate by Senate Rob Garagiola. As reported by MarylandReporter.com:

“In recent years, the Transportation Trust Fund has been depleted,” Garagiola, D-Montgomery, said in an e-mail. “This legislation proposes a constitutional amendment to create a firewall for current and future Transportation Trust Fund monies. It is critical that we act now to address our infrastructure needs.”

Senator Garagiola has also introduced legislation, SB 440,  to restore the Highway User Revenue to local governments back to the historical 30% level.

“Maryland needs to begin the process of restoring this vital funding to our counties and municipalities,” Garagiola said. “Marylanders do not distinguish importance between state and local roads.  At a time when our local governments are also struggling to balance their budgets, we have taken essential funding from their own equally critical transportation projects.”

Historically, county and municipal governments got 30% of the Transportation Trust Fund revenues. The percentage shrunk to 10% over the last two years due to transfers to the general fund. The proposal keeps local governments’ share at 10% in FY2013 but increases it to 25% by FY2016.

SB 440 will restore the local share back to 30% in FY 2017.
Other bills to protect transportation funding and the local share of Highway User Revenues include HB 23, introduced by Delegate Herb McMillan, HB 146, introduced by Delegate Susan Krebs,

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Posted by Andrea Mansfield

Governor Proposes a 6% Sales Tax on Gasoline

January 31, 2012

As previously reported on Conduit Street, the Governor announced on WTOP’s “Ask The Governor” program, his support to apply the 6% sales tax to gasoline sales as a way to raise funds for transportation infrastructure.  As reported by the Washington Post:

The sales tax would be phased in annually in increments of 2 percent at the wholesale level, meaning that a gallon of gas that now costs $3.48 at the pump would increase 6 cents.

If the price of gas rises or falls, the sales tax amount would also. Combined, the three-year increase per gallon could total 18 cents or more, making Maryland’s combined levy on gasoline more than 41 cents a gallon and among the highest in the country.

When speaking on WTOP, the Governor was also asked about his support of a “lock box” to protect the Transportation Trust Fund from future transfers to the State’s General Fund.

O’Malley said he also would be open to a “lock box” measure to prevent the state from dipping into transportation funds, as it has in the past, to cover other spending.

While one of  the options the Blue Ribbon Commission on Maryland Transportation Funding considered, the Commission recommended an increase in the gas tax and other fees that are currently being paid, instead of applying the sales tax to gasoline sales.  The Commission also recommended a “lock box” to protect the Transportation Trust Fund.  As reported by MarylandReporter.com:

The top recommendation of the Blue Ribbon Commission was to create a legal prohibition requiring that money directed to the Transportation Trust Fund be spent on transportation. In past years, when the General Fund budget has run low, the Transportation Trust Fund has been used as a supplemental revenue source.

The Governor’s proposal has been receiving mixed reactions. Also reported by the Washington Post:

“The governor is walking into the biggest nightmare of working-class families,” said Senate Republican leader E.J. Pipkin (Queen Anne’s). “With this new gas tax, the citizens of Maryland will be paying premium and getting regular. . . . Add that to his other proposed tax increases, and I don’t see how Maryland is attractive to businesses — the governor’s stated goal.”

Several Democrats in the General Assembly said they wanted to wait and see O’Malley’s proposal before taking a position. House Speaker Michael E. Busch (D-Anne Arundel) said any discussion of raising the gas tax would have to come after the legislature agrees on a plan to close the state’s roughly $1 billion shortfall.

Other coverage of this issue can be found in the Gazette and the Annapolis Capital.

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Posted by Andrea Mansfield

Governor O’Malley Supporting Sales Tax on Gasoline

January 30, 2012

Today, Governor O’Malley announced his support for the state sales tax to apply to gasoline sales, a measure different from that previously discussed by a task force on transportation funding.

The Governor broke his decision in an interview on WTOP radio — their online coverage is here. From WTOP:

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.

No word yet on whether the implementing legislation would re-establish the historic 30% share of transportation revenues distributed to local governments for locally managed roads and bridges.

1 Comment | State Budget, Transportation and Public Works | Permalink
Posted by Michael Sanderson

MACo Launches 2012 Grassroots Effort

January 19, 2012

During the Maryland General Assembly, the Maryland Association of Counties (MACo) often calls upon its members to speak with a legislator regarding a  particular bill.   The Buddy System is MACo’s grassroots effort  to match county elected officials with Maryland Senators and Delegates to increase communication about legislation impacting county government.

During Session, Buddy Alerts are sent via email when a vote on a specific bill is crucial. The alert will provide a brief overview of the legislation, MACo’s position, and a some quick talking points.  MACo encourages elected officials to sign up to participate in this effort by selecting  Delegate(s)/Senator(s) from the lists below. Prior to selecting your “buddies” take into consideration those with whom you have the best rapport and feel most comfortable conveying a position on a bill.

Please send buddy requests to Emily Hollis at ehollis@mdcounties.org.

2012 Maryland State Senators

2012 Maryland State Delegates

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Posted by Emily Hollis

Analysis Finds Tying Annual Increases in Gas Tax to Inflation Would Have Raised Signficant Revenue

December 17, 2011

As reported by the Washington Times, a recent analysis by the Institute on Taxation and Economic Policy has found that Maryland and Virginia have foregone millions of dollars in gas tax revenues by not tying annual increases in the gas tax to inflation.

The states, both of which are desperately trying to cobble together more money for transportation, had among the highest totals in the nation of unimposed gas-tax dollars, according to the D.C.-based Institute on Taxation and Economic Policy.

Maryland’s gas tax of 23.5 cents per gallon, in place since 1992, could have generated an additional $421 million per year in the past two decades if it had been tied to inflation, the analysis concluded.

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Posted by Andrea Mansfield

Governing Magazine Columnist Discusses States’ Gas Tax Options

December 12, 2011

In the online version of Governing Magazine, columnist Penelope Lemov, discusses “approaches States could use to raise revenue for road repair and building” with Mark Robyn, an economist with the Tax Foundation.  Below is an excerpt from their conversation.

Is this a good time for states to raise their motor fuel taxes?

…But people have to believe the money is being spent wisely. Not all states do that, and people say, “Well, I see this waste of money. If you increase my taxes, you’ll waste a portion of it.” When I say states are wasting money, I mean they are using it for road projects that people don’t see as valuable — the “bridge to nowhere.” If there are no “bridges to nowhere” and people are driving over potholes, they’ll be more willing to accept gas taxes to avoid potholes.

The way most state gas taxes are structured, the tax is a fee per gallon — not a percentage of the price. That means, the gas tax does not keep up with inflation. Should states incorporate a percentage of price into their gas tax formula?

…at some point maintenance is going to be more expensive in dollar amounts, even if a state never again added a highway and just maintained its current roads. If the cents-per-gallon charge remains the same for years, you could argue that it’s like a tax cut.

What else can states do about funding road repairs?

Some have recommended getting away from the current system of gallons of gas used and move to a mileage tax where you tax automobiles, tractor trailers and the like based on how many miles they drive. These approaches might have an advantage over the gas tax. It doesn’t matter if the car doesn’t use any gas: If you drive a mile, you get charged for a mile.

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Posted by Andrea Mansfield

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