Friday Five | June 30, 2023
A recap of this week’s top-five news items and resources from the intersection of business and government.
1. Pay up at the pump: Maryland gas tax increases to 47 cents per gallon July 1
It’s going to cost more to fill up a gas tank starting tomorrow, because the state’s gas tax goes up – again.
The state’s portion of the gas tax will be 47 cents per gallon, up from 42.7 cents, as part of an annual adjustment that links the tax to inflation.
Maryland’s gas tax has inched up year after year since 2013, when state lawmakers and then-Gov. Martin O’Malley approved legislation that made initial increases to the tax and then indexed future increases to inflation. The 2013 plan was designed to raise more money for transportation projects.
Although the gas tax may not be popular, it raised $1.1 billion in 2022 for transportation projects across the state.
“No one ever likes to pay more at the pump, whether it’s due to inflation, whether it’s due to economic issues or whether it’s because of a gas tax,” said Ragina Ali, spokesperson for AAA Mid-Atlantic. “But the reality is the gas tax is necessary to fund improvements on Maryland roads.”
Maryland Chamber of Commerce pushes for long-term transportation funding solutions
The gas tax generates revenue for transportation projects. However, even with year-after-year automatic gas tax increases in place, Maryland ranks among the states with the lowest expenditures on roadways, particularly in terms of maintenance expenditures per capita, where we are ranked 48 out of 50 states, and total spending per capita, where we are ranked 37th. (Source: U.S. Department of Transportation, 2020)
It is clear that the current gas tax is not a sustainable solution for funding Maryland’s transportation projects and maintenance needs. As Maryland pushes for increased electric vehicle adoption, it is imperative that we find creative solutions to ensure Maryland’s transportation needs are met.
Read the Chamber’s press statement here.
2. Minimum wage increase on the horizon for most, some will get there sooner
Starting tomorrow, most business owners around the state will have six months to prepare for a coming jump in the state’s minimum wage.
The Fair Wage Act of 2023, passed earlier this year, was a priority for Governor Moore in his first year in office. The change accelerates the move to $15 per hour as phased in under a 2019 law.
Aaron Seyedian, owner of Well-Paid Maids, said business owners should embrace the coming change because of its overall benefits.
“The cost of living is high here and so this kind of Wal-Mart model where the state, according to some people, can kind of withstand a kind of race-to-the-bottom economics, that’s just not the kind of economy Maryland has. It’s in line with our history and our reality … to say you know, things tend to cost a bit more so people need to be paid a bit more. I think it’s pretty rational when you think about it that way.”
In Maryland, a single adult must earn $19.61 per hour to cover basic living expenses, according to the Massachusetts Institute of Technology’s living wage calculator. Regionally, in western Maryland and the Eastern Shore, that living wage is about $4 less.
The coming increases “amount to pennies on the dollar” to business owners, Seyedian said. “I just don’t think that it’s the thing that business success hinges on.”
3. Pay up at the pump: Maryland gas tax increases to 47 cents per gallon July 1
With Maryland’s economy showing signs of weakness as it recovers from the effects of the pandemic, the state should take care to exercise restraint in pursuing additional, expensive energy and climate policies on the backs of utility ratepayers at a time when many are still having trouble paying their utility bills. With over $900 million in utility rate increases currently pending before the Public Service Commission – and Marylanders already on the hook to repay utilities nearly $1 billion to fund the state’s energy efficiency program – now is a good time to reflect on where we want to go and how we will get there.
Over the past several years, Maryland has enacted arguably the most comprehensive and progressive clean energy and climate legislation in the nation. While many are familiar with the state’s laudable goal to achieve 100% clean energy and to reach net-zero greenhouse gas emissions by 2045, they are likely unaware of the dozens of other energy and climate policies that either are currently in place or will take effect later this year. Further, drawing the public’s attention to arcane matters such as public utility rate proceedings – where the costs of many of these policies are now recovered – is difficult under the best of circumstances.
I caution our policymakers and elected officials to exercise restraint in having ratepayers foot these costs with economic doldrums on the horizon.
Read outgoing Maryland Public Service Commission chairman Jason M. Stanek’s guest commentary here.
4. Poll: Voters Don’t Like Higher Taxes to Fund the Kirwan Commission’s Education Plan
A 63% majority of Maryland voters oppose the tax increases needed to fund education spending hikes, according to a new Maryland Public Policy Institute poll conducted by Gonzales Research & Media Services. The overwhelming opposition to income and property tax hikes comes as Maryland taxpayers are learning of the truly enormous cost of the so-called “Blueprint for Maryland’s Future” devised by the Kirwan Commission in 2019.
A total of 841 likely voters were read the following: “Lawmakers in Annapolis passed legislation that increases funding for Maryland public schools by nearly $4 billion each year. Do you support or oppose efforts to raise income and property taxes to pay for these new increases in education spending?” A mere 36% voiced support, including only 51% of Democrats, 25% of Independents, and 15% of Republicans.
“Buckle up, Marylanders,” said Maryland Public Policy Institute President and CEO Christopher Summers. “There are only a few solutions to this problem. One is to reduce the spending mandated by the Kirwan Commission’s plan. But this is unlikely given current political realities. The second is to require less funding from local jurisdictions and more from the state. But this is a distinction without a difference since the same hard-working people are taxed either way. The third is to increase taxes at the local level or the state level or both.”
5. White House unveils $42.5B to connect every American to high-speed broadband internet
The Biden administration on Monday announced $42.45 billion to connect all Americans to high-speed broadband internet by the end of the decade, likening the ambitious goal to FDR’s New Deal-era rural electrification program that brought the then-modern technology to farms and rural areas across the United States.
The funds, which will be distributed as grants across U.S. states and territories, are allocated under the bipartisan infrastructure law, passed in 2021, but unveiled as the kick-off for the administration’s three-week tour highlighting infrastructure projects and private sector investment across the U.S.
“What we’re doing is, as I said, not unlike what Franklin Delano Roosevelt did when he brought electricity to nearly every American home and farm in our nation. Today [Vice President] Kamala [Harris) and I are making an equally historic investment to connect everyone in America to high-speed internet, and affordable high-speed internet, by 2030,” Biden said at the White House event in the East Room attended by guests and members of Congress.
