ANNAPOLIS — Maryland Gov. Martin O’Malley forged ahead on his proposal to apply a 6 percent sales tax on gasoline on Tuesday, despite criticisms that the tax would hurt working families.

O’Malley’s proposal, which he submitted to the legislature Tuesday, recommended phasing in the sales tax by 2 percent annually —  or an additional 6 cents each year — over the course of three years.

“Maryland has some of the worst traffic in America, and with a growing population and aging infrastructure, we must address these needs today,” O’Malley said.

Once fully phased in, the 18-cent-per-gallon tax would generate $613 million annually to address an $800 million shortfall in Maryland transportation revenue.
Critics blasted the proposal as an undue burden on Maryland taxpayers, especially after O’Malley last month proposed raising income taxes on one of every five residents.

“This will pose a serious hardship of Maryland working families,” said Kimberly Burns, president of the nonpartisan group Maryland Business for Responsive Government. Burns said some residents will travel to neighboring states to buy gas once the tax is fully implemented.

“This tax increase proposal doesn’t solve any problems,” she said. “Is our infrastructure really in a dire emergency situation or is this just creating an emergency and a dire need where one doesn’t exist?”

Maryland transportation officials estimate the state is carrying a $12 billion backlog in overdue transportation projects, in addition to its immediate $800 million shortfall. No new transportation projects have been funded in the state for at least two years.

To protect consumers from sharp increases in the cost of gas, O’Malley’s plan includes a stopgap measure that would slow the state’s implementation of the proposed sales tax if the price of gasoline rose by more than 15 percent in a single year.

The plan also includes new protections for the state’s transportation fund, which lawmakers have frequently raided to help plug shortfalls in the general fund.

O’Malley has transferred more than $700 million from local transportation coffers — funds that pay for road and bridge repair — to help plug annual budget deficits.
As a result, local governments have seen their share of transportation aid drop from $530 million in 2008 to $147 million in fiscal 2012. O’Malley would restore

local transportation aid to 42 percent of county governments’ funding levels in 2008 and 71 percent of municipalities’ funding levels for the same year.

The transportation fund protections would make it more difficult for lawmakers to divert transportation dollars in the future and would require the state to pay back what it borrowed.