Bonus research

I was writing something the other day as a possible addition to another venue, and in doing the research kept the link on my bookmark bar for future reference. Well, as it turns out I didn’t need the extra research for the other piece but I wanted to make my point on the subject. So here are more of my thoughts on the prospect of an additional Maryland gasoline tax – something I originally visited in January.

The two pieces I found were comparisons – one being the current gasoline tax table provided by the Tax Foundation which shows Maryland’s gasoline tax rate is currently tied for 29th among the 50 states. The second is an older comparison table that I found, and the reason I wanted it was to determine where Maryland’s gasoline tax ranked among its peers when it was adopted in 1992. (I couldn’t find 1992, but figured 1994 was close enough.)

It’s quite telling to me that back in 1994 our state had one of the highest gasoline tax rates, with only a handful of states charging more: Connecticut, Montana, Nebraska, Nevada, Oregon, Rhode Island, and West Virginia. Worse yet, only Montana, Nevada, Rhode Island, and West Virginia charged more tax on diesel fuel. In 1994 our taxes were a full 30% higher than the national average, but because states have began to add various other fees and local tariffs we remain above the average insofar as excise tax is concerned but slightly below the mean in overall taxation per gallon. Apparently 20 years is long enough and we have to break out of the pack and lead the country once again.

Since several states now add various amounts of sales tax to the price of gasoline at the pump, it’s difficult to accurately say just where Maryland would rank if gasoline prices were significantly higher or lower than they are today should they adopt Governor O’Malley’s idea of an additional sales tax phased in over three years. But it’s obvious we would be paying more at the pump regardless of the price – even if Newt Gingrich could get gasoline back down to $2.50 per gallon that’s still an extra 15 cents per gallon, or around $2-3 per fillup depending on tank size. At $4 per gallon the fee goes up to perhaps $4-5 for every tankful.

(Note that there’s also a number of alternative plans being floated around for a straight per-gallon excise tax increase, which would make the impact more easily gauged. Adding 15 cents per gallon, as one proposal advocates, would put us just a tick behind North Carolina as the highest-taxing state in terms of excise tax.)

Regardless of what proposal to increase fuel tax is adopted, when combined with the additional tolls being charged by the Maryland Transportation Authority at their facilities (including the Bay Bridge) the cost of getting around via car will certainly jump. By next summer driving across the state from Cumberland to Ocean City and back on a 12-gallon tankful of gas each way may well cost $15 extra in taxes and tolls alone from the price in 2011 – before the new tolls were adopted for the Bay Bridge and other MTA facilities.

The stated reason for the increases are quite simple: the state claims it doesn’t have enough money for road and bridge construction. Yet the MTA toll increases spared the Inter-County Connector and gasoline taxes tend to come down harder on rural residents who have to drive farther to work and shopping. In sum, they tend to serve as a wealth transfer from rural to urban dwellers, particularly in the Washington metro area because the ICC tolls did not go up. Moreover, the tendency for gasoline taxes to be spent on mass transit provides a further shift in prosperity from rural to urban; one particularly galling when a mostly empty train or bus goes by.

The main reason the state “needs” this tax increase, though, is to patch over the holes created by several administrations by raiding the Transportation Trust Fund (TTF). It’s an art which has been perfected by Martin O’Malley because he wasted the $1 billion-plus raised by a series of 2007 tax increases Democrats rammed through the General Assembly on a program of further spending rather than simply addressing the vital functions the state is supposed to provide. So now he and Annapolis Democrats are coming back to the people of the state with hat in hand begging for more, and promising this time they’ll “protect” the TTF. Well, I want the protection first, and a number of bills in the General Assembly deal with this. Unfortunately, Delegate Norm “Five Dollar” Conway and Senator Edward Kasemeyer don’t seem to have much desire to move these bills. But I’ll bet they’ll move that gas tax along in a hurry.

It’s quite likely that over the next few years our gas prices will either be going up at an accelerated rate or not dropping as quickly as they could because the state of Maryland will take a larger bite from our wallet through the gas tax. Maryland doesn’t seem to want to be a national leader in anything except loony liberalism and high taxation, and the controversy over highway funding provides another perfect example.

A softened blow, but it will still hurt

Eastern Shore drivers will get a one-month reprieve from Bay Bridge toll hikes – but it’s still likely the prices will rise steeply.

As originally envisioned, Bay Bridge tolls would jump to $5 come October and skyrocket to $8 in 2013. Instead, the MTA is expected to vote next Thursday on a proposal to increase Bay Bridge tolls to $4 on November 1 and $6 in July 2013. So we’ll “only” have a 240% increase instead of a 320% increase.

Still, this will take a larger bite out of our pockets and as a percentage (with some exceptions for Baltimore-area commuters, who now pay less than $1 to cross at various Baltimore-area points) those using the Bay Bridge will see the largest increase in tolls across the system.

While we all figured a toll increase was a fait accompli, I think the grudging preference among those who testified at our hearing (aside from Norm “Five Dollar” Conway) was that increases be phased in slowly and not with such a steep incline as to increase over threefold in the span of two years. We got a little bit of modification, but it’s clear the MTA is going to rely on Eastern Shore drivers to be the cash cow for years to come – although Baltimore-area commuters have a point in saying they’ll be unfairly targeted too.

On the other hand, the newest toll highway in the MTA portfolio will still be exempt from increases as the Intercounty Connector doesn’t see a hike. That highway is a little bit different in that there is no cash toll and drivers are charged on a sliding scale of anywhere between 15 cents and $3.94 per mile depending on time of day and number of axles. Yet they won’t have to bear any additional burden, at least for the time being.

So while we can thank the MTA for apparently listening to our concerns, it’s interesting to note that a comment in response to the story by David Hill in yesterday’s Washington Times on the toll hike concluded the increase to $6 was the plan all along and the $8 figure was just in place to make us feel like we won something at the end. And it is indeed tempting to think that the O’Malley administration would have been thrilled if no one showed up to complain about $8 at the Bay Bridge – remember, the Eastern Shore hearing wasn’t originally planned but added due to popular demand.

Yet they will still get additional millions out of the deal – maybe not the $77 million projected annually by the original proposal, but perhaps a number in the range of $50-60 million on top of what they already make. They won’t be hurting for money, but Eastern Shore drivers might be.

MTA toll hearing comes to the Eastern Shore

Last night over 250 people came to listen or generally express their opposition to a series of proposed toll hikes at the Bay Bridge and several other structures operated by the Maryland Transportation Authority.

This was a panoramic shot I took just as the event was beginning.

Of course, the MTA had flyers, a video, and a series of presentation boards available in an adjacent room to state their case. As you can see in the first photo below, they had a room full of boards. Below that are a few examples.

The sum of their case was that they needed toll increases to fix their aging infrastructure, while other goals were to standardize their toll structure, incorporate the cost of collection into the toll, and have vehicles pay a “proportionate share” of their costs.

On the other hand, Nick Loffer of AFP-Maryland was outside rallying the troops to sign a petition against the toll increases.

And the media was there as well. For all I know, I was on the news.

The two local Delegates also made their presence known. Norm Conway was being interviewed by the media while Mike McDermott chatted up the crowd; in this case fellow local blogger G.A. Harrison.

Delegates Charles Otto of Somerset County and Jay Jacobs of Kent County were also there and testified in opposition.

The hearing itself started a short time after those in the room had assembled. We watched the short MTA video stating its side, and their members pled the case that “Maryland has some of the lowest tolls in the country.” But Board Chairwoman Beverley Swaim-Staley also wanted to point out the toll increases were intended to “generate enough revenue…to maintain (our) bond rating.” It was also pointed out that EZPass patrons (except communters) would get a break.

Interestingly enough, the Board sat silent through the testimony, as one ground rule laid out was that they wouldn’t respond to questions or comments.

Elected officials were allowed to pull rank and testify first. It began with Wicomico County Republican Central Committee member Dave Goslee noting, “people’s wages are not going up…government should live within its budget.”

It set the tone for remarks by Pocomoke City Mayor Bruce Morrison, who stated he and the three members of his City Council all came to show their opposition to the proposal. “Think of us on the Shore, too,” he pleaded.

But Mike McDermott got the crowd on its feet.

McDermott thundered, “The Bay Bridge is a cash cow for the state of Maryland!” He also wondered how the MTA came up with an $8 toll figure, feeling that was “arbitrary.” “No one would be here for (an increase of) 50 cents,” said McDermott.

Then he asked what the need was. Answering his own question, Mike claimed that I-95 improvements and the Inter-County Connector are going to be financed by “you and me” on the Eastern Shore.

While he went way over the allotted five minutes, the patrons didn’t mind and gave McDermott a standing ovation once he was through.

“I want (the Bay Bridge) to be as strong and dependable  as it can be,” remarked Norm Conway. But the audience booed Conway when he said “most people would consider” a $5 toll to cross the bridge. He asked the MTA board to listen to people across the state and perhaps readjust the toll structure for SUVs.

Speaking on behalf of State Senator Jim Mathias, Linda Donaldson stated the Senator’s suggestions to proceed were:

  • A “significant discount” for EZPass
  • A “significant” commuter discount
  • Be mindful of the overall cost of operating vehicles
  • The fundamental need for public safety on the structures

Delegate Jay Jacobs, who was on his third hearing for the toll increase, believed that “a 300 percent increase in tolls, I guarantee, will send people to Delaware shopping.”

And while Delegate Charles Otto called the Bay Bridge a “godsend” for the Shore, he pointed out it may cost trucks an extra $1 per mile to go from the Bay Bridge to Salisbury when the tolls are factored in. “I hate to get political, but all I heard this time last year was that a fee was a tax,” concluded Charles.

I testified at the event as well. This is how I wrote the draft of my remarks; it wasn’t quite the Gettysburg Address but it got applause:

Good evening.

My name is Michael Swartz and I’m proud to be an elected member of Wicomico County’s Republican Central Committee.

First of all, I’d like to thank the MTA for bowing to demand and having a hearing on the Eastern Shore. By my count, the closest MTA facility is about 90 miles from here so one might think we’re not affected by a toll increase.

But we are. It’s going to affect tourism, it’s going to affect commuters, and most importantly I see a negative impact on our agricultural industry.

After all, $8 to cross a bridge isn’t a large part of someone’s vacation budget. But increasing the rates on commuters could hamper growth and progress on the Eastern Shore. Over here we already feel shellacked as victims of the “War on Rural Maryland.” They couldn’t take away our septic systems, but they can throttle development in other ways like making the Eastern Shore a more expensive place to live.

More importantly, one should consider the impact a toll increase would have on commerce. Because we have little in the way of railroads or port facilities on the Eastern Shore, over-the-road trucking is truly our one option for both delivering and providing goods and commodities, as Mr. Goslee and Delegate Jacobs pointed out before. A large toll increase would be detrimental, and basically amounts to a redistribution of our wealth to other parts of the state.

A smarter plan would be to keep the tolls where they are, but if an increase is necessary it needs to be smaller and phased in over a longer period. It’s not our fault you didn’t raise tolls earlier, so don’t make us bite the bullet now.

Thank you.

From the AFP perspective, Nick Loffer made the overall suggestion of running the toll facilities as a business and regionalizing the operation. He chided the MTA for a lack of forethought and felt that created the anger in the audience.

Other speakers from the audience termed the toll increase a “soft tyranny,” believed the decision is already made, and called the increases an “assault on the middle class.”

There were also several business leaders who spoke up. The toll increase would be “a wedge…that turns the Bay into a barrier,” claimed Brad Bellacicco of the Salisbury Chamber of Commerce. One business owner, who runs a turf farm in both Anne Arundel and Queen Anne’s counties, believed the increase would add a $150 per acre cost to his business, tripling the tax on his four-truck fleet from $16,000 to $48,000.

Needless to say, tourism and Ocean City officials chimed in, too. Tourism creates 134,000 Maryland jobs and $1.6 billion in revenue, according to the Maryland Tourism Council. Their official warned of “unintended consequences” from the hikes. “Without tourism, we have no jobs in Ocean City,” added the director of their hotel and motel association.

Closing the testimony, Ocean City Mayor Rick Meehan, who stated that his town attracts 8 million visitors a year and creates $150 million in state revenues,  pleaded with the board to “moderate your position (and) discount EZPass.”

I look at this more as a development issue, however. If fewer people come to the Shore as tourists, fewer jobs are created and fewer people have an incentive to locate here. And while that may suit a lot of Shore natives just fine, the corollary effect of increasing business costs will be to drive jobs out of the area. We already lose a lot of our local college graduates who can’t find good-paying jobs in the area.

Not one person last night said $8 was a great idea. Yes, there was one crank who considered this part of the war on the middle class promoted by greedy corporations and rich Republicans like Andy Harris, but we can ignore his screed. Some on the conservative side also strayed well off the topic at hand, which was a problem.

As I’ve said, a modest toll increase may be required but not a giant jump as is planned. A suggestion I didn’t hear last night but will toss into the hopper: perhaps they can bring construction costs down by eliminating “prevailing wage.”

Alas, I think the die has been cast. All we opponents did was have our say, but the state needs the money. Think of it as a prelude to this fall when the General Assembly really loots our wallets.