A Senate committee cut a swath through Gov. Larry Hogan's first-year legislative agenda Friday as it said no to several of his flagship initiatives, including a halt to increases in the gas tax.
In a voting session that lasted less than an hour, the Senate Budget & Taxation Committee pared back Hogan's gas tax legislation to a shadow of its original form. Senators also severely watered down Hogan's ambitious proposal to eliminate income taxation on military pensions and killed a similar bill for first responders.
Also heavily changed was Hogan's proposal to exempt many small businesses from the personal property tax.
The panel's decision to turn back Hogan's effort to hold down the gas tax came as no surprise. No sooner had Hogan called for repeal of scheduled gas tax increases in his State of the State address than Senate President Thomas V. Mike Miller pronounced the idea a "nightmare." Legislative analysts put the cost in lost transportation revenue at about $1.5 billion through 2020.
Hogan's bill would have canceled three increases that gradually raise the sales tax component of the gas tax to 5 percent, a provision adopted in 2013 legislation pushed by former Gov. Martin O'Malley. He also called for an end to the indexing provisions of that bill, which increase the tax annually to account for inflation.
The committee stripped away those proposals and left Hogan with a legislative fig leaf. The amended proposal would lower the cap on how much the tax can rise in any year due to inflation from 8 percent to 3 percent. With current and projected inflation running well below 3 percent, the change is unlikely to save drivers money in the near term.
Nevertheless, the committee's three Republicans joined the Democratic majority in passing the bill unanimously.
"I didn't like that we're capping it at 3 percent, but it's better than 8 percent," said Sen. Andrew Serafini, a Washington County Republican.
The Hogan administration chose to look on the bright side.
"At the start of the session, legislators dismissed the notion of changing how Maryland's gas tax worked. Seeing positive changes now is very encouraging," said Doug Mayer, a Hogan spokesman.
Sen. Edward J. Kasemeyer, the committee chairman, said Maryland businesses had pressed the General Assembly for many years to raise transportation revenue before lawmakers finally acted in 2013. Without the revenue Hogan proposed to give up, he said, Maryland would not have the money to build the projects needed for economic development.
"We'd be back to where we started from," said Kasemeyer, a Howard County Democrat. "We couldn't do without it in terms of the construction projects we've undertaken."
Hogan had also proposed exempting all income from military and first-responder pension plans from taxation. That idea, too, seemed doomed from the start as House Speaker Michael E. Busch questioned whether it would open the door to other groups seeking exemptions.
On the military pensions bill, it stripped away Hogan's language and substituted a measure that has passed the Senate twice before — raising the state's existing exemption on military pensions from $5,000 to $10,000 for those over 65.
The governor's bill to relieve small businesses of the burden of paying the personal property tax fared somewhat better. The panel approved Hogan's proposal to exempt a company's first $10,000 in business equipment from that tax, which is collected by local governments. However, senators delayed its impact to July 1, 2017, and made the law contingent on improvements in the state's tax assessment system.