Maryland transportation bill could add 20 cents to cost of a gallon of gas

Traffic flows over the American Legion Bridge along I-495 on the day before the Thanksgiving holiday in 2006. (Photo by Chip Somodevilla/Getty Images)

Maryland motorists could expect to pay roughly another 13 to 20 cents per gallon of gas by mid-2016 under a transportation funding bill that has quickly gained momentum in the House of Delegates and could pass on Friday, state analysts say.

The higher gas taxes — phased in over several years — would be used to help replenish a transportation fund that is rapidly running out of money for highway construction and long-planned mass transit projects, including the Purple Line in the Washington region.

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House Republicans have sought in recent days to slow the bill’s momentum, arguing that the tax increases backed by Gov. Martin O’Malley (D) would take a particularly heavy toll on working-class families at a time when the economy remains fragile.

But Democratic supporters say they have been energized by last month’s passage of a sweeping transportation bill in Virginia, a state led by a Republican governor that competes with Maryland for jobs and also suffers from some of the nation’s worst traffic congestion.

Supporters of the bill — which the Senate could take up next week — also argue that they have done what they can to minimize the impact. For the average driver, the added cost at the pump, which would go into effect in July, would initially be about $19 a year, later rising to as much as $100 annually, legislative analysts say.

“We want to phase it in as gradually as we can for our constituents,” said House Majority Leader Kumar P. Barve (D-Montgomery), a strong supporter of the bill.

Transportation officials say the bill would yield $4.4 billion for roads and mass transit projects over the next six years, including additional borrowing. It has been supported by business and labor groups, as well as the county executives of Montgomery and Prince George’s counties.

Maryland last raised its 23.5-cent-per-gallon gas tax in 1992. Repeated attempts to increase it since then have fallen short in the legislature — resulting in the projected dearth of transportation funding, bill supporters argue.

The bill being considered by the House would automatically raise the gas tax each year based on inflation. During preliminary debate this week, Republicans decried that provision as an “eternal” tax increase. By July 2016, the measure is projected to add about 2.2 cents per gallon to what motorists now pay for gas, according to nonpartisan analysts from the Department of Legislative Services.

Steeper increases would come from a new sales tax on gas that was proposed by O’Malley (D) and revised by House leaders.

Under the House plan, the state would impose a 3 percent sales tax, phased in over three years. That would translate into another 10.8 cents per gallon at the pump by July 2016, analysts say.

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

Legislation has languished for years in Congress that would ensure states can collect sales taxes when their residents make purchases from out-of-state Internet retailers.

The transportation bills introduced by O’Malley in Maryland and successfully championed in Virginia by Gov. Robert F. McDonnell (R) both earmark yet-to-exist revenue from the Internet tax for transportation projects.

Observers say passage in the next year or two is hardly a sure thing.

“We do not believe it is a stretch that it will pass,” said O’Malley spokeswoman Raquel Guillory, noting that the bill has bipartisan support in Congress and the backing of the National Governors Association.

If Congress doesn’t act before Dec. 1, 2015, Maryland’s state’s sales tax on gas would rise from 3 percent to 5 percent to make up for the lost revenue, under the bill being considered in the Maryland House. That would translate into another 7.2 cents per gallon at the pump for motorists, according to Maryland legislative analysts.

(In Congress doesn’t act, Virginia’s plan would make up the revenue by raising its sales tax on gas from 3.5 percent to 5.1 percent.)

Regardless of the particulars, Republicans in Maryland argue the impact will be felt by many residents.

“We are pricing middle-class families, and certainly the working-class poor, out of our state,” Del. Justin Ready (R-Carroll) said during debate this week over several proposed amendments, most of which were defeated.

Some Democrats acknowledge what they’re trying to do isn’t popular. But they say it’s responsible.

“As a legislator, if I’m going to take heat from some of my constituents, I’d rather take heat on legislation that’s going to meet our needs,” said Senate Majority Leader Robert J. Garagiola (D-Montgomery). “If we don’t get new money in the transportation trust fund, there are no new projects on the horizon.”

Garagiola said he expects to Senate to make some changes to the transportation bill, but he said the magnitude of the money raised should not change significantly. He added that he is confident the House and Senate can work out any differences before the General Assembly is scheduled to adjourn April 8.

 
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