O'Malley's relies heavily on flagging gas tax for Maryland

Virginians would benefit from lower gasoline taxes and, experts say, better prospects at congestion relief than their peers in Maryland as the neighboring states weigh plans to raise badly needed money for infrastructure.

Sitting on Virginia Gov. Bob McDonnell's desk is a transportation funding overhaul that eliminates the state's 17.5-cents-per-gallon gas tax but replaces it with a new tax on wholesale gasoline, a sales tax increase and a litany of higher taxes in Northern Virginia. Not to be outdone, Maryland Gov. Martin O'Malley proposed lowering the state's 23.5-cents-per-gallon gas tax to 18.5 cents and adding a wholesale sales tax to gasoline.

Proposals across the Potomac
» Reduce gas tax from 23.5 cents per gallon to 18.5 cents, index to inflation
» Adds 2 percent wholesale gas tax, raises to 4 percent in 2014, 6 percent in 2015 if Congress fails to pass Internet sales tax
» Indexes Maryland Transit Authority bus and rail fares to inflation
» Eliminates 17.5-cents-per-gallon gas tax
» Adds 3.5 percent wholesale tax to gas (5.1 percent if Congress doesn't pass Internet sales tax by 2015), 6 percent to diesel
» Raises sales tax from 5 percent to 5.3 percent for all goods, up to 6 percent in Northern Virginia and Hampton Roads
» Adds $100 registration fee for alternative-fuel vehicles
» Raises property transfer and hotel taxes in Northern Virginia

Both states face a critical need for cash for transportation projects in a region with the worst traffic congestion in the country.

Transportation experts say Virginia's plan provides more targeted cash and better chances at relief for motorists in the Washington area. They would pay less at the pump -- about 7 cents per gallon less than now -- though more on virtually everything else, especially in Northern Virginia. Their neighbors in Maryland would pay about 2 cents more per gallon starting in July, with that jumping as high as 19 cents per gallon by 2015.

"The fact is Virginia has shown a real desire and will to do something about its traffic," said AAA Mid-Atlantic spokesman Lon Anderson, noting Virginia's use of public-private partnerships to relieve Capital Beltway congestion with its high-occupancy toll lanes and the $300 million earmarked in the new transportation plan for Metro's Silver Line to Washington Dulles International Airport.

Anderson worried that Maryland would use the bulk of its money for proposed mass transit projects instead of roads. Maryland needs money to secure federal funding for the proposed Purple Line light rail project in Montgomery and Prince George's counties and Corridor Cities Transitway bus system along Interstate 270.

Both plans have similar mechanisms to raise almost identical amounts of money -- $3.5 billion in Virginia and $3.4 billion for Maryland over five years.

"I looked at them and said, which Irishman does this one belong to? It's really easy to get them confused," Anderson joked.

Both add a tax to gasoline at the wholesale level. Virginia is taxing gas at 3.5 percent and diesel at 6 percent. Maryland is looking to tax both by 2 percent starting in July, jumping to 4 percent in July 2014. They also bank on approval from Washington to tax online purchases, with triggers to raise taxes higher if Congress doesn't act by 2015.

But Maryland's plan leans heavily on the future of the gas tax, which has become a less reliable revenue source as fuel efficiency has improved.

"The gasoline tax is still the workhorse, but there are concerns about sustainability long term," said Robert Puentes, senior fellow at the Brookings Institution's Metropolitan Policy Program. "Maryland's plan seems like it's cleaner and a much more direct approach. But the question is, assuming you raise this money, what is the plan for it and how does it align with economic goals? Those questions should be utterly transparent and clear."

Most importantly, Puentes said, a new pot of money doesn't guarantee smoother commutes for Virginians and Marylanders unless state leaders have a strategy for spending it wisely.

"The economy is still the No. 1 concern outside of transportation circles," Puentes said. "When you have the economy as your starting point, the infrastructure projects needed become more clear. If you're just trying to solve a congestion problem, you're running on a treadmill and you're not going to get there."