ANNAPOLIS — A House panel voted 15-4 on Monday for a gas tax measure to raise hundreds of millions of dollars per year, but with some changes to the plan initially submitted by Gov. Martin O’Malley.
Supporters say the measure will raise roughly the same amount of money as O’Malley’s plan after six years — about $830 million annually once new bonding capacity is added to the mix.
The bill approved by the House Ways and Means Committee would apply a 1 percent sales tax at the wholesale level on July 1, instead of 2 percent under O’Malley’s plan. The sales tax would increase to 2 percent on Jan. 1, 2015, under the House changes That’s compared to a 4 percent increase in July 2014 under O’Malley’s bill.
A 1 percent increase in the sales tax would add about 3.3 cents more to the price of a gallon of gas in July. The bill retains a mechanism to link the gas tax to inflation, which would add to the cost — an estimated half penny to make the total nearly 4 cents.
The governor’s plan to cut 5 cents from the state’s 23.5-cents-per-gallon excise tax would be eliminated, with supporters saying that part of O’Malley’s plan presented complexities for funding formulas.
“I think it has the benefit of simplicity, and it has the benefit, I think, of phasing in a little more gently in the opening years,” said Delegate Kumar Barve, D-Montgomery County.
The House panel’s changes also affect what would happen to a provision of the bill, if Congress fails to enact 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 another 2 percentage points from 4 percent to 6 percent, if Congress fails to enact the Internet sales tax measure by 2015. 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.
Supporters say Maryland hasn’t raised the state’s 23.5-cents-per-gallon-gas tax since 1992. They say Maryland needs to keep its transportation network competitive with neighboring Virginia, which approved a transportation revenue package this year.
“If we do not pass this bill we will not be economically competitive with Virginia,” said Delegate Eric Luedtke, D-Montgomery. “It won’t happen.”
Opponents say the state has mismanaged transportation money in recent years to fill other budget holes.
“I just think that we’re making our constituents now pay for poor management over the last several years,” Delegate Ron George, R-Anne Arundel, said. I do want to get there. I don’t think that this is now the time to do it.”