Maryland should resist the sneaky dime gas tax hike

Originally published in the Washington Examiner

Peter Samuel Mar 5, 2009

"Raise the state gas tax" is a cry being heard now that gasoline prices have collapsed from the boom levels of a year ago. People who paid $4.00-per-gallon last year will hardly balk, it is said, if a tax increase raises the price from $1.80.

But gasoline prices will rise again and you can be sure advocates of a 10-cent gas tax hike won't then propose dropping the amount collected per gallon. They want to exploit a temporary low in gas prices to ratchet up gas taxes permanently.

This sneaky 10-cent gas tax hike proposal would hoist Maryland's fuel costs out of line with those of neighboring jurisdictions. For example, Maryland's tax is now 23.5 cents-per-gallon, Virginia is 19 cents, the District of Columbia is 20 cents, and Delaware is 23 cents.

The 10-cent increase would leave Maryland 14.5 cents higher than Virginia, 13.5 cents above D.C. and 10.5 cents over Delaware. Many Marylanders travel daily into these neighboring jurisdictions, while most travel there once a week or so.

Maryland could expect to lose substantial business and revenue by having higher gas taxes than these nearby jurisdictions. A good portion of motorists will begin to tank up outside Maryland.

Of course, other jurisdictions might follow Maryland's bad example and increase their gas taxes, too. That is why gas taxes are the old and failed way of financing transportation.

Maryland should instead harness new technology to raise revenues for roads. Rather than raise the gas tax, we should substitute a Variable Road-Use charge, or electronic toll, as we build new highways and rebuild old ones.

The technology is already being applied to the Inter-County Connector and to the new toll lanes under construction on I-95 north of the 895/95 merge. This open-road tolling involves no toll booths and allows uninterrupted highway speed travel and payment off-road.

There is no change for those with E-ZPass transponders, but others would need to pay proactively at a discount, or be billed by the Department of Motor Vehicles using an electronic lookup of their address.

This approach should be used for all new road capacity and major improvements in existing roads because under the current system gas tax revenues, vehicle and license fees, and federal transportation grants go into a big transportation slush fund in Annapolis.

That fund is then doled out by the politicians in Annapolis to whichever lobby group has the greatest clout at the time. How the money is spent thus has little or nothing to do with the urgency of need or type of improvement.

And by the time funds are actually used to build something, a large portion of the money has been eaten up at the multiple levels of Maryland state government bureaucracy involved in administering it.

An open road toll or new-road use charge can be dedicated to the finance and management of the road where it is levied. The actual per-mile charge can be varied by time of day to reflect the scarcity of road space during peak hours and the greater benefit to motorists of free-flow peak travel.

Such HOT or managed express lanes successfully operate in several states and are planned in many more areas.

The politics of the transportation slush fund in Annapolis that so pollutes and dissipates the gas tax would be bypassed completely. Those jurisdictions that choose to do toll concessions can harness investor funds and expertise.

The process would eliminate multiple layers of bureaucracy, as well as lobbying costs. Motorists would have choices for the first time. They could choose to pay to get past congestion on tolled managed lanes, or take their chances in traffic on the tax-supported roads we know and hate.

Rather than raise the old gas tax, we should let it and any federal funds we can get be used to repair and maintain existing roads and transit.

Frederick resident Peter Samuel is an adjunct fellow of the Maryland Public Policy Institute and editor of TOLLROADSnews.com.