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O'Malley Rolls Out Gas Tax, Highlights Tough Choices

Republicans say governor's tax proposals will hurt the working families he wants to help.

Gov. Martin O'Malley called for legislators to pass a sales tax on gasoline, saying on Wednesday that the decision would be unpopular but much needed.

The governor made his comments in Annapolis during his sixth State of the State speech in which he focused on jobs, taxes and what he called tough choices.

"Asking our fellow citizens to do more will not be popular," O'Malley said. "But without anger, fear or meanness, let’s ask one another: how much less education do we think would be good for our children’s future? How much less education do we want? How much less public safety? How many fewer jobs?  There are costs, and there are values."

Republicans in the General Assembly criticized O'Malley for policies they said will hurt the same middle class working families the governor said he wants to help.

O'Malley described the state of Maryland as strong in his nearly 33-minute address to legislators gathered in the House of Delegates chamber Wednesday.

But at the same time he touted the achievements of his administration over the last six years, O'Malley said that more needs to be done.

O'Malley briefly touched on the gas tax—the most anticipated portion of his message. The governor said a bill would be filed in the next couple days.

"With a growing population and aging infrastructure, we might soon pay an even steeper price," said O'Malley. "Bridges are not like trees. They do not grow broader and stronger with age."

O'Malley's plan calls for phased-in elimination of the 6 percent sales tax exemption on gasoline.

At current prices, opponents estimate that the change would add 18 cents per gallon to the 23 cents in state gas taxes.

The additional revenue would create "7,500 new jobs building needed roads, bridges, and public transit" in Maryland, said O'Malley.

"Now look, I know that every family is still feeling the hurt of this recession," said O'Malley. "The people I serve are the people you serve. I know this is a very, very difficult ask. But nobody else is going to do this for us except for us."

Seeking to increase transportation funding for construction and repair projects that would create jobs, O'Malley intends to submit a bill repealing the sales tax exemption on a gallon of gasoline—phasing it out by 2 percent each year unless the price of gas spikes.

"It's going to be an extremely tough sell," said Senate President Thomas V. Mike Miller Jr., who has advised O'Malley to meet with delegations and various elected officials if he hopes to see the tax increased at all in these difficult times.

Aware that legislators are wary of governors transferring money from the Transportation Trust Fund in order to balance the budget, O'Malley said he would like to safeguard future investments in the fund.

"My understanding is the governor is very receptive to people wanting to protect those funds," said Donald Fry, a former state senator and president and CEO of the Greater Baltimore Committee. "There will be some sort of legally enforceable way to ensure the money in the transportation fund is used for transportation purposes."

Fry is also a member of the Blue Ribbon Commission on Maryland Transportation Funding, which recommended a state constitutional amendment, or "firewall,"to keep those funds from being used for other purposes.

Senate Minority Leader E.J. Pipkin said the so-called "lock box" was a gimmick.

"There are all kinds of gimmicks to get at people's money," said Pipkin, an upper Eastern Shore Republican. "The gas tax is one of the most impactful taxes and working families would have already paid."

"On one hand (O'Malley) talks jobs and on the other hand he kills jobs with higher taxes," he said.

Pipkin said most of the transportation money has gone to fund transit projects that only three percent of state residents use.

"Before we have a discussion about raising taxes we should examine how government spends the money," said Pipkin.

During his speech, O'Malley told legislators he has taken a balanced approach to managing the state's finances during the recession, including making nearly "$800 million in cuts and spending reductions in the current budget. Including those reductions, cuts in state spending total nearly $7.5 billion since O'Malley took office, the governor said.

Critics said those numbers are misleading.

"He's misguiding the public with those words and words mean a lot," said Del. Sue Aumann, a Baltimore County Republican and member of the House Appropriations Committee. "Our budget every year has gone up $1 billion and we have a perpetual deficit of $1 billion."

"The bank of citizens is running dry," Aumann said.

Capital News Service reporters Dave Nyczepir and Mali Krantz contributed to this story.

hmj February 02, 2012 at 03:27 PM
Way too much fraud and waste in state programs. Taxes in Maryland are among the highest in the nation. Stop the fraud and waste in Maryland Medicaid and in the Earned Income Tax Credit. Millions are wasted every year.
Jeff Hawkins February 02, 2012 at 03:54 PM
Doesn't seem to be an end to what can be taxed or high it can go! It's really disturbing and frustrating living in Maryland and especially MoCo these days. Let's just say that I've been here since the mid 1950's.....my whole life. I've loved living here and working here and raising my family here. Now that I'm an "old guy", I'm most likely going to have to leave Maryland.....I don't really want to, but I can't afford to live here anymore. This is a theme I hear over and over from people I know. Almost everyday it's another tax hike or rate hike from somebody. I know many before me have left because of this issue..........I guess it's my turn now.....and I don't like it.
Joseph Jordan February 02, 2012 at 04:57 PM
Here is an excerpt from an article in The Washington Examiner: "The largest county in Maryland, Montgomery County generates the highest amount of tax revenue of the 24 local jurisdictions -- $2.9 billion -- but receives the fourth most in state grants. Local governments, on average, received 46 cents in state aid for each $1 in taxes paid by county residents and businesses in fiscal 2009, according to data released in recent weeks by the Maryland Department of Legislative Services. Montgomery County received just 22 cents in state aid per each dollar in taxes. Baltimore City, the fourth most populous jurisdiction, receives the largest share of state money at $1.12 per each dollar it contributes in taxes, followed by Prince George's County at 66 cents. Put another way: Baltimore City receives $1,895 per resident, Prince George's, $1,326 per resident and Montgomery County, just $668 for each resident."
Brigitta Mullican February 02, 2012 at 09:00 PM
Montgomery County is on the short end of receiving tax revenues when compared to other jurisdictions as Joe points out. There is a lot of waste and programs in our county that are nice to have but don't benefit the most needy. Priorities and budget break-outs need to change. The bigger the budget pot the more waste and fraud occur. Unfortunately, it costs money to have oversight of all the programs where waste and fraud can occur. Not everyone is honest. If more people were employed, more revenue would be collected from the workers and there would be less a need to tax us. The real problem is it is easier to manage with more money than less. Families with no jobs know this well.
JustABill February 03, 2012 at 08:40 AM
Way to go Maryland Democrats! How can you continue to vote for people like Gov. O'Malley, Sen. Miller, Del. Bush, and all the other tax and spend liberals who are so far out of touch with the trials and tribulations of the citizens of Maryland. If my notes are correct in just the few short days this General Assembly has been in session, Owe'Malley has asked for a 15 cent increase to the current gasoline tax, a 17.33% (1 cent) increase to the state sales tax, and now an expansion of the sales tax overall to include gasoline adding another 7 cents per dollar to the overall price for gasoline. They have not disclosed the other products and services the expansion of the sales tax will cover, but when they tried before it was 43 items including most "services" that have never had sales tax applied to them. Sales tax is supposed to apply to an actual product that is sold not a "fee" for a service provided that does not include an actual product. So the Democrats who lie through their teeth about how they are the party that will look out for the poor and working class will pass not one, not two, but at least three tax increases or new taxes that will have the most negative impact on the poor and working class citizens of Maryland possible in this horrific economy. Way to put other people's money where your mouth is Gov. Owe'Malley. Then he says the taxes are needed to increase revenues to maintain schools, roads, and bridges. These are not the droids you're looking for!

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