Chairman’s Message: Maryland's Gas Tax Increase - Why Are Our Business Associations So Dumb?
Back when Bob Ehrlich was governor he urged businesses to get "dangerous" and not support politicians who voted against their interests. Unfortunately Maryland's businesses never heeded him, and they continue to rely on business lobbying groups advocating for higher taxes.
Forty years ago Maryland established the Transportation Trust Fund as a dedicated budget for the Department of Transportation. Revenue sources for the Trust Fund include gas taxes, vehicle titling taxes, vehicle license, registration and other fees, 24% of corporate income taxes, 5.3% of sales taxes and federal aid.
However Governor O'Malley has raided nearly $700 million from the Transportation Trust Fund in the past two fiscal years to help plug general fund deficits. This year's budget took out another $100 million. Only $60 million of this latest raid will be repaid within five years and then not until FY 2014. Another $40 million will be restored through new revenue from increased auto titling, vanity plate fees and dealers' processing charges passed during this year's session.
How do our business lobbyists respond? The Maryland Chamber of Commerce, Montgomery County Chamber of Commerce, the Greater Washington Board of Trade and the Greater Baltimore Committee have all lined up in support of higher gasoline tax of at least 10 cents a gallon. They supported it "as long as lawmakers ensure the money is spent only on transportation projects."
Think of it as a shell game. Money is already collected for transportation that is supposedly held in "trust." Instead it is used for other purposes. Rather than fight to have the missing money restored to transportation, these business groups respond by supporting higher taxes and another solemn promise.
Complicity in this false choice between "higher gas taxes" for transportation spending is not limited business associations. Remarkably even AAA Mid-Atlantic says they want a gas tax increase, if the money is guaranteed to build and maintain Maryland's transportation network.
Among the business association executives cheerleading for higher taxes, Greater Baltimore Committee CEO Donald Fry has taken the lead. When not working for the Baltimore business group, he is O'Malley appointee to the state's "Blue Ribbon Commission on Transportation Funding." (Guess what they will be recommending.)
Fighting for higher transportation taxes is familiar role for Fry. As a Democratic legislator in the nineties is he was active with transportation "funding" efforts. After losing his Cecil and Harford County State Senate seat in 1998, Fry was able to continue his pro-tax advocacy on "behalf" of the Greater Baltimore Committee's members. Losing his Senate seat allowed him take what has become a $340,000 a year (2009) job with the business association.
Wendell Cox of the Maryland Public Policy Institute provides an excellent discussion of Maryland failed transportation policy in the column that follows this one. One point he makes deserves repeating: "In recent years, approximately 45 percent of Maryland's road and transit funding has been spent on transit. Yet, transit only accounts for approximately 3 percent of travel in the state. This disparity is caused in part by an intention, or an illusion, that transit can attract a material share of drivers from their cars. Approximately the same share of Marylanders get to work by transit today as did in 1980, illustrating the negligible effect of this imbalance."
For example, for the past 30 years, the state has required Baltimore's public transportation to pay for 50% of its operating costs through "farebox revenues." Yet, in addition to the O'Malley's Trust Fund raid, the Governor signed legislation this year allowing Baltimore's "farebox" share to drop to 40% of costs. As a result even more state subsidies are required.
In past five years, the ranking of Maryland business climate has dropped to one of the worst in the country.
So how do Maryland's business lobbyists respond? They campaign for a tax increase opposed by roughly four out of five people in the state.
According to a recent survey was conducted by Annapolis-based Gonzales Research & Marketing Strategies, 78% of voters oppose increasing the tax by 10 cents per gallon, according to the survey. Even a 5 cent per gallon increase meets with opposition, as 59% of voters said they do not support such an increase.
Maybe Bob Ehrlich got it wrong. Instead of asking the business community to be "dangerous," he should have told them to be not so dumb.
Mark Uncapher
Montgomery County Republican Chairman
MCGOP CONVENTION!