Maryland lawmakers talk fuel tax increase

By Keith Goble, Land Line state legislative editor | 3/4/2013

Maryland Gov. Martin O’Malley is expected to offer a transportation funding plan this week. Lawmakers at the statehouse are already discussing various offers to help pay for state and local road, bridge and transit work.

The Senate Budget and Taxation Committee recently heard testimony on multiple bills to increase funding via tax increases. Lawmakers are looking for solutions to a funding shortfall that is estimated at about $875 million annually.

Senate President Thomas V. Mike Miller Jr, D-Calvert, told lawmakers that the state risks having the Transportation Trust Fund go bankrupt within five years if they fail to take action.

Miller has offered two bills to help boost funding for roads, bridges and transit. The first bill would add a 3 percent sales tax on the wholesale price of fuel – which, at current prices, is estimated to raise the tax rate by 10 cents per gallon. Legislative analysts estimated that the sales tax proposal would generate about $300 million a year.

The tax source would be combined with the existing 23.5-cent-per-gallon gas tax and 24.25-cent-per-gallon diesel tax. The tax rates have remained unchanged for 21 years.

Public acceptance of a dime-per-gallon fuel tax increase could be hard to come by. According to a Gonzales Research & Marketing Strategies report, 94 percent of Maryland residents believe it’s important to maintain and improve the state’s transportation system yet about three-quarters of respondents oppose a 10-cent fuel tax increase.

Miller’s plan includes a revenue source for county transportation projects. Specifically, SB830 would give counties and the city of Baltimore the option to charge up to a 5-cent-per-gallon fuel tax at the wholesale level.

In addition, the state would be authorized to pursue a long-term lease deal for the Intercounty Connector.

“These are just possibilities, folks. It’s a menu designed to help solve a crisis,” Miller testified. He encouraged lawmakers to approve something now.

A year ago, O’Malley unsuccessfully proposed a 6 percent sales tax be added to fuel purchases.

Miller’s second bill would create a “lockbox” to secure transportation funds. In the past 30 years, the state’s Transportation Trust Fund has been raided a dozen times. The fund is expected to run dry by 2018.

SB829 would limit raids to occasions when the governor declares an emergency and state lawmakers endorse the switch.

Sen. Nathaniel McFadden, D-Baltimore, said the lockbox component is essential to help protect any additional revenue routed to transportation.

Other bills considered by the committee would benefit transit work. SB362 would allow counties or municipalities to add a 2-cent tax on fuel purchases for local roads and transit projects.

SB652 would impose a 2.1-cent tax on the wholesale fuel price in areas serviced by mass transit. One more bill – SB653 – would increase the sales tax on all goods by half a cent in the affected areas.

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

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