Maryland bills would increase fuel taxes as much as 10 cents

| 3/9/2010

Intent on generating an infusion of cash for the state’s transportation budget, one Maryland state lawmaker has offered multiple bills to raise the fuel tax by as much as a dime per gallon.

One bill introduced by Rep. Charles Barkley, D-Montgomery, would gradually phase in a 10-cent-per-gallon fuel tax increase.

Maryland now applies a 24.25-cent-per-gallon tax on diesel and 23.5 cents for gas purchases. HB479 would mandate a 2-cent fuel tax increase on both fuels annually for the next five years.

Barkley’s other bill – HB969 – would cap annual increases at one penny.

Prospects for passage of either bill appear to be slim. Gov. Martin O’Malley and legislative leaders have offered assurances that there will be no tax increases this year. There are continued concerns about increasing taxes in the middle of a struggling economy. The November elections are also fast approaching.

Supporters say there is no time to waste. The Maryland Department of Transportation lacks funding to get work done. Increasing the fuel tax would be a simple way to eat into the funding gap, they say.

According to a fiscal note on the bill, increasing the tax rates by 2 cents per gallon would raise $63 million in the next fiscal year. By 2015, when the tax increase is fully implemented, it would generate $327 million.

HB969 would mandate a half-cent increase in fuel taxes. Future increases of up to 1 cent annually would be tied to the Construction Cost Index, which is used by trade groups to estimate labor and materials costs.

While it wouldn’t generate as much revenue, supporters say it could be a more viable solution for lawmakers to endorse. This method would raise $15 million next year and $89 million by 2015, according to a fiscal note.

Both bills would split revenue. The state DOT would get 70 percent while local jurisdictions would receive the other 30 percent.

The bills are in the House Ways and Means Committee.

To view other legislative activities of interest for Maryland in 2010, click here.

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