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House panel approves O’Malley’s transportation funding bill

ANNAPOLIS — The House of Delegates’ Ways and Means Committee on Monday amended and approved legislation that would increase gas prices by more than 3 cents per gallon this summer, just days after holding a hearing on the administration-backed legislation.

The BP gas station at the intersection of East Fayette Street and North Central Avenue in East Baltimore was selling regular gas at $3.799 a gallon on Monday. If adopted by the House of Delegates, a tax on gasoline wholesalers could increase prices by more than 3 cents a gallon this summer.

The powerful committee approved a rewritten version of House Bill 1515, which would increase gas taxes and transit fares, by a party-line vote of 15-4, setting up debate by the full House this week.

“It is important for me, my constituents and the businesses throughout the entire state of Maryland to be able to get from ‘Point A’ to ‘Point B’ quickly and efficiently,” said House Majority Leader Kumar P. Barve, D-Montgomery.

The bill, introduced to the House and Senate this month by Gov. Martin O’Malley with the support of House Speaker Michael E. Busch, D-Anne Arundel, and Senate President Thomas V. Mike Miller Jr., D-Calvert and Prince George’s, was changed to raise roughly the same amount of money — more than $800 million annually by fiscal year 2018 — as the original proposal.

But the committee approved amendments that affect the timing of the proposed phase-in of the increases. Under the revisions, a 1 percent wholesale gas tax would take effect on July 1. The tax would stay at that level until Jan. 1, 2015, when it would rise to 2 percent. On July 1, 2015, the tax would rise again to 3 percent.

The tax could potentially jump to 5 percent by July 2016 if Congress fails to pass legislation that would allow states to collect sales tax on Internet purchases, which Maryland would earmark for transportation projects. U.S. Sen. Ben Cardin, D-Maryland, said Monday that he expects such a measure to be approved by lawmakers as part of a broader tax plan.

Pegged to the CPI

O’Malley had proposed allowing the wholesale tax to rise to 6 percent, but the panel made up for that difference by choosing to maintain the state’s 21-year-old 23.5-cent excise tax on gas, but allowing it to rise with the Consumer Price Index. He also proposed a 2 percent wholesale tax that would have increased to 4 percent by next summer.

The original bill would have imposed the wholesale tax rate on diesel fuel, too, but the Ways and Means Committee struck that measure to appease concerns voiced by truckers.

Even so, the 24.25-cent excise tax on diesel fuel will still increase because it, too, will be tied to inflation.

Barve said the altered legislation was “a simpler package” that would put off the worst of the tax increase until summer 2015 – after the November 2014 statewide election. Barve, however, said that was a coincidence.

“We wanted to phase it in as gently as we can for our constituents,” he said.

Republican members of the committee unsuccessfully tried to convince the panel to cap the potential annual gas tax increase, citing the possibility of a worldwide financial disaster that could cause the Consumer Price Index and gas prices to shoot skyward.

But Democrats, who outnumber Republicans 2-to-1 on the committee, said capping the potential yearly tax increase would cost the state too much money. If there were an actual crisis, Barve said, the legislature could lower the tax rate during a regular or special session.

“This has not been indexed since 1992,” said Del. Frank S. Turner, a Howard County Democrat and the committee’s vice chairman. “I think that’s very important to recognize.”

The committee also adopted amendments that would force the Maryland Department of Transportation to report on the legislation’s effectiveness after six years.

The four Republican members of Ways and Means who were present voted against the bill. Del. Andrew A. Serafini, R-Washington, admitted that transportation revenue was necessary; he just feared too much of it would go to urban-area mass transit projects such as the Red Line in Baltimore and Purple Line in Washington, D.C.

“We have bridges and roads that are in trouble,” Serafini said. “Before we do anything new, we’ve got issues with system preservation.”

Competing with Virginia

Maryland lawmakers, after years of exhibiting an acute unwillingness to tackle the transportation funding issue, were forced into action in recent weeks after Virginia legislators agreed to increase taxes to raise $3.5 billion for transportation projects over the next five years, about the same amount that O’Malley’s proposal would raise. The states frequently compete for businesses and are currently competing for the FBI’s headquarters, which may leave Washington, D.C.

“If we do not pass this bill we will not be economically competitive with Virginia,” said Del. Eric G. Luedtke, D-Montgomery.

H.B. 1515 also retains a measure that would increase subway, light rail and bus fares in Baltimore in accordance with inflation. But, in a nod to some city lawmakers’ concerns, House Majority Whip Talmadge Branch, D-Baltimore, successfully proposed an amendment that would cap the potential increase at 10 cents a year.