House committee approves gas tax increase

A House of Delegates committee approved a plan Monday to raise taxes on gasoline by 3.8 cents July 1 as part of broader revenue package to pay for transportation projects.

The rise in the gas tax, which would be followed by more increases over the next three years, would be the first since 1992.

The 15-4 vote by the Ways and Means Committee sends the legislation — which is backed by Gov. Martin O'Malley and the General Assembly's Democratic leadership — to the House floor. Four Republicans on the panel voted no, while the other three were absent.

The committee made some changes to a proposal agreed on by the governor, Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch that raises taxes by a greater amount this summer but more slowly after that.

Legislative leaders said the increase is necessary because the buying power of gas tax revenue has dwindled and the state soon will reach the point where it can afford nothing but maintenance of current highways and transit systems.

O'Malley has been pressing for an increase in transportation revenue for more than a year, but his efforts did not gain much traction until Republican-controlled Virginia — facing a similar funding shortfall — passed a roughly $880 million transportation package last month.

Del. Kumar Barve, the House majority leader and a member Ways and Means, said Maryland needs to invest in transportation to compete with Virginia. He noted that the two states are vying to become the site for a new FBI headquarters.

"It's important for me, for my constituents and for business throughout the state of Maryland to get from Point A to Point B quickly and efficiently," said Barve, a Montgomery County Democrat.

Republican committee members said they recognized the need for funding but objected to details of the revenue plan and to the way the state spends its transportation dollars.

"We're making our constituents pay for poor management the last several years," said Del. Ron George, an Anne Arundel County Republican.

Under the original plan, the cost of gas would have gone up by 2 cents this summer, then by another 7 cents in 2014 and possibly 7 cents more in 2015. The revised plan begins with a 3.8-cent hike, but phases in the subsequent increases more slowly than the original plan. It would raise roughly the same amount in tax revenue — about $600 million when fully in effect in 2016.

At that time, motorists would pay roughly 16 cents more per gallon than the 23.5-cent tax they are paying now. In subsequent years, the gas tax would continue to rise with inflation because lawmakers kept a provision letting the tax rise with the Consumer Price Index.

The panel added a requirement that the Maryland Department of Transportation study the effects of indexing so the General Assembly can determine after six years how it has affected consumers, the economy and the transportation program. The committee rejected Republican amendments seeking to cap such inflation-driven increases.

The revised bill scraps a provision of the original plan that would have lowered the traditional 23.5-cents-a-gallon gas excise tax while imposing a sales tax on gas. Under the amended bill, the sales tax on gas would rise in three stages to 3 percent on July 1, 2015. After that it, could continue to increase to as much as 5 percent on July 1, 2016, if Congress does not approve a bill allowing states to collect a sales tax on Internet sales.

If Congress were to approve the law and the president were to sign it, the Maryland legislation would direct that money to transportation in place of the third phase of the tax increase.

Barve said the committee decided not to lower the excise tax because it would have interfered with existing formulas for distributing funds.

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