As previously reported on Conduit Street, the Spending Affordability Committee recently considered the State’s capital debt limit and a proposal to accelerate capital spending for construction projects such as schools and roads in order to spur job growth and take advantage of low interest rates. A November 21 Baltimore Sun editorial acknowledges the State must be careful about simply increasing its debt limit but also questions the effect of simply “front loading” already planned capital spending. Instead, the editorial supports increasing the gas tax as a way to issue more capital debt for transportation and road projects.
[Accelerating already planned capital spending] might be helpful, but it would have a relatively marginal effect. …However, there is another way to achieve the same goal: Increase revenues. Governor O’Malley and Senate President Thomas V. Mike Miller have recently indicated an interest in the idea of higher gas taxes to replenish the state’s transportation trust fund. That would automatically increase the state’s capacity to issue debt to finance new roads, bridges and mass transit projects. A blue ribbon commission on transportation funding recently recommended a package of new revenues — including a gas tax increase and higher transportation fees — that would raise some $870 million a year. Even if the legislature and governor agree to something less than that, it could put people back to work and make the state’s economy more efficient, all while protecting Maryland’s strong credit rating.