Maryland lawmakers could consider tax, fee increases

| Friday, September 16, 2011

Plans for how to pay for needed transportation projects in Maryland drew discussion this week from state lawmakers.

The Senate Budget and Taxation Committee met with the Department of Legislative Services to address viable options to raise revenue to help close an estimated $800 million budget shortfall. Options discussed include raising the state’s fuel tax rates, adding a 6 percent sales tax on fuel purchases, or increasing other taxes and fees.

The commission has recommended that the Maryland General Assembly approve $520 million in tax and fee increases to pay for road improvements and transit.

The state’s fuel tax rates have remained unchanged for about 20 years. The tax rate for diesel has since held at 24.25 cents per gallon, and the tax for gas has been 23.5 cents per gallon.

In the years since, supporters of an increase point out that construction and maintenance costs have skyrocketed at the same time that vehicles have become more fuel efficient. Also, fewer dollars are expected to be made available for states from the federal government.

The commission estimates that a dime per gallon increase in the fuel tax rates would generate an additional $310 million annually. A new 6 percent sales tax on fuel sales would raise about $670 million a year.

A similar plan to increase fuel tax rates and boost vehicle fees was sought during the 2011 regular session. The proposed 10-cent increase was met with stiff opposition.

At the time, truckers in the state said the tax and fee increases would have dire consequences on the industry.

Maryland Motor Truck Association President Louis Campion said increasing the diesel tax by a dime would cause truck drivers to avoid fueling up in Maryland. Higher vehicle titling fees could also lead to trucking operations in the state to pack up and move across state lines.

Some critics of the funding options acknowledge they could be swayed in favor of higher taxes or fees if lawmakers approve an amendment to the Maryland constitution forbidding money from being transferred out of the state transportation fund.

In the past 30 years, the fund has been raided a dozen times, totaling about $670 million. The state’s general fund has been used to reimburse the transportation account for all but about $220 million.

Lawmakers will most likely consider the proposals during the regular session that begins in January 2012.

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

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