Gas Tax Increase, Public-Private Partnerships Discussed for Transportation Funding - Southern Maryland Headline News

Gas Tax Increase, Public-Private Partnerships Discussed for Transportation Funding


By Megan Poinski, Megan@MarylandReporter.com

(September 15, 2011)—State policymakers all agreed that Maryland needs more money for transportation needs. How to get that money was the subject of two meetings in Annapolis on Wednesday.

The Joint Legislative and Executive Commission on Oversight of Public-Private Partnerships heard testimony on using the partnerships to help complete transportation projects. The Senate Budget & Taxation Committee heard from representatives of government and business about different revenue options to fund transportation.

Federal transportation dollars may be cut, and Transportation Secretary Beverley Swaim-Staley said that top priority projects statewide would cost upwards of $12 billion. So it is a good time to determine how to raise more money locally. Unfortunately, Greater Baltimore Committee President Donald Fry told the Senate committee, there are no “new” ways to do this.

“When you look around the country, everything falls back to two basic forms: a gas tax or sales tax,” Fry said. “There’s no magic elixir nobody has found yet to solve this problem.”

Gas tax – and trust in the transportation trust fund

Speaking to the Budget & Tax Committee, Fry, Greater Washington Board of Trade President Jim Dinegar, and Maryland Chamber of Commerce Vice President for Government Affairs Allyson Black all urged an increase in the state gas tax as a way to increase transportation money.

Black said that the chamber’s support of the gasoline tax increase has been “cautious” for the last several years. Fry said that after studying funding options, the gas tax increase is the one that the Greater Baltimore Committee finds most sensible. (A possible tax based on miles driven once suggested two years ago by the Greater Baltimore Committee is no longer on the table.)

All of them agreed that Marylanders are unlikely to support a new tax during an economic slowdown.

“It’s never a good time for this, but it’s the least offensive of the options,” Dinegar said.

The state’s gasoline tax has not been raised since 1992. Currently, it is charged as an excise tax – 23.5 cents per gallon of gasoline, 24.25 cents per gallon of diesel fuel, and 7 cents per gallon of jet fuel.

Stanford Ward, a senior policy analyst for the Department of Legislative Services, told the committee that revenues from this tax have stayed flat or declined in recent years. High fuel prices have kept people from driving as much as they had previously, and people are buying more fuel-efficient cars, he said.

Fiscal 2012 gas tax revenues are estimated to be $738 million. Ward said that a 5-cent increase would add $157 million to revenues.

However, the business leaders said that if the gasoline tax is increased, there needs to be an ironclad assurance that the money will be spent on transportation. In past years, funds from the transportation trust fund – which receives revenues from places like the federal government, gas taxes, vehicle taxes and fees, and rental car taxes – have been transferred to the general fund to cover shortfalls elsewhere.

“The general public does not believe that the moneys being collected for transportation are being used for transportation purposes,” Fry said. “It’s a real credibility issue.”

Fry is a member of the Blue Ribbon Commission on Transportation Funding, which has recommended a constitutional amendment or new laws to limit circumstances when money can be transferred out of the trust fund. These proposals died in both the House of Delegates and Senate in this year’s session.

Public-private partnerships require mutual benefit, quick action

Maryland recently succeeded in revamping Seagirt Marine Terminal through a public-private partnership with Ports America Chesapeake. CEO Mark Montgomery and Swaim-Staley told the joint commission about how the process went, and several transportation experts talked about how the partnerships can work best.

The joint commission is supposed to make recommendations to improve current public-private partnership law, definitions, and legislative oversight requirements.

Transportation experts all stressed that in order for a public-private partnership to work, it needs to actually be the best strategy to get the project done. It can’t be looked at as a way to just get more funding; the private sector is unlikely to get involved in a project from which it will not also benefit.

“You have to do it because you’ve looked at all of the alternatives, and it is the right thing,” said Ronald Hartman, the executive vice president of the rail division of Veolia Transportation, which has participated in several public-private partnerships worldwide.

Fry, who also testified before the joint committee, said it is important to be able to expedite the government approval process for public-private partnerships. Private sector entities will be ready to move forward quickly, and may lose financing if they have to wait several months for approval.

Swaim-Staley said that she kept everyone aware of the Seagirt project status, and was able to get quick approval for the project from the legislature. Montgomery said that the fast approval was vital.

“If we had a longer review process, we would not have done the deal,” she said.

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