Legislators Talk Taxes In OC

OCEAN CITY -- A proposed increase in Maryland’s gasoline tax, other proposed hikes in taxes and fees, unemployment insurance and the general condition of the state’s economy were among the topics of discussion as Ocean City business people met with their state representatives this week.

The resort’s Economic Development Committee (EDC) this week hosted its annual legislative meeting in advance of the upcoming 2012 General Assembly session. While the back-and-forth session was largely congenial and not without its moments of levity, resort business leaders held their legislators’ collective feet to the fire over several issues including a proposed gas tax hike.

EDC President Michael James opened the session with a plea to local lawmakers to go to battle for the district this year.

“We’d like to accentuate the positive, but we’re in the fourth year of a recession and energy costs have doubled, the unemployment tax rate has doubled or tripled in some cases, and now we’re hearing an increase in the gas tax is possible,” he said. “It’s incredibly important our legislators know the business community is in the fight of our lives. We need some wins. I know we get some votes in a losing cause, but we really need some wins.”

Senator Jim Mathias (D-38) said the Lower Shore and the resort area was not without significant victories during the economic downturn. Mathias pointed out the ongoing expansion of the Ocean City Convention Center, the success of the beach replenishment program in the face of Hurricane Irene this summer and the success of the county’s public school system. He also pointed out the dualization of Route 113 is ongoing despite the worst economic downturn since the Depression.

“I think on balance we’ve done a pretty good job considering the circumstances,” he said. “We do have some wins and some tangible results, but we can do more. We have a lot more work to do to make Maryland better for business. We need to reduce some regulations so we can grow jobs in Maryland again.”

Mathias said a proposed gasoline tax increase in Maryland by 15 cents per gallon would certainly be a hot-button issue in the General Assembly next year and hoped to find a balance between the need for an influx of revenue for highway projects and the desperate economic conditions for many Maryland families.

“The median income in the U.S. has dropped twice since 2007 and is now at or below 2000 levels,” he said. “This is a very difficult climate to ask for more and I’m not inclined to support a gas tax increase. We need that infusion of money for our roads because infrastructure improvement is vital to our economic recovery, but so is the economic well-being of our citizens.

Delegate Norm Conway (D-38B) said infrastructure improvement was vital to economic recovery in the state, and to the tourism industry in Ocean City and the entire resort area, but agreed asking citizens to pay more through increased taxes could be unpalatable.

“The one area Maryland doesn’t do well in compared to other states is tax structure,” he said. “Nobody wants to pay sales tax. I don’t want to pay it either, just like I don’t want to pay 15 cents more per gallon for gas. But we have to look at our infrastructure. Our highways are critical to getting people here.”

Another issue near and dear to resort business owners is the steadily increasing unemployment insurance tax.

“The unemployment insurance trust fund is structured in such a way that it’s tied to a balance,” Mathias said. “Unfortunately, our businesses are paying at the highest level on the table. We’re trying to find a way to infuse money into that fund to bring you back down from that highest table.”

EDC Legislative Liaison Brett Wolfe questioned if there was any effort to separate the seasonal unemployment tax rate from the year-round rate.

“It’s a possibility,” said Mathias. “We’re looking into it.”

Inevitably, the discussion came around to the issue of state’s wealth-based formula for education funding, which penalizes Worcester because of the high value of resort area property values despite the number of students from households at or below the poverty level.

“The taxing effort of Worcester County is what we hear all the time,” said Mathias. “Worcester is a very affordable county and we hear about Worcester’s low taxing effort when we go to the table. We’ve been able to maximize our contributions with the help of our County Commissioners.”

Conway agreed with Mathias’ assessment.

“The beef locally has always been the state aid per pupil in this county is so low, but the piggyback tax has nothing to do with education,” he said. “In the eyes of many legislators around the state, you’re not helping yourself to the same degree as other counties.”

James seemed incredulous at the concept of increasing the piggyback tax in order to gain more state funding for education.

“Are you suggesting we raise the piggyback tax to increase our state aid per pupil?” he asked. “Do they really think we should raise our piggyback tax?”

Conway countered the notion had legs in Annapolis from a perception standpoint.
“They make a political judgment that we could do more to help ourselves,” he said.