It sounds simple: Maryland pauses collection of its 36-cent gas tax and surging gas prices plummet overnight. But as the General Assembly began debating such a proposal Tuesday, it became clear that financial relief for Maryland motorists through a 30-day gas tax holiday is no guarantee.
Lawmakers questioned if there was any way to force gas stations to pass tax savings along to motorists — there isn’t — and debated whether to extend it for as long as three months.
“I don’t know if it’s really going to provide the impact that we hope for in 30 days,” said Del. Jason Buckel, an Allegany County Republican, during a committee meeting. “If it’s not a big help, it looks foolish.”
After quick debate, committees in both the House and Senate unanimously advanced bills that lawmakers say all but ensure a swift drop in gas prices within days.
On Tuesday, a gallon of regular gas cost Marylanders a near-record $4.25, on average, two cents lower than a day earlier, according to the automotive club AAA.
Both chambers could take up floor debate on the measures as early as Wednesday and send them along to Gov. Larry Hogan quickly. The Republican governor struck an agreement last week with Democratic legislative leaders on the plan and is expected to sign the bill.
The challenge, fuel industry representatives explained to lawmakers, was that gas stations would be unlikely to lower their prices until they sold out of gas held in underground storage tanks on which they already paid the state gas tax, which is slightly more than 36 cents a gallon. (The tax is actually paid by distributors who deliver fuel to stations, but is passed down the line to consumers.)
It would take some gas stations longer than others to sell through those stores, industry groups explained. Without a mechanism to help stations avoid absorbing the cost of the taxed fuel stores, it appeared less likely the tax savings would be passed on to motorists immediately.
“Relief that has been so anticipated might not be felt as quick as a signature by the governor on Thursday night,” Ellen Valentino, executive vice president of the Mid-Atlantic Petroleum Distributors’ Association, told senators.
Meanwhile, in a simultaneous hearing on the House side, delegates were being told that suspending collection of the gas tax would set a precedent that could threaten investment in roads that are waiting for billions of dollars in deferred maintenance investment as it is.
“We should be spending more,” said Michael Higgins, chairman of the Maryland Transportation Builders & Materials Association, “not cutting the revenues on which those projects depend.”
The state’s transportation trust fund, which invests gas tax money in road, bridge and tunnel projects around Maryland, was long a source of stopgap funding for holes in the state’s operating budget. That ended with a 2014 constitutional amendment restricting the use of transportation money.
Maryland Policy & Politics
Nonpartisan state budget analysts estimate the gas tax holiday will cost the transportation trust fund about $98 million, though lawmakers pledged to make that up using other tax revenue. Democratic Comptroller Peter Franchot last week announced a surplus in the state’s general fund has ballooned to $7 billion.
As the House Ways and Means Committee took up the bill for a vote, delegates pushing to extend the gas tax holiday came one vote from upending the debate. The panel voted 12-11 to reject an amendment extending it from 30 days to 90.
“We don’t know where the Russian war is going to be in 30 days,” said Del. Steven Johnson, a Harford County Democrat, in advocating for the 30-day timeline.
Russia’s invasion of Ukraine has contributed to the spike in fuel prices.
“We won’t be here in 30 days,” Buckel responded. The legislature is scheduled to adjourn April 11.
By late afternoon, committees in both chambers had agreed on the same proposal: Directing the comptroller’s office to reimburse gas stations for taxes paid on any fuel on hand when the tax holiday begins, and ordering the stations to report their fuel inventory when the holiday ends.
That way, the tax relief would apply strictly to fuel sold during the 30-day holiday period.