Down the Road: Why Maryland May Appreciate Paying More at the Pump

Nobody likes paying more when they pull up to the pump. Yet America’s roads and transit systems are crumbling and nobody is paying the real cost of driving.

So what can be done?

New legislation signed by Governor Martin O’Malley on May 16 will increase the gas tax in the state of Maryland for the first time in twenty years, as reported in a recent Huffington Post article and by CPHA as wellAccording to the Baltimore Sun, this new tax is projected to raise $1.2 billion over the next six years and will be used to fund several transportation initiatives across the state. Whether you agree with the specifics of the planned gas tax and its expenditures or not, the legislation is a refreshing reminder that local government can generate revenue in the midst of a congress more concerned with political “scandal” than economic progress.

With this new revenue, Governor O’Malley’s new transportation initiatives will include:

1)$100 million to fund extended service on the MARC commuter train,

2)$450 million for the extension of both the Baltimore Light Rail and the Washington, D.C. Metro system,

3)$500 million in other state-wide infrastructure improvements, including several new road and bridge projects.

As reported by the American Society of Civil Engineers, Maryland roads in “poor” condition are estimated to cost drivers nearly $1.6 billion in additional repair costs every year, roughly $422 per motorist. New infrastructure improvement projects funded by an increased gas tax are hoped to alleviate this situation.

The first part of the new gas tax will come as a 4¢/gallon increase this July, eventually reaching 19.5¢/gallon by July 2016. With a current state tax of 23.5¢/gallon, Maryland is well below the national average of 30.6¢/gallon and its neighbors Pennsylvania (32.3¢/gallon) and New York (50.5¢/gallon), according to the American Petroleum Institute.

Though some argue against a gas tax increase by citing a recently reduced gas tax in Virginia, both states still face the common problem of reduced revenue for transportation initiatives, as noted in a recent Washington Post article. While Virginia has lifted its 17.5¢/gallon gas tax, it has only replaced it with a .3% increase in the state sales tax and 3.5% wholesale gasoline tax, among other new tax increases. With the new Maryland gas tax, drivers will only feel the sting of higher taxes at the pump, rather than across the board, as in Virginia.

With no increase in the state gas tax for the last twenty years and motor vehicles becoming increasingly gas efficient, a revenue source to fund a growing list of transportation projects is long overdue. With the last tax increase not accounting for inflation, over the last two decades the state lost an estimated $4.4 billion in tax revenue, according to the Baltimore Sun. The latest increase fixes this problem and adjusts the state gas tax according to future inflation, ensuring a secure source of revenue for further state transportation projects.

Although the new gas tax increase will raise prices by nearly 20¢/gallon, delaying this much-needed investment in state infrastructure would only result in higher costs down the road, according to an article last year in The Economist. In  a report by the National Conference of State Legislatures, the American Association of State Highway and Transportation Officials note that every $1 spent on repairs to roads in “fair” condition can save another $6-$14 in future maintenance by not waiting for the same road to fall into “poor” condition. 

So Maryland drivers can expect to see a modest rise in gas prices. And while transit riders have much to gain from the resulting transit improvements, they will also pay their share of  a gas tax increase. The current bus fare in Baltimore City is $1.60 but it is expected to increase by 10 cents in July 2014.

But new revenue from the state gas tax means we can also look forward to improved and expanded public transit, roads, and bridges across the state. The tax also means better long term outcomes for our region. Not only will investments in infrastructure save us tax money down the road, the increased price of gas is an incentive for diversified energy consumption, fuel efficient cars, alternative transit mode choices; and the tax and improved transit service will help alleviate congestion and encourage better land use patterns.

So it may sting pulling up to the gas station this July. But perhaps down the road, Maryland residents will appreciate paying a little more at the pump.

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Faith Tandoc

Faith Tandoc

This article was written by Faith Tandoc and edited by Michael Snidal. Click here to meet our writing team.
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