Maryland lawmakers approve nearly doubling fuel tax

By Keith Goble, Land Line state legislative editor | 4/2/2013

Maryland lawmakers moved to Gov. Martin O’Malley a five-year, $3.4 billion transportation funding plan. One provision could result in truckers and other drivers paying about twice as much in state taxes at the fuel pump.

The Senate voted 27-20 to send a bill to the governor that would address a lack of new highway construction money available after 2017. House lawmakers already approved the funding plan on a 76-63 vote.

Initiated by the governor, HB1515 would raise about $830 million annually for state and local road, bridge and transit work.

O’Malley said that passage of the bill will allow the state to continue to be competitive at attracting companies to invest, grow and create jobs.

“We will support more than 57,000 jobs, ease traffic congestion, and build a 21st century transportation network,” O’Malley said in released remarks.

Starting July 1, new revenue would be generated through a 1 percent sales tax applied to fuel purchases at the wholesale level. The change is expected to 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.

Critics sought to remove the automatic tax increase provision. They said that lawmakers should be required to vote each time taxes are increased.

Also approved by Senate on a 45-2 vote is a bill that is intended to protect the new revenue from raids to other budgets.

SB829 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 proposed constitutional amendment would require the governor to declare a fiscal emergency and a three-fifths vote of each chamber of the General Assembly to divert funds away from transportation purposes.

Sen. E.J. Pipkin, R-Eastern Shore, said the bill doesn’t prevent the governor from dipping into the trust fund. Instead, he said the amendment simply provides cover for lawmakers’ vote to increase fuel taxes.

“I don’t believe this is a real lockbox. When the governor wants it to happen, it happens. This is a cover for the gas tax vote,” Pipkin told lawmakers before the Senate vote.

House lawmakers still must endorse the bill before it could move to the governor’s desk. If approved, voters would get the final say.

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

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