ANNAPOLIS — The Maryland House of Delegates advanced a transportation funding measure on Wednesday night that supporters say is badly needed, but opponents contend will be a terrible burden on Maryland drivers.
A final vote to send the bill to the Senate is expected Friday.
The legislation, which will gradually apply a new sales tax to gasoline, would raise hundreds of millions of dollars a year in new revenue. It also includes a provision that would enable the tax to keep up with inflation with automatic increases.
A change approved Wednesday night on the House floor would cap an increase from inflation to 8 percent of the motor fuel tax rate effective the previous year. Eight percent of the current 23.5-cents a gallon tax would be about 1.8 cents.
Republican opponents were quick to criticize the proposal. Delegate Andrew Serafini, R-Washington, said the legislation’s tax provisions would raise costs for many other goods that need to be transported to stores.
“We’re going to pay for this tax multiple times over,” Serafini said at a news conference outside the House chamber.
Others criticized the automatic increases that would be triggered by linking the tax to the Consumer Price Index.
But Democratic supporters said one of the reasons why the tax increase is needed now is because the state did not include an indexing component for inflationary costs when the gas tax was last raised in 1992.
“One of the things we’ve got to do is to look backwards before we look forwards, and one of the reasons why we’re here this evening is because we did not index this in ’92, so we went 21 years with that 23.5 cents per gallon,” said Delegate Frank Turner, D-Howard. “We did not raise it one penny.”
The House Ways and Means Committee changed the bill earlier this week with an eye toward phasing in tax increases more gradually, while raising roughly the same amount as the plan Democratic Gov. Martin O’Malley pitched earlier this month. Under the changes, a new 1 percent sales tax would be applied at the wholesale level on July 1, instead of the 2 percent in O’Malley’s plan. The sales tax would increase to 2 percent on Jan. 1, 2015, instead of the 4 percent under the governor’s initial plan.
O’Malley’s plan would have cut 5 cents from the state’s 23.5-cents-per-gallon excise tax, but that reduction was eliminated under the bill changed by a House panel.
The House Ways and Means Committee also changed a part of the bill that hinges on whether Congress passes legislation to allow states to collect a sales tax on Internet sales. Under O’Malley’s proposal, the state would have been able to increase the sales tax from 4 percent to 6 percent, if Congress fails to pass an Internet sales tax law. Under the changes made by the House, the 3 percent sales tax would jump to 4 percent in January 2016 and 5 percent in July 2016.
Leaders in the state’s business community have supported the measure. They say the state’s businesses and quality of life need the investment in infrastructure. If no action is taken, they note, Maryland will run out of money for new transportation projects after 2017.
Virginia GOP Gov. Bob McDonnell recently won approval for overhauling his state’s highway maintenance system by raising diesel and retail sales taxes and creating a mechanism for a potential future gasoline tax hike. Supporters of raising new revenues in Maryland have noted the two states are fiercely competitive for jobs, and that the quality of transportation infrastructure is a priority for businesses.
The Maryland proposal would generate roughly $830 million in new funding for transportation when fully implemented in several years, once new bonding capacity created by the additional revenue is added into the mix.