Maryland fuel taxes soon to near half-dollar?

By Keith Goble, Land Line state legislative editor | 3/21/2013

Maryland House lawmakers could cast a final vote before the end of the week on a five-year, $3.4 billion transportation funding plan that would cost truckers and other drivers to pay about 50 cents per gallon.

Lawmakers are pursuing a solution to address a lack of new highway construction money available after 2017.

The House took up for initial consideration on Wednesday, March 20, a Democrat-led bill initiated by Gov. Martin O’Malley that would raise about $830 million annually for state and local road, bridge and transit work.

Starting July 1, new revenue would be generated through a 1 percent sales tax applied to fuel purchases at the wholesale level. The change would equate to a 3.8-cent-per-gallon rate increase for gas and diesel.

The sales tax rate would later rise to at least 3 percent. The tax would increase to 5 percent if Congress fails to act on legislation allowing states to tax Internet sales.

In addition, the state’s 23.5-cent-per-gallon excise tax on gas and 24.25-cent tax on diesel would be indexed to inflation, which would allow for regular increases. The tax rate has remained unchanged since 1992.

When the taxes are fully implemented in 2017, state estimates show that the price at the pump would be about 40 cents per gallon – about 16 cents higher than the current rates.

If the Internet tax isn’t approved by federal lawmakers, the state’s tax rates would increase another 8 cents to nearly 48 cents per gallon.

Lawmakers rejected a proposed amendment that would have axed the automatic tax increase provision. Delegate Herbert McMillan, R-Anne Arundel, said that lawmakers should be required to vote each time taxes are increased.

“This bill puts the gas tax on autopilot and it locks us out of the cockpit at a time when our people need us to be at the controls picking our way through difficult economic weather,” McMillan told lawmakers.

Delegate Frank Turner, D-Howard, opposed McMillan’s proposal. He said if the automatic increase had been enacted in the early 90s, the state likely wouldn’t be in the situation it finds itself in today.

The bill – HB1515 – includes a provision that is intended to protect the new revenue from raids to other budgets. It would require a three-fifths majority of a standing committee to transfer transportation money in the case of an economic emergency.

House lawmakers turned back an effort by Delegate Susan Krebs, R-Carroll, to tie passage of HB1515 to the approval of a constitutional amendment – HB176 – protecting the Transportation Trust Fund from raids. Voters would get the final say.

“We need to put the trust back into the Transportation Trust Fund by letting voters decide whether or not it needs to be protected,” Krebs said before the vote.

Opponents said the bill already contains language to limit transfers.

House lawmakers are expected to vote on the bill late this week. If approved, it would advance to the Senate for further consideration.

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

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