Gas Tax Passes Maryland House

House Bill 1515 passed the House of Delegates today 78-56.  The bill now goes to the Senate.

This bill is very important for bicycling because it will provide the funding needed to convert some of the unfriendly state higways into complete streets. But the current tax is not enough for capital improvements; available funds are only enough to repave the existing roads.  MDOT will also have money for some key trails.  And the bill will enable continued planning and design for the Purple Line (and therefore the Capital Crescent Trail in Silver Spring).

If enacted, the bill will add a 1% sales tax to gasoline starting this July 1, another 1% on December 1, 2014, and a final 1% on June 1, 2015. The bill also specifies that the existing per-gallon portion of the fuel tax will rise with the Consumer Price Index (the current tax is 23.5 and 24.25 cents per gallon for gasoline and diesel, respectively).

In addition, the sales tax could eventually go up another 2% unless Maryland starts collecting sales and use tax on sales by out of state sellers (e.g. internet sales).  If internet sellers continue to get a free ride, the sales tax on gasoline will go up to 4% on December 1, 2015 and 5% on June 1, 2016.  But the extra 1-2% will be automatically repealed whenever Maryland starts collecting taxes on the out-of-state sellers.

Passage has been expected since Wednesday night, when several amendments were defeated:

• By a vote of 81-50, the House rejected an amendment by Delegate Haddaway-Riccio that would limit the annual increase in the tax to 1 penny per gallon.  That would have been a real killer because it would not have prevented the tax from ratcheting down during years when the price of gasoline falls.  (The bill was amended to limit the inflation adjustment to 8% per year, but that does not apply to the sales tax portion.)
• The house also rejected by 82-46 an amendment by Delegate Schuh to ratchet-down the fraction of the proceeds available for transit from around 46% down to 35%.
• Delegate Krebs proposed making the entire tax hike contingent on the General Assembly passing a constitutional amendment preventing transportation trust revenues being transferred to the general fund.  That amendment lost 78-56.
• Delegate Bates proposed requiring gas stations to prominently post the amount of tax revenue for each gallon sold.  Some do voluntarily, but the proposal to make that mandatory failed 85-43.

The bill also will ensure that fares for transit provided by the Maryland Transit Administration rise with inflation.

If you get a chance, I recommend watching the hearing for the bill in the House Ways and Means Committee.  Aside from the need to fund transportation, the most common theme was that highway users are getting a terrible deal because the gas tax subsidizes transit, and the transportation trust fund sometimes lends money to the general fund.  None of us showed up to point out that actually, the general fund is subsidizing the transportation trust fund because gasoline and auto sales are exempt from the sales tax which funds the general fund.

The Legislators seemed to accept the claim that drivers are subsidizing transit, but they view that as a necessary subsidy, at least for now.  The reality is that the general fund is subsidizng transt and (to a lesser extent) highways a well.  The bill provides for some studies that will be quite useful, on alternative ways to fund transit, such as a taxing authority.  While those ideas undoubtedly are worth pursuing, transit and bicycle advocates probably should be encouraging MDOT to adopt a more honest accounting of who is subsidizing whom.

(Jim Titus is a cycling advocate from Prince Georges County.  The opinions expressed here do notnecessarily represent the opinion of any organization with which he is affiliated.)

 

Comments

[Shane]

Frustrating part is, some of us were there. We just had to leave before we were able to testify because of the transportation options available to get back from Annapolis.

[Pseudoprime]

"MDOT will also have money for some key trails." Anything specific, or just a general hope?

[JimT]

@Shane: It's too bad that when the calendar changed in 1751-52, the legislative sessions all advanced by three months. Mid-June would have been a nice time to ride a bike home from Annapolis, maybe even in daylight.

@Pseudoprime: It's a general statement, but more than hope. See the state's 6-year Capital Transportation Plan which allocates about 6-7% of highway funding to bike-ped. Without this bill, overall fundng will be about 25% less, and bike-ped would experience a disproprotionate decline.