Saturday, March 16, 2013

Gas Tax Hike Included In Govenor's Transportation Plan

The Legislature is considering Governor O'Malley's proposed transportation plan, which includes a new sales tax on gasoline and is designed to collect $3.4billion in new revenue over the next five years.

The bill is designated HB1515 in the House of Delegates and SB 1054 in the Senate.  The bills are set to be considered by the Senate Rules Committee and the House Ways And Means committee.

The bill would lower the fixed gas tax from 23.5 cents per gallon to 18.5 cents in July 2013, but would add a 2% sales tax which would effectively raise the tax at current prices.  An additional 2% sales tax would be added next year.  The bill also would peg the 'flat' tax rate to inflation, allowing it to automatically increase in future years.  Additionally, if the federal government fails to pass an "internet sales tax", the bill contains a provision to automatically increase the tax by another 2%.  The total tax increase could be up to an additional 22 cents per gallon in 2015.

While the revenue is technically designated to go exclusively to transportation projects, concern has been expressed by some that the bill authorizes the fund to be "raided" under specified circumstances to pay for non-transportation programs.  Diversion of money from the transportation fund has provoked controversy in the past.  A recent measure intended to restore the diverted funds did not pass.

The proposal raised disputes between urban and rural parts of the state.  Some lawmaker from rural parts of the state argued that the spending of transportation funds is weighted heavily towards transit projects.   “Over time, the money’s been moving away from roads and into these mass-transit projects. And only 9 percent of Marylanders use transit." argued Senate Minority Leader E.J. Pipkin, "It’s a mass subsidy for that nine percent.”   Other lawmakers from urban areas, such as parts of Montgomery County, favored the use of gas taxes to pay for projects such as the Purple Line, arguing that transit projects will reduce congestion and improve economic growth.  Meanwhile, trucking organization have argued that gas tax hikes could raise shipping costs.

Additional Coverage:
Washington Post
Maryland Legislative Watch
Washington Examiner

UPDATE 03/18/2013:
The Ways and Means Committee has approved the gas tax proposal with amendments and it will go to the full house for a vote.