Maryland Senate to consider gas tax increase and ‘lockbox’ legislation Friday

March 28, 2013

The Maryland Senate appears poised to sign off as early as Friday on a sweeping plan to raise taxes on gas to help replenish a state transportation fund that is rapidly running out of money for highway construction and long-planned mass-transit projects.

The chamber’s Budget and Taxation Committee voted 9 to 4 on Thursday to send the legislation to the full Senate and then passed a second bill that would make it more difficult for future General Assemblies to divert transportation funds to other programs.

The so-called “lockbox” bill, which passed the committee unanimously, is meant to combat a practice that has been used by governors and lawmakers from both political parties to help balance operating budgets over the years.

“We want to be clear that the money will actually go to transportation,” said Sen. Richard S. Madaleno Jr. (D-Montgomery), a supporter of both bills.

Under the tax bill, which passed the House last week, motorists could expect to pay roughly an additional 13 to 20 cents a gallon by mid-2016, according to legislative analysts. The higher gas taxes would be phased in over several years, with the first increase of about 4 cents a gallon coming in July.

Transportation officials say the bill — a priority for Gov. Martin O’Malley (D) — would yield $4.4 billion for new projects over the next six years, including additional borrowing.

A legislative aide said Senate President Thomas V. Mike Miller Jr. (D-Calvert), a major booster of the plan, will seek a vote from his chamber either Friday or Saturday. Passage would send the bill to O’Malley for his signature.

For the lockbox bill to become law, the House would have to take action by April 8, the legislature’s scheduled adjournment date. The measure would then be put to voters in the form of a constitutional amendment on next year’s ballot.

Based on current projections, state analysts say that after 2017, Maryland will have only enough revenue for maintenance of its existing transportation network and not for new highway construction or planned mass-transit projects, including the Purple Line rail link in the Washington area and the Corridor Cities Transitway rapid bus line along Interstate 270 in Montgomery County.

There is also a backlog of other unfunded projects sought by local leaders, such as improvements to Route 210 that Prince George’s County Executive Rushern L. Baker III (D) has said have become more urgent with a casino expected to open in his county in 2016.

The plan adds another layer of taxes to purchases of gasoline, which are now subject to a 23.5-cent-a-gallon flat tax, a levy unchanged since 1992.

Under the bill, a new sales tax of 3 percent also would be imposed. That tax would be phased in over three years, starting in July.

Another 2 percent could later be tacked onto the sales tax on gas if Congress doesn’t take action on a separate issue related to Internet sales.

Maryland and other states are lobbying the federal government to adopt a long-stalled plan that would ensure states can collect sales taxes when their residents make purchases from out-of-state Internet retailers.

If Congress acts on that by 2015, that revenue would be earmarked for transportation in Maryland. Otherwise, the additional 2 percent sales tax on gas would take effect.

Virginia has a similar provision in the transportation bill passed last month that was championed by Gov. Robert F. McDonnell (R).

Opponents of Maryland’s bill have argued that it relies too heavily on taxes paid by motorists to fund mass-transit projects and that a tax increase could upset the still fragile economy.

Republican opponents of the bill objected most vocally Thursday to a provision that automatically increases the flat tax on gas in coming years to reflect inflation.

Sen. David R. Brinkley (R-Frederick) said the automatic increases were a way for future legislatures to avoid having to vote for more tax increases.

“This is the worst part of the bill, and it really needs to come out,” Brinkley said.

The committee voted down a proposed amendment to that effect.

Under the lockbox bill, diverting transportation money to other programs would require a declaration of an “emergency” by the governor and three-fifths votes by both the House and Senate.

John Wagner has covered Maryland government and politics for The Post since 2004.
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