Moody’s economist advises Md. to fund education but not raise gas tax in 2013

Mark Zandi, chief economist for Moody’s Analytics, gave Maryland senators an upbeat analysis of the economy, along with some advice on what they could do to help the “winners” and “losers” in the current economy.

Testifying before the Senate Budget and Taxation Committee, Zandi, who is frequently quoted in the national media, said state policymakers should look at the longer term and focus on educational structure and infrastructure. They should make the “the right kind of investments” to level opportunities for the middle and lower income Marylanders.

But then Zandi added that Maryland needed to “make your tax code fair, simple and competitive.”

During the Great Recession, Maryland has continued to fund education and higher education as other states have cut back funding, particularly for state colleges and universities. Maryland has maintained its spending partly by a series of tax increases that have made it less competitive with neighboring Virginia.

Zandi was also asked his opinion of raising the gas tax to fund infrastructure, as business groups have mounted another push to replenish the soon-to-be-depleted Transportation Trust Fund. “I would phase it in” over several years beginning in 2015, Zandi said, and “certainly not [raise it] in 2013.”

He said the end of the 2% Social Security tax holiday would be a drag on the economy that would be exacerbated by a gas tax hike.

Zandi’s expectation of a growing national economy by the end of the year is based on a presumption that Congress and the president will hammer out some kind of compromise that will cut spending and raise the debt limit in the next few months.

–Len Lazarick