You're one step closer to the presidency Mr. O'Malley, keep it up!

by Thayer-D on Mar 5, 2013 9:25 am • link • report

Is there a reason people would prefer wholesale taxes to retail taxes? Gas taxes are already included in the pump price anyway, so it's not like there's a register receipt item that looks smaller if the tax is built into the price as a wholesale vice retail tax.

by Michael Perkins on Mar 5, 2013 9:28 am • link • report

This is a solid, sensible plan. Not only does it solve the immediate problem of paying for the Purple and Red Lines, but it puts Maryland's transportation program on a much sounder financial footing for the long term.

by Ben Ross on Mar 5, 2013 9:29 am • link • report

Sorry for being repetitive, but I got a piece of advice from a couple of legislative staffers familiar with the thinking of several delegates. They said that when we write to our legislators, we need to say:

"I am willing to pay."

What we don't need to say are things like "tax drivers because of their negative externalities."

Our letters need to emphasize that we are ordinary citizens who buy gasoline and are willing to see our taxes go up. They already know that self-identified cyclists and multi-modal users want higher taxes. What they don't realize is how many people who drive are also willing to pay.

So unless you don't own a car, emphasize that you are a driver.

by JimT on Mar 5, 2013 9:29 am • link • report

Exactly what Jim said. I'm a Maryland resident that commutes 60 miles a day to Tysons Corner and back. I buy gas in Maryland and I'm willing to put some extra cents to the dollar if it means I can improve regional transportation options.

It won't happen overnight, but we have to start somewhere.

by Swftkat on Mar 5, 2013 9:37 am • link • report

I am a DC resident and will be willing to fill up when in Maryland.

by Andrew on Mar 5, 2013 9:41 am • link • report

This is a great proposal. I'm very, very willing to pay more to see the Purple line built to help move people in the down-county area. University blvd, east west highway - all a mess. I hope the rural minority in Maryland doesn't beat this out. We've subsidized your rural roads and highways for decades - now it's your turn to chip in a bit.

by Nick on Mar 5, 2013 9:42 am • link • report

There appears to a trend away from the flat excise tax on gasoline to a wholesale or sales tax. Besides the 3.5% wholesale tax in VA, Governor Corbett in PA has proposed to lift an $1.25 a gallon cap on a gas wholesale tax. The Vermont legislature is considering a new 2%, then increase to 4% sales tax on gas, while cutting the excise tax. I guess it is politically easier to add a wholesale or sales tax, while cutting the fixed excise tax, even though the cost gets passed on either way.

While a percentage sales tax will adjust to some extent for inflation, it adds a lot of volatility to the revenue stream when gas prices can swing up or down by 60 or 75 cents over a couple of months.

Overall, the MD plan is much more balanced than the over complicated Virginia compromise plan. Hope MD can get it passed, not just for the Baltmore Red Line, the Purple Line, but also for future MARC service expansions.

by AlanF on Mar 5, 2013 9:52 am • link • report

Alan - I think this actually helps reduce volatility. People only have so much income - if they spend more on gas, they spend less on other things. Under the current system, when the price of gas swings up, sales tax revenues go down. With this plan, changes in transportation revenues are balanced by changes in general fund revenues.

If the price of gas drops and the transportation fund has less sales tax revenue, the general fund has more sales tax revenue and the state can increase its (already large) contribution of general revenues to transportation.

Michael - It's simply easier to collect the tax at the wholesale level. Even last year's proposal for a sales tax on the retail price was actually back-calculated into a wholesale sales tax and collected from the wholesaler.

by Ben Ross on Mar 5, 2013 10:00 am • link • report

As another DC resident, I actually prefer buying gas in MD over VA, even if MD is a bit more expensive. At least then I know my tax money will be used to build something intelligent, instead of a highway to nowhere in Southern VA.

I am certainly willing to pay more.

I assume DC will follow suit here? Can we get some more funding for transit too?

by Kyle-W on Mar 5, 2013 10:11 am • link • report

I think the various award programs (exxon and shell) are having an effect on pricing; I've noticed that Exxon/Mobil and shell are really bumping out in price a bit Given the price spike in the last month was "refineries" it suggests that perhaps there is more flexbility on the retailer in terms of price than currently asumed.

Given that we've had a 10 year era of rising fuel prices, I can see the logic of the percentage tax, but we may be looking at 10 years of steady or declining prices as well.

As much as someone like myself is willing to pay $5 a gallon w/taxes, clearly for a lot of people we are seeing the limits of fuel prices. The walmart emails few weeks ago are pretty good evidence of how much that is hurting.

by charlie on Mar 5, 2013 10:25 am • link • report

someone please tell me my math is all wrong or i don't understand wholesale pricing or something because this is really bugging me. it seems to me that, for a 10 gallon purchase of gas, the wholesale price of gas would have to be something like $25 per gallon for the initial 2% tax to generate the same amount of tax as our current system does, and still over $8 per gallon if it goes all the way up to the full 6%, right?

10 gallons * 23.5 cents equals $2.35.

vs.

(10 gallons * 18.5 cents) + (.02 * x) = $2.35
$1.85 + 0.02x = $2.35
0.02x = $0.50
x = $25

right?

by burgersub on Mar 5, 2013 10:28 am • link • report

Does a tax on the distributor mean the entity that delivers gas to gas stations pays the tax or is a distributor a gas station? Would this mean that gas you bought in DC from a MD distributor would be taxed in MD? I'm all for higher gas taxes, but is DC getting screwed here?

by Turtleshell on Mar 5, 2013 10:28 am • link • report

Has anyone been able to study the behavioral changes to gas prices in our region? Namely how many DC and MD residents are willing to cross the river to purchase gas?

by Jack Jackson on Mar 5, 2013 10:36 am • link • report

@burgersub: You solved for x, where x is the price for 10 gallons of gas. So it would be even if the wholesale price of a gallon is $2.50.

by Gray on Mar 5, 2013 10:38 am • link • report

@Burgersub

On ten gallons, the formula would be:

(10 gallons * 18.5 cents) + (.02 * x) = $2.35
$1.85 + (0.02x*10) = $2.35
0.02x*10 = $0.50
0.02x = .05

x = $2.50

by Kyle-W on Mar 5, 2013 10:40 am • link • report

oh thank god, i feel sane again. i knew that couldn't be right.

by burgersub on Mar 5, 2013 10:41 am • link • report

@Burgersub, you are leaving the 10 gallons out of the equation for the 2% sales tax. if the wholesale price is, say $3.20 a gallon, the 2% wholesale tax will be 6.4 cents a gallon, which will be more than 5 cent cut in the excise tax. The 2% wholesale tax is equivalent to a 5 cent excise tax at a wholesale price of $2.50 a gallon.

A comment on the internet sales tax provision: given the state of gridlock in Congress, especially on anything related to "new" taxes, I would venture that the odds are pretty good that Congress won't pass an Internet Sales Tax bill, and the wholesale tax on gas will go up in VA and, if the bill passes, in MD in 2015.

by AlanF on Mar 5, 2013 10:42 am • link • report

so how is chaining MTA fares to inflation going to work? will a single bus ride cost a different amount of money every year? every month? that's going to end up being a big pain, particularly for people that always pay in cash. of course, maybe that will be an incentive to push more people toward charmcards and install offboard fare payment systems everywhere, something i feel they should do anyway to speed boarding.

by burgersub on Mar 5, 2013 10:53 am • link • report

Could the "volatility effect" of a wholesale tax exert pressure on wholesale suppliers to try and keep pricing more stable or is that just wishful thinking?

by aaa on Mar 5, 2013 10:57 am • link • report

so how is chaining MTA fares to inflation going to work? will a single bus ride cost a different amount of money every year? every month? that's going to end up being a big pain, particularly for people that always pay in cash. of course

This is just a wild guess but I imagine they would just raise adjust the fare to account for inflation during the time when fares are normally expected to increase.

by Scoot on Mar 5, 2013 11:12 am • link • report

Any word on if he's about to name a new Sec. of Transportation or is O'Malley counting on the interim Sec. to do a lot of the heavy lifting on this?

by thump on Mar 5, 2013 11:17 am • link • report

@Scoot, but the fares don't increase on any kind of regular schedule. if memory serves, a single ride on most local MTA services has been $1.60 since 2003.

by burgersub on Mar 5, 2013 11:22 am • link • report

@Scoot, but the fares don't increase on any kind of regular schedule. if memory serves, a single ride on most local MTA services has been $1.60 since 2003.

Well then I think it's time for a fare increase -- preferably to around $2.00 to account for inflation.

BART (SF) has an inflation based fare increase program that automatically schedules fare increases every 2 years. If memory serves me, WMATA has raised fares 3 times in the last 5 years.

by Scoot on Mar 5, 2013 11:45 am • link • report

@burgersub

Fare increases are considered during every budget cycle along with all other kinds of budget-balancing measures like service changes, asking for increased funding, etc. Those changes usually go into effect at the beginning of the fiscal year. So fare increases would likely follow that same pattern. They would increase on a yearly basis or every other year. No, fares would not increase by a penny every month, that's impractical obviously.

Prices increasing once a year isn't a "big pain," prices go up on all kinds of goods and services all the time.

by MLD on Mar 5, 2013 11:59 am • link • report

i'm not saying i would protest a fare increase or that we're not long overdue for one or whatever, just wondering what form they'll take. if they go up a nickel every year, then every bus ride will involve multiple people having to fish out an extra nickel and put it in the slot, which slows the bus down. that was the "big pain" i referred to, the physical annoyance.

by burgersub on Mar 5, 2013 12:05 pm • link • report

Very promising, well-thought-out plan. Just a couple of things I'd like to point out.

1. Not passing this proposal would only (immediately) halt the CCT and Purple Line planning process. The Red Line has already proceeded to the final design stage, although without funding obviously couldn't begin construction.

2. I'm having some doubts about whether the $3.4 billion over 5 years will be enough to fund the Purple Line, Red Line, CCT, and highway construction projects. The Purple Line pricetag is already $1.1b (the portion for the state).

3. "The bill will undoubtedly face stiff opposition from Maryland Republicans..."

Haha, I doubt a single Republican will vote for it, but that's never meant anything in this state. The MD Republican Party is a bankrupt fringe group who have little say in Annapolis (where they're outnumbered 2:1 in both chambers).

The real challenge is convincing rural and minority Democrats who are wary of new taxes and regressive taxes respectively, although this one is far more palatable than previous proposals. This is a reason initiatives such as gay marriage, death penalty repeal, and wind farms have failed until recently.

by King Terrapin on Mar 5, 2013 12:13 pm • link • report

@Burgersub

I completely agree. On a $2 bus fare, it takes 40 people to pay the extra .05c to make up for the one less rider that rides due to the rider who uses the bus due to the extra 1 minute wasted due to people paying the extra nickel.

On another note, I think the best thing of these two bills (MD and VA) are the provisions that when Congress can't get its act together and pass the marketplace fairness act*, that the gas taxes automatically raise. These triggers are good policy, and the 5.6c increase in VA and the 8.0c increase in MD will be good.

*Only way this thing passes is if Democrats take the House in 2014, which is probably a 15% chance at the moment.

by Kyle-W on Mar 5, 2013 12:35 pm • link • report

haha what? i'm having trouble parsing that but i get the feeling that you're making fun of me. by and large our bus system is already slow as molasses and every little thing counts! this is of course a very minor consideration in the grand scheme of this bill, i was just wondering.

by burgersub on Mar 5, 2013 12:38 pm • link • report

Not poking fun. Simply saying that the incremental revenue from a 5c increase could very likely result in less revenue, if it slows down board of the bus. I would hope our respective transit agencies would not be so dense as to price a bus ride at 2.05 though.

by Kyle-W on Mar 5, 2013 12:55 pm • link • report

i'm not saying i would protest a fare increase or that we're not long overdue for one or whatever, just wondering what form they'll take.

Again, just a wild guess - a shot in the dark - but I presume they will take roughly the same form as most other systems that implement this type of fare increase ...

by Scoot on Mar 5, 2013 1:00 pm • link • report

@King Terrapin,

The CCT is probably the furthest away from happening anyway, and is also the most likely to eventually pick up a bigger chunk of County and Developer money because it's the trigger to allow the Life Science area plan to fully be implemented. So that allows for 2.4 billion over the next 5 years for transit, and 1 billion for roadway work. That's also assuming both lines are paid in full over the next 5 years. The state can say we have money coming, program for it, and it counts towards getting the Federal money. The state only actually spends each year the money it needs to fund construction for that year, and some money may likely still be spent in 2019, 2020, even 2021 on the two projects, as environmental mitigation and other side projects related to the transit lines are still being completed.

What is not clear to me, is this $3.4 billion NEW dollars in addition to what would have been raised with the current tax policy, or is this $3.4 billion total dollars will be raised because of this plan?

by Gull on Mar 5, 2013 1:13 pm • link • report

@Gull, it is stated that this would be a projected $3.4 billion in additional revenue over 5 years. The larger revenue stream will not suddenly go away after 5 years, it will be there for completion of the Purple Line and follow-on transit projects. The state is likely to look to cut its share of Purple Line funding by leaning on the 2 counties to come up with funds from the commercial properties around the Purple Line route.

There should also be additional funds for MARC projects, namely adding a 4th track between DC and West Baltimore, as a critical step to allow MARC to expand the Penn Line to a 7 day/week service. In an ideal transit planning situation, the MARC Penn Line service would be running on weekends and evenings when the Purple and Baltimore Red Line start service. Both of those lines have NEC stops as major anchor connections. But the MD upgrades to the NEC will need significant federal funding to draw on.

by AlanF on Mar 5, 2013 4:24 pm • link • report

@Gull

Good point about the CCT not being built anytime soon. It will probably take half as long to construct as either the Purple or Red Lines though given it's length, lower complexity, and suburban location. As for the $3.4b, I believe that is new revenue.

@AlanF
"leaning on the 2 counties to come up with funds from the commercial properties around the Purple Line route"

I'm not sure if this would work nearly as well for the Purple Line as it did for the Silver Line. In Tysons Corner and along the Dulles Toll Rd corridor there are a number of very large businesses/landowners (many F500) who stood to benefit from the Silver Line. Along the Purple Line you have Bethesda and Silver Spring, but the marginal benefit is much lower since there are already Red Line stations directly serving the respective Central Business Districts. The rest of the line travels mostly through residential (Chevy Chase, Long Branch, Langley Park) or small business (Northern Prince George's) areas.

The main reason that there's no weekend service on the Penn Line currently is because of Amtrak labor issues. As you would imagine there's significantly more capacity on the NEC on the weekend than during the week. That said, I really do hope that 4th track is built to increase work week capacity. A BWI station expansion is MARC's top capital priority right now and would extend the existing fourth track at Halethorpe to BWI.

Additional capacity is also crucial on the CSX lines. MARC has proposed (and had allocated funded for) extra trains on the Brunswick Line, but CSX denied it.

by King Terrapin on Mar 5, 2013 9:21 pm • link • report

The "theoretical" economist think is that wholesale taxes will be shared, to some extent, between the provider and the consumer. It's not even theoretically a 50/50 split, most of it ends up on the consumer, but the theory is that some does not, to preserve business. With a good like gas, it's hard to draw any conclusions. The elasticity of demand for gas varies WILDLY between people and uses. Some people have to drive, some don't; some companies can achieve better efficiency in their supply chain, some cannot; some people can afford to buy a more fuel-efficient car, some cannot; some gas stations go for lower prices and profits to draw business from the competition, some take advantage of needy consumers, and some are located such that they can, at least, pass the whole tax on. Overall, this plan seems pretty solid, even if the theoretical outcome they're aiming for (more of a shared burden) doesn't quite work out.

Also, I *do* think that transit riders have a place in the "we will pay" discussion. What I pay for the Metro now is not a whole lot more than what I paid for the Metro 10+ years ago. That's largely because most of my commutes are short, in-town routes. Off-peak fares aren't too miserable, either. Of course, there is a point in keeping these fares relatively low. For people somewhat like me, who can afford a little more, it drives us out of our cars, and it helps move people who don't quite have those means. But indexing fares to inflation is both predictable and doesn't result in massive fare increases when the proverbial excrement hits the fan. If fares go up by inflation every year or 2 years, both I and employers who give benefits can better predict what we need to budget, and even a 6% increase in fares (for historical average inflation on a 2-year cycle) doesn't amount to a TON of money, at what transit fares are (on the current bus fare, that's a dime; on a Metro fare, that's a max of $.20 off-peak and $.35 peak...both, again, only every 2 years).

by Ms. D on Mar 5, 2013 10:47 pm • link • report

More Tax Please!!! Maryland is for suckers. Think about it, What happen to the previous Transportation Fund? The Purple Line benefits developers and politicians pockets. For example, developers already have plans in place develop Chevy Chase Lake. Does it make sense to add the purple line to solve traffic problems then add more development, traffic and people?

by b diggs on Mar 6, 2013 11:23 am • link • report

@b diggs:

Think about it, What happen to the previous Transportation Fund?

I don't have to think about it too hard to realize that it was spent on transportation infrastructure, mostly roads. I'm not sure how that supports the argument that we shouldn't fund transportation improvements in the future.

by Gray on Mar 6, 2013 11:31 am • link • report

Think about it. Does the purple line solve traffic problems by adding more development, and traffic. Who benefits? Be brave, demand more from politicians, don't let them waste tax payers dollars on a poorly planned trolley line, demand answers to solve regional transportation problems.

by b diggs on Mar 6, 2013 11:59 am • link • report

So you're assuming that the no purple line will also mean no development?

And a line that is planned to go from Bethesda to UMd and new Carrollton isn't regional?

by Drumz on Mar 6, 2013 12:03 pm • link • report

I think you misunderstand what the Purple Line is, b diggs. It is not "a poorly planned trolley line," and it is not intended to "solve traffic problems." It has been planned for years as a light rail line operating largely in separated right-of-way (i.e. not a "trolley") so that it can provide high quality transit links for a large number of people in MoCo and PG county. Secondarily, it will be used to encourage transit-oriented growth along the line, which will have a long-term effect on commuting patterns in the area.

Heavy traffic will still remain in all quarters of the DC metro area, whether we build better transit or not. This is not a very good argument against improving transit though.

by Gray on Mar 6, 2013 12:07 pm • link • report

Think about it. A poorly planned trolley terminates in Bethesda. Why doesn't the purple line continue on to Georgetown? When the purple line terminates in Bethesda riders have a long walk to make the red node connection. With great expense the purple line may fit under Wisconsin ave. Why does the purple cross a grade on Connecticut Ave? (this will clog a major artery), and the purple line does not have the ride of way on the CSX line in Brookville, so the purple line designed to ride over the CSX line.

These design issues go on and on and on, the purple line is a very, very expensive solution. Educate yourself with transportation, design issues and don't jump on any bandwagon.

by b diggs on Mar 6, 2013 12:37 pm • link • report

@b diggs:

Think about it.

At some point you're going to stop repeating this, right?

Why does the purple cross a grade on Connecticut Ave? (this will clog a major artery) . . .

It's a good thing that major artery isn't clogged now.

and the purple line does not have the ride of way on the CSX line in Brookville, so the purple line designed to ride over the CSX line.

I'm not sure what you're saying here.

Look, you're right that the Purple Line is expensive. But the many benefits of it have been documented. Many options have been studied, and the planners have made clear why they chose the preferred route. The end result is that we have a well-studied project that can provide clear benefits. At great expense, yes, but transportation infrastructure tends to be expensive. That does create the problem that we need to find some way to fund it, which is the whole point of this exercise.

Think about it.

by Gray on Mar 6, 2013 12:43 pm • link • report

in Bethesda riders have a long walk to make the red node connection

Flat-out false.

by Ben Ross on Mar 6, 2013 1:09 pm • link • report

Metro needs to add routes with node-to-node connections in their system. The purple line was sold to you as part of metro, it's a light rail that has nothing to with metro. The purple line creates more problems within communities with no benefits. Tax dollars are better spent on making a better metro. For example, how about spending money on another Potomac bridge crossing. There are better transportation solutions out there, do your homework.

by b diggs on Mar 6, 2013 1:10 pm • link • report

There are better transportation solutions out there, do your homework.

I'll think about it.

by Gray on Mar 6, 2013 1:21 pm • link • report

Well the purple line is being built by MTA, the expansion o metro will largely come from metro.

Plus another Potomac crossing will largely be coordinated between Va and DC. Get at them to do their homework.

by Drumz on Mar 6, 2013 1:23 pm • link • report

The purple line can be extended to Georgetown, but right now the primary gaps that need additional transit in maryland(and maryland want to fund projects with maryland dollars that help marylanders) are Bethesda to Silver Spring and College Park to New Carrolton. College Park to Silver Spring will be nice and there you go, the purple line.

Later it can be extended(georgetown or tysons/Largo Branch Ave Alexandria) improved(less at grade / smarter fare control)

the purple line is looking like it will cost 2 billion. A metro expansion would be 8-10. I would love full heavy rail in a completely separated grade but that just doesn't seem to be in the cards.

by Richard Bourne on Mar 7, 2013 10:38 am • link • report

Interesting Article in the Baltimore Sun, Dated March 7, 2013.
---------------------

"The Maryland Department of Transportation wants to proceed with the light rail Purple Line at a newly raised price tag of $2.15 billion. The Purple Line now costs more than twice the rapid transit bus alternative while yielding only a 25 percent increase in ridership. "

The complete article can be viewed at:
http://www.baltimoresun.com/news/opinion/readersrespond/bs-ed-purple-line-20130307,0,1885735.story

Visit baltimoresun.com at http://www.baltimoresun.com

by b diggs on Mar 7, 2013 9:36 pm • link • report

Cool, a letter to the editor makes a claim, provides no evidence for it and still implicitly argues that the purple line should be built just paid for in a different way.

by Drumz on Mar 7, 2013 10:31 pm • link • report

Support Doug Duncan in 2014.
-------
"Montgomery County's feeling nostalgic for former county executive Doug Duncan, who announced earlier this week that he'll run for a 4th term in 2014."
-------
"while opposing the Purple Line between Bethesda and Silver Spring, which he called "spending millions to go nowhere."

by b diggs on Mar 7, 2013 11:17 pm • link • report

He realizes the contradiction in calling the two biggest business centers in Maryland outside of Baltimore, "nowhere" right?

by Drumz on Mar 8, 2013 7:45 am • link • report

I agree with d diggs points, also I would like to add the diminished quality of life for close-in communities. For example crime, just look at the crime hot spots around metro now.

by jasper on Mar 8, 2013 10:27 pm • link • report