Moody's economist advises Maryland against gas tax hike

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Local,Maryland,Transportation,Andy Brownfield,Taxes

ANNAPOLIS - Maryland should hold off on an increase in the state's gasoline tax this year, Moody's chief economist told a state Senate panel on Tuesday.

Economist Mark Zandi told the Senate Budget and Taxation Committee that raising the gasoline tax this year would hurt workers who are already going to receive smaller paychecks as a result of a compromise Congress passed earlier this month to avert the so-called "fiscal cliff."

The compromise allowed the payroll tax holiday to expire, meaning taxpayers owe an extra 2 percent of their salaries up to $110,100.

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Maryland Gov. Martin O'Malley announced on Tuesday that he will file a bill to do away with the ultimate punishment.
"The death penalty is expensive and it does not work," O'Malley said during a news conference. "And for that reason alone, I believe we should stop doing it."
The governor said the state instead should focus on measures that have proven to reduce crime rates, such as deploying police forces strategically, collection and use of DNA evidence and using modern policing technology.
He also tied the abolition of capital punishment to a moral imperative, pointing out that the U.S. was among the seven countries that oversaw the most state executions: Iran, China, Iraq, North Korea, Saudi Arabia, Yemen and the United States.
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O'Malley was flanked by members of the legislative black caucus, county executives and NAACP officials. -- Andy Brownfield

"If I were going to increase the gas tax to pay for infrastructure, I probably wouldn't do it this year," Zandi said. "I'd phase it in over 2014, 2015, 2016 so it doesn't amplify the payroll tax."

Gov. Martin O'Malley has floated indexing Maryland's flat 23.5-cent-a-gallon gas tax to inflation to replenish the state's near-bankrupt Transportation Trust Fund. He also has proposed raising the state sales tax from 6 percent to 7 percent and devoting the extra revenue to transportation.

The transportation fund has no money for new projects, and is on schedule to dry up by 2018 just maintaining current infrastructure. Both proposals would raise roughly $700 million a year, though O'Malley hasn't introduced legislation on either.

Maryland needs a cash injection into its Transportation Trust Fund to secure almost $2 billion in federal funding for the planned Purple Line light rail in Montgomery and Prince George's counties and the Red Line light rail in Baltimore.

To win $900 million from the Federal Transit Administration for each project, Maryland first must demonstrate where its share of the funding will come from.

Zandi said he expected a higher gas tax would be most effective once Maryland's economy was in full swing, which he estimated would happen between 2015 and 2017.

Meanwhile, he said he was optimistic about the state's current growth.

"Maryland's economy is going to improve, but I think the growth rate will be slower than the national average because the state is dependent on federal nondefense spending," he said.

He expects Maryland's economy to grow by 2 percent in 2013, though he estimates that would have been a point higher if the state weren't so tied to federal funding.

He said the state's economic recovery is also hurt by the glut of foreclosed housing and the slow judicial process used to clear it.

abrownfield@washingtonexaminer.com

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