ANNAPOLIS — Gov. Martin O’Malley and the leaders of both houses of the General Assembly unveiled a plan Monday night that would raise hundreds of millions of dollars for transportation projects through a combination of tax increases, decreases and adjustments.
The plan, endorsed by Senate President Thomas V. Mike Miller Jr., D-Calvert and Prince George’s, and House of Delegates Speaker Michael E. Busch, D-Anne Arundel, would phase in application of Maryland’s 6 percent sales tax on the wholesale purchase of gasoline, starting next fiscal year with a 2 percent assessment, rising to 4 percent in fiscal 2015 and potentially reaching the full amount by fiscal 2016.
In return, the excise tax on gasoline — 23.5 cents a gallon since 1992 — would be lowered to 18.5 cents per gallon but would be tied to the consumer price index, allowing it to rise with inflation.
Those measures would raise $391 million in fiscal 2014 and nearly $600 million by fiscal 2015, according to a fiscal analysis of the proposed legislation.
Also, if the U.S. Congress passes a bill that allows states to tax Internet sales, the money generates from such receipts would be earmarked for transportation.
The bill would also tie Maryland Transit Administration fares to the consumer price index, an idea championed by Republicans in the legislature for years.
If everything goes as planned, the state expects to pull in $833 million for transportation by fiscal 2018.
In a statement, O’Malley said the accord — reached after recent meetings with Busch and Miller — would support 44,000 jobs and “help us generate the revenue we need to ease some of the worst traffic congestion in the nation while building and repairing our transportation infrastructure.”
But while the money will fill the state’s soon-to-be-barren Transportation Trust Fund with enough money to continue road and highway projects, the amount would apparently only cover the costs of design, engineering and land acquisition related to the Red Line in Baltimore and Purple Line in suburban Washington.
The bill would create a work group to study creating regional transit authorities (as Miller proposed in legislation last month) which could raise money to pay for construction of mass transit.
Hoping Congress will allow states to collect sales tax on online purchases is also problematic — so much so that, when Virginia Gov. Robert F. McDonnell proposed doing the same to raise money for transportation, some Democrats in Maryland derided the idea as foolish. If Congress doesn’t pass such legislation, Maryland’s contingency plan is to apply the full 6 percent sales tax to wholesale gas purchases.
Last week, Virginia passed legislation that increased the sales tax at varying levels across the state and created a wholesale fuel tax in order to raise $3.5 billion over five years for transportation projects, spurring Maryland’s Democratic leadership into action. The Free State’s plan is expected to raise $3.4 billion over five years.