Maryland lawmakers have been eying this week’s proposal by McDonnell (R), which would scrap the commonwealth’s gas tax and replace it with additional sales tax collections and new revenue. Such a plan would have major implications for Maryland, which maintains a 23.5 cent-per-gallon gas tax.
All told, McDonnell’s plan — which he characterized as a bold departure from failed initiatives of the past — is projected to raise nearly $3.2 billion over five years.
In his letter, Deschenaux acknowledged that McDonnell’s plan is “certainly a conversation starter.” But he said several things should give Maryland lawmakers pause.
Among them: “Over one-third of the program is funded by revenues that do not now exist,” Deschenaux said.
He is referring to revenue that McDonnell hopes Congress will allow Virginia to collect in sales tax on Internet purchases. Federal legislation that would give states that authority has been bogged down on Capitol Hill.
Deschenaux noted that McDonnell’s plan also diverts $283 million from Virginia’s general fund to transportation programs, a move critics have said could hurt education and other priorities.
“In sum, while the Virginia plan appears to produce substantial revenues to address a critical need, our preliminary early analysis notes that it is based on wishful thinking, shifting of monies from the general fund and moving away from a user-based financing of transportation,” Deschenaux wrote.
The letter comes as Maryland Gov. Martin O’Malley (D) continues to weigh whether to offer a transportation plan to the General Assembly this year.
Last year, O’Malley proposed applying the state’s 6 percent sales tax to gasoline, a move that would have generated more than $600 million a year, according to legislative estimates. That legislation went nowhere.
In recent days, O’Malley has said one option this year could be raising the state’s sales tax on all items by 1 percentage point and dedicating the additional revenue to road and transit projects. He has not committed to that idea, however.