Maryland’s gas tax makes a convenient villain — if you don’t look too closely
One of the smarter transportation policies adopted when Martin O’Malley was governor was the Transportation Infrastructure Investment Act of 2013, which indexed Maryland’s tax on gasoline and diesel to the consumer price index. Previously, the gas tax was locked in at an absolute number — it was 23.5 cents per gallon a decade ago — and could only be increased by an act of the General Assembly. This is important because gas tax revenue is a major source for long-term transportation investment (through what is known as the Transportation Trust Fund) including maintaining, replacing and expanding traffic-clogged roads and bridges. But because raising such a high-profile tax (one advertised on every pump at every gas station across the state) was seldom an especially politically popular thing to do, the need for gas tax revenue often outpaced those periodic increases. And that’s bad for traffic congestion, for economic growth and linking people to employment and even for taxpayers who may be called upon to make up the revenue through other means. Whatever one may think of the gas tax, whether at the state or federal level, one can’t dispute its inherent fairness as a “user fee” — the more someone uses the highway (and the more gas-guzzling the vehicle one drives) the more that operator is called upon to help finance the system.
Yet just last week, Maryland Senate Republicans were at it again denouncing these automatic increases and vowing to make a reversal of the 2013 act one of the party’s top legislative priorities this year. Legislation to accomplish just that, Senate Bill 261, was heard by the Senate Budget and Taxation Committee with 15 co-sponsors, all Republicans. The bill’s partisan nature is hardly shocking. A similar effort was attempted last year and never made it out of committee. Yet this time around, these populists have one additional edge: Because of inflation, Maryland’s gas tax took a pretty big jump this past year, rising 6.6 cents per gallon to 42.7 cents per gallon. Maryland now has one of the higher gas tax
rates in the nation. Throw in the 18.4cent federal tax on gasoline and the total drivers in the Free State now pay at the pump in taxes now exceeds 61 cents per gallon. And this comes less than one year after lawmakers approved a one-month suspension of the state gas tax which was then 36.1 cents per gallon to help families deal with rising prices.
But let’s take a closer look. The gas tax holiday cost the Transportation Trust Fund approximately $300 million. Did it spare families the pain of inflation?
Not by much. According to AAA, prices at the pump have fluctuated markedly over time — and by location. As of Feb.
12, 2023, the average price per gallon statewide was $3.31 per gallon, taxes included. That’s about 12 cents below the national average. So where do taxes fit in? They get drowned out by other market forces. One year ago, the average cost of a gallon of regular unleaded in Maryland was $3.49 and that was before the tax increase. Meanwhile, Maryland often ranks high in lists of states with the worst traffic congestion. So what good is saving 6 cents at the pump if, as a commuter, it costs you $10 in traffic delays or $100 in repairs because your
car was damaged because of pot holestrewn roads? That’s the real choice that lawmakers face, not wasting money on a blink-and-you-missed-it election year handout.
It’s easier, of course, for politicians to represent all taxes as bad, all government spending as bad, and all elected officials who endorse both of those things as bad. There are surely examples of foolish and wasteful transportation spending — Baltimore’s infamous “Highway to Nowhere” comes to mind — but those are the exception, not the rule. Just ask all those Republican state senators who co-sponsored Senate Bill 261. They might want to roll back the gas tax, but you can bet they have plenty of projects in their legislative districts for which they would be only too happy to cut a ribbon. Meanwhile, they always have the option of submitting legislation to roll back the most recent gas tax increase. The downside of such a bill is, of course, that they’d be expected to explain what transportation projects they’d cancel or delay to make up for the revenue shortfall. And that kind of reality-based decision-making is a much tougher sell with voters.