Maryland Gov. Harry Hughes told legislative leaders yesterday he will push to increase the state's gasoline tax and vehicle registration fees next year in order to provide a much-needed infusion of money for Maryland's transportation program.
In a series of meetings with legislators, Hughes said he is fine-tuning a package of tax increases that will provide the state with more than $400 million in new funds over the next five years, most of which will go for highway and bridge projects that might otherwise be delayed, according to sources familiar with the proposal.
A key to the new funding will be a "franchise tax" on gasoline that will be imposed on wholesalers at the rate of 3 1/2 percent of the cost of a gallon, and is expected to raise more than $70 million a year. It is generally recognized that such a tax at the wholesale level would be passed on to drivers, who now pay a 9 cents per gallon tax on gasoline at the pump.
In addition to the franchise tax, Hughes told the legislators he would like to raise an additional $10 million to $15 million by increasing fees on heavy trucks. That proposal is similar to one considered but not passed by the legislature last session. Last year's plan was designed to compensate the state for damage that heavy trucks cause to roads and bridges.
Finally, Hughes told the legislators he is considering increasing annual registration fees for small cars from $20 to $30 and for larger cars from $30 to $35. The fee increase would bring in an additional $11 million, according to figures provided the legislators.
The package of new taxes and fees is intended to provide the state with enough new funds to rehabilitate many highways and bridges in the state that are in some cases dangerously decayed. At the same time, the package will bring Maryland's taxes and fees in line with surrounding jurisdictions, and will allow the state Department of Transportation to move ahead with new projects that have been stalled because of a severe drop in transportation revenues.
For the last few years, Maryland's transportation trust fund, which finances the building and rehabilitation of highways, mass transit, the port of Baltimore and other projects, has suffered because it relies heavily on gas tax revenues at a time when people are driving less and using smaller cars.
Since 1972, the gasoline tax has remained unchanged because of legislative bickering over whether new revenues should be used for urban mass transit or rural and suburban roads. At the same time inflation has driven up the costs of all transportation projects, forcing the state last year to eliminate 60 road and bridge projects from its six-year road improvement program.
Several proposals to increase the gasoline tax -- including one by Hughes -- were considered but not passed by the legislature last year in part because of disagreements over the use of the money and in part because the proposals were introduced late in the legislative session. It is uncertain at this point whether Hughes will have any more success in this election year.
Hughes told the legislators that most of the new money will be earmarked for roads and bridges and will make it possible to revive about 30 priority projects cut by the Transportation Department last year. He said he would specify the projects and officially propose the new taxes and fees at the mid-November meeting of the legislature's Joint Transportation Oversight Committee.