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O’Malley ‘considering’ 15 cent gas tax increase

ANNAPOLIS — Gov. Martin O’Malley is weighing a 15-cent gas tax hike as part of a package of proposals to spur spending on infrastructure, streamline regulations and cut into Maryland’s persistently high unemployment rate.

The governor announced the initiatives Monday morning as lawmakers returned to the State House for a special session on congressional redistricting. O’Malley and legislative leaders will use the short session to brief delegates and senators to start to build support for the effort.

The centerpiece will be an aggressive capital budget plan to increase spending on things like schools. That would be coupled with increased spending on transportation infrastructure backed by an increase to the state’s gas tax, which has been 23.5 cents per gallon since 1992.

A commission last week gave preliminary approval to a recommendation that the General Assembly raise the tax rate by 15 cents over three years.

“I think all of us need to consider it,” O’Malley said. “I’m certainly considering it.”

The governor said generally, he supports raising revenues to spur job creation.

The administration is also considering tax incentives to maintain construction jobs and adding money to the Sunny Day Fund, which is used to woo businesses to relocate or expand in Maryland,

O’Malley said the package, when it is introduced during the General Assembly’s regular session in January, will address “the No. 1 priority that all of us in our country must remain focused on right now.

“That is job creation, job retention and doing everything we possibly can to get as many Marylanders back to work as we possibly can,” he said.

In August, Maryland’s unemployment rate rose to 7.3 percent. In the year that ended that month, Maryland’s employers added only 3,600 jobs. Only nine states and Washington, D.C., added fewer.

One piece of the job creation package will take effect immediately. O’Malley signed an executive order Monday that will start a 60-day review of all state regulations.

“The intent here is to find regulations we can reform, any duplicate regulations that we can eliminate, so as to spark faster job creation and move forward as quickly as we can with any developments that might be stalled, or might be awaiting approval,” the governor said.

Ellen Valentino, state director of the National Federation of Independent Business, said the order is a “step in the right direction” to cleaning up state rules that conflict with federal rules and are costly for businesses.

“Regulations have become a burden for small business owners,” she said “They’re like dust on a windowsill that just continues to build and build and build.”

House Minority Leader Anthony J. O’Donnell, R-Calvert and St. Mary’s, said he could find common ground with O’Malley on the regulation issue, but said the rest of the governor’s plan showed he is “not serious” about creating jobs.

“It’s an insatiable appetite to spend more money and create more government debt,” O’Donnell said. “That’s not how you create jobs in this state. Getting out of the way of the private sector will create jobs.”

O’Malley did not say by how much he wants to increase capital budget spending. The state’s fiscal 2012 capital budget includes $940 million in debt, down from the $1.14 billion in each of the two years prior.

The governor dismissed concerns that the state’s debt limit could stymie his plan.

“The problem is not one of debt ceiling, or even finances,” he said. “The problem is a political problem, of coming together with the consensus necessary to make the investments a modern economy requires.”

House Speaker Michael E. Busch, D-Anne Arundel, spoke at the morning news conference after O’Malley.

“I think the timing is perfect for an aggressive capital infrastructure budget. There are things that can provide an immediate community benefit,” he said. “The interest rates are as low as they’re ever going to be … and the cost in the workforce is very competitive, probably the best cost reduction we can get from labor. There are people who need the work.”

Raising the gas tax by 15 cents is expected to bring in an additional $498 million per year when fully implemented. The Blue Ribbon Commission on Transportation Funding is also considering a raft of other transportation tax and fee increases to bring in more than $300 million more every year.

Kathleen T. Snyder, president and CEO of the Maryland Chamber of Commerce, said she was “delighted” to see transportation infrastructure at the top of the agenda, but added transportation funds need to be protected from budget raids before the chamber can back tax and fee increases.

“It’s a great way to get people working, and back to work, and to build infrastructure that will last 50 or 100 years,” Snyder said.